The European Bank for Reconstruction and Development (EBRD) has partnered with the Black Sea Trade and Development Bank (BSTDB) to finance a solar plant, with the lenders providing loans of €19.1 million each.
The funds will be given to project company Ingulets Energo 2 LLC for the 57.6 MW plant planned for the Mykolaiv region in southern Ukraine, which is expected to generate 65 GWh per year.
The investment was made under the EBRD’s €250 million Ukraine Sustainable Energy Lending Facility III (USELF III). The European lender claims to be the largest international investor in Ukraine, with €13.1 billion invested since 1992, into 418 projects.
Its Black Sea counterpart touts a portfolio of 365 infrastructure, energy, transport, manufacturing, telecommunications and finance projects, for a reported total investment of around €5 billion.
From hydro to solar
USELF-III started in July to replace the EBRD’s original lending facility USELF, which started in 2009. At that point the facility supported non-large-scale hydropower projects. The fund subsequently provided €100 million for 150 MW of renewables projects incorporating various technologies.
With the USELF-III facility, the EBRD committed to lending €250 million to Ukraine’s renewable energy sector because of “growing interest from major international developers to implement larger RES [renewable energy source] projects”.
Ukraine has set itself an 11% renewable energy target for its gross electricity consumption by next year. The EBRD noted the current penetration of green energy resources other than large-hydropower remains low, at 1.5%.
As well as realizing a carbon emissions reduction plan, The European lender wants to also “foster private ownership of renewables projects in the power generation sector, which is dominated by state-controlled nuclear, some thermal power plants and large hydropower facilities, which make up almost 80% of the country’s total installed capacity”.
Switch to auctions
In that vein, the bank recently announced assistance for Ukraine’s transition from feed-in tariffs to competitive auctions for the procurement of new renewable power generation capacity. The country is set to hold its first auctions for solar next year, for projects exceeding 10 MW of capacity – and 20 MW-plus for wind projects.
A second round of auctions is planned in 2021-2022, for projects from 5 MW of capacity up for solar, and from 10 MW for wind. A third round of procurement will take place in 2023, for PV projects with more than 1 MW capacity and wind projects above 3 MW. The ceiling price for each of the auctions would be the level of FITs at that point.
Ukraine grants a FIT of €0.1502/kWh to ground-mounted PV projects connected to the grid between 2017 and this year and saw strong solar growth in the last two years, attracting operational installed capacity of 841 MW. On top of the FIT program, the government is supporting a GW-sized PV project at the site of the Chernobyl nuclear disaster as well as distributed generation projects remunerated through net metering.