Scatec Solar secures financing for 55 MW solar plant in Ukraine

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Scatec Solar says it has secured funding of €37 million for its 55 MW Chigirin project in Ukraine’s Cherkasy region.

Development lenders the European Bank for Reconstruction and Development, the Nordic Environment Finance Corporation and Swedfund have signed credit agreements for non-recourse debt financing, according to Scatec. The credit facility covers up to 70% of the project costs.

“Scatec Solar will be the lead equity investor in the project and is in the process of securing additional equity partners for the project,” a company announcement stated. The Norwegian solar developer will also carry out engineering, procurement and construction; operation and maintenance; and asset management services at the plant. Construction is under way and Scatec Solar expects to reach commercial operation in the first half of next year.

The project will reportedly be remunerated under Ukraine’s feed-in tariff system. Ukraine grants a FIT of €0.1502/kWh to ground mounted PV projects that will be connected to the grid between 2017 and this year, and has seen strong solar growth in the last two years, attracting operational installed capacity of 841 MW.

Auctions loom

On April 25, Ukraine amended its incentive regime after decreeing the FIT payment which Scatec and others will benefit from was too costly for public funding. The amendment came into effect on May 22 so Scatec had presumably signed the paperwork for Chigirin before that date.

A reverse auction system for tendering new renewable energy generation capacity will be introduced in Ukraine this year. The government will determine capacity quotas in five-year cycles. The amended energy law prescribes minimum quotas and solar, like wind is assured a minimum 15% of any renewable energy quota announcement. The first batch of auctions will be held from next year to 2022 with the first expected any time soon and then twice-yearly auctions to follow around early April and October.

New solar projects with a generation capacities of more than 1 MW will participate in a one-stage, sealed-bid auction. The winning bids will receive feed-in tariff support as high as their bids for 20 years. The government guarantees the power generated will be purchased.

With its new project, Scatec Solar has 282 MW under construction and a project pipeline of 123 MW in Ukraine. Scatec Solar has 844 MW of PV in operation worldwide and 1,016 MW under construction, and claims to have a project pipeline of 4.6 GW.