Ukraine establishes domestic content rules

Share

About a year ago Ukraine was still believed to be a promising destination for PV market players. The country with a naturally high level of solar radiation used to offer attractive feed-in tariffs (FIT) for clean energy producers. The political crisis in the country, however, resulted in FIT being reduced by almost eight times and caused a dramatic slowdown in the Ukrainian renewable energy sector. The large scale solar sector has been at a standstill since that point.

Now, Ukraine is struggling to get back on the track with the clean energy production. In addition to the new FIT compensation rules established in summer 2015, the government has recently approved the feed-in premium rules for clean energy producers that use domestically manufactured equipment on their power plants.

According to the new rules, renewable plants with 30% to 50% domestically manufactured equipment will receive 5% higher FIT compensation for the produced energy. Those with the domestic content of 50% or more will get 10% higher payment under FIT. To be eligible for the domestic content rules plants have to be commissioned by December 31 2024.

Though solar manufacturing in Ukraine is not well developed at present, the rules are designed to stimulate future investments in PV production, Igor Dykunskyy of the Ukrainian legal advice agency DLF told pv magazine: “I don’t think we should expect immediate results. But some developers might consider moving their production into the country to receive this bonus”.

The current energy policies adopted by the Ukrainian government in June 2015 canceled the local content requirements and set up the compensation of € 0.1599/kWh ($0,18) for ground-mounted solar power plants and €0.1723/kWh ($0,19) for rooftop PV commissioned in 2016.

The tariffs fixed in Euro for the next 15 years vary according to the commissioning time. For ground-mounted solar plants the tariffs are set at €0.1502/kWh for projects powered between 2017 and 2019, €0.1352 for 2020 to 2024, and €0.1201 for plants commissioned between 2025 and 2029. For rooftop PV the compensation will be €0.1637, €0.1475 and €0.1309/kWh accordingly.

Private households that use solar systems with less than 30 kW capacity can sell generated power to the grid and receive a compensation of €0.1901/kWh if the system is installed this year. The new domestic content rules, however, do not apply to households PV systems.

“Due to the crisis, 2014 and the beginning of 2015 was a really depressing time for the industry,” said Igor Dykunskyy. “Negotiations of the new FIT regulations took about six months. But unlike the previously unrealistically high tariffs established in 2009, the new ones reflect the real market situation. Obviously, risks for the investors are still high. But we can already feel some positive changes. One of our clients is planning to develop a 120 MW solar plant in Kherson region. The project has been frozen, but there is a high chance that it will be restarted soon. No matter what, solar has much higher potential in Ukraine than any other renewable technology”.

Meanwhile, several large Ukrainian solar power plants with the total capacity of about 200 MW are located in Crimea, territory annexed by Russia in 2014. The plants developed by Austria’s Aktiv Solar, with the company reporting last year that they had been sold to the private owners.

“There is no information on what is going on with this facilities now,” said Igor Dykunskyy. “All we know is that the Crimean plants have not been connected to the Ukrainian power grid since summer 2014.”