CISOLAR 2019: Ukrainian PV needs clarity and long-term strategy

Some 500 delegates from the solar industry, the political world and the research community came together, greeted by rainy and cold weather in Kiev last week for the eighth iteration of the CISOLAR 2019 conference on solar energy in central and eastern Europe.

However, the conference venue did not provide shelter from the cold rain, as Vitaliy Daviy — the CEO of IBCentre, the organizer of the event — reacted to a particularly impassioned speech by Vsevolod Kovalchuk, director of SE NPC Ukrenergo, a Ukrainian grid operator. Kovalchuk lashed out at the government for not doing enough in terms of regulation and failing to future-proof the grid for the country’s solar potential. He even referred to the Ministry of Energy as “trash”. But the exchange of heated opinions is somewhat reflective of the current state of Ukrainian PV development. Boasting impressive growth over the past year, the market is now at a crossroads, as stakeholders eagerly anticipate the development of long-term strategies.

While most participants at the event did not share Kovalchuk's pessimism, it seems that the majority of stakeholders in the Ukrainian solar market are plagued by a sense of uncertainty as to what the future might hold. According to Kovalchuk, the Ukrainian grid can accommodate around 4.8 GW of solar PV without the need for infrastructure upgrades. He claimed in his speech that the government has failed to put measures in place that would ensure the security of electricity supply.

Sergiy Sevchuk, head of the State Agency on Energy Efficiency and Energy Saving of Ukraine (SAEE), was more measured in his criticism. He told pv magazine said that the SAEE is aware of the problems and thus has crafted a legal package to face new challenges.

“The proposal foresees to move away from feed-in tariff towards an auction system. However, more importantly, it foresees an incentives scheme for storage,” Sevchuk said, adding that the parliament still has to approve it as law, with a second reading of the draft scheduled in May.

Waiting for new laws

Political uncertainty regarding this proposed law drove much speculation on the trade show floor, with many players expressing fears that the Ukrainian market could deflate by a considerable margin if auctions are introduced. And the presidential elections, which saw Zelensky replace the incumbent Petro Poroshenko, don’t necessarily provide any clarity. As Daviy noted, renewable energy development and specific related laws were not the subject of either campaign. What lies ahead thus remains foggy. However, he did criticize the government for not making long-term plans and failing to provide long-term investment security, as well as solutions for the grid that are required for a more ambitious renewable energy future.

Despite the political uncertainty that taints the country’s renewable energy market, the trade show was packed, hosting more than 5,000 visitors and over 100 exhibitors. According to the organizers, the conference and trade show experienced a 25-30% spike in delegates and exhibitors. Daviy said that this is reflective of the current market situation in Ukraine.

“Our event is a mirror of the market. Ukraine is the main emerging market now. In the time between CISOLAR 2018 and CISOLAR 2019, 1.2 GW were installed here — 600 MW in the first quarter of 2019,” he said.

Optimism remains

Daviy added that he also sees deficits in the Ukrainian grid, but he has proposed a unique component to the feed-in tariff scheme. “For example, projects could get one or two cents more on their feed-in tariff if they co-locate a storage system with their wind or solar plant,” he explained.

The topic of storage did come up repeatedly throughout the conference as a possible way to accommodate rising volumes of variable renewable energy. Daviy echoed the sentiments of many in the Ukrainian PV market when he said that it's too early for a shift toward auctions, as it could have adverse effects on the market.

However, he did note that the overarching premise of making solar PV competitive with conventional sources of energy should also be on the agenda in Ukraine. For the vast majority of corporations at the event, the market offers good prospects for the next one or two years, but after that political decisions will determine the pace of future development.

Borga Karagülle, business development manager at Smart Energy, provided a somewhat optimistic outlook on the development of the Ukrainian solar market.

“Everything depends on financing. If the local banks continue to finance the projects after the commercial operation date stage, then yes, we could see even a rise in the market, and we are hoping that this rise will continue and the projects will continue to develop in the next two, three years,” said Karagülle. On the matter of looming auctions he said, “Actually, we are not that concerned about fading out green tariffs, because we think that even with subsidy-free tariffs in Ukraine we could have some projects. I mean it all depends on the business model, what you are aiming for. It all depends on your IRR expectations. It could be damaging in the short term, but in the long term, the market will be here. That is for sure.”