Scatec Solar has commenced construction on a 148 MW solar PV installation in Ukraine, in cooperation with Power China Guizhou Engineering Co. Ltd.
The Norwegian independent power producer will be the the equity investor and provide engineering, procurement and construction (EPC) services, as well as operations and maintenance support and asset management services, as is usually the case with its business model. Power China, meanwhile, will work closely with Scatec Solar to provide construction financing and additional EPC services. “The two-year construction financing facility from Power China Guizhou covers 65% of the €124 million capex,” the Chinese company wrote in a statement.
Scatec Solar currently has a 500 MW project portfolio in Ukraine, according to CEO Raymond Carlsen. “The collaboration with Power China on this project gives us access to cost-competitive financing as part of a turnkey EPC solution,” Carlsen said. “The remaining part of our project portfolio in Ukraine will be realized with Scatec Solar as EPC provider and with financing from the multilateral development banks.”
The company also said that it is in “advanced stages of securing long-term debt financing, as well as an equity partner for the project.” It expects the Progressovka installation, which will be built on leased public land, to reach its commercial operation date within the first half of 2020. Once completed, the site will produce enough electricity under Ukraine’s 10-year feed-in-tariff (FIT) scheme to power 76,000 households.
With this project, Scatec Solar now has 229 MW under construction and a project backlog and pipeline of 274 MW in Ukraine. Globally, the company now has 779 MW in operation and 1,026 MW under construction, and a project backlog and pipeline of 4.7 GW.
Separately, Scatec Solar also revealed this week that it has signed an agreement with FMO, under which the Dutch development bank will take a 40% equity stake in the Oslo-based company’s 32 MW Kamianka project in Ukraine. The total investment for the project has been estimated at €35 million, with 70% to come in the form of non-recourse debt financing from the European Bank for Reconstruction and Development and FMO.
Acciona signs deal with UDPR
Acciona, meanwhile, has also signed an agreement in Ukraine with UDP Renewables (UDPR) for two PV projects. According to the announcement, both projects are in the Odessa region, in the southwestern part of the country. The cumulative capacity of 33.3 MW will be spread over the Gudzovka site, with a power rating of 19.8 MW, and the Arcyz site, with 13.5 MW. Acciona will use polycrystalline modules and fixed-tilt mounting structures for both projects, according to the announcement.
The power will be sent to the national grid and sold to Ukrainian utility Energorynok under a power purchase agreement for the period until December 31, 2029. After that date, Acciona will operate under the price system that has been established in the Ukrainian market.
New rules for Ukraine
Scatec Solar’s Progressovka plant will likely be one of the last projects to receive a FIT in Ukraine, as the country is moving to auctions next year. Ukraine’s “green tariff” scheme is rather generous compared to other markets, providing subsidies of €0.1502/kWh. The country has also tried eliminating currency risks with its FIT scheme to attract more international investors. Though the price of the FIT is paid in Ukrainian hryvnia, the National Energy and Utilities Regulatory Commission reviews the payments on a quarterly basis with a euro-hryvnia exchange rate, to ensure that investors get their expected returns.
The Ukrainian market is now undergoing a range of changes. The FIT scheme, valid through 2030, has attracted a lot of developers, but next year will be the last chance for them to apply for new projects, as the subsidies only run for 10 years.
On May 22, a new law regulating the core elements of the future auction system entered into force. It was long anticipated and will likely provide greater security and certainty for long-term planning in a vibrant market that appeared to be at a crossroads until just a few weeks ago.