Expensive pleasure: Are there any prospects for green energy in Ukraine?

Author : Tymur Chmeruk

Source : 112 Ukraine

Ukrainians need to look for sources of financing within the country in order to obtain additional funding from Europe
09:54, 21 November 2017

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Alternative energy is gaining popularity in the world. Oil crises that occur regularly, global environmental problems, fear of nuclear power, increased after the Fukushima accident, and a number of other factors only contribute to this process.

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Ukraine's interest in this issue increased due to the political situation - the desire to finally get off the "energy drug" of Russia, and also to move in one direction with European partners. EU countries pay a lot of attention to the problems of ecology. Also, a number of economic factors contribute to the alternative energy, in particular, the growth of energy prices.

The "green" tariff was introduced in 2008. But after adoption of the law on creating competitive conditions for the production of "clean" energy in 2015, this topic became more attractive from the investment point of view. The "green" tariff was tied to the euro, which was offset by inflationary risks.

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At the moment, the number of investment projects for the construction of solar, wind and hydropower plants is steadily growing. European banks are ready to invest in the green energy sector of Ukraine much more willingly than in other projects, as there are state guarantees, transparent schemes of work and simple understandable tariffs. In particular, the EBRD has a USELF program specially developed for Ukraine with a volume of up to 140 million euros, aimed exclusively at investing in renewable energy. The scheme of cooperation is rather simple and transparent, the main problem is that this program provides only additional financing of the project. Also the high competition in the selection of projects and a long procedure for review of the application are important here, which can take up to six months.

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The main problem is that there are not enough lead investors inside the country. Alternative energy is an expensive pleasure. Consider this for example the construction of solar power plants: if you roughly round up the calculations, the cost of building for each MW of capacity is 1 million euros. The EBRD is ready to cover up to 70% of the project cost, provided that the rest of the project is independently covered by the founders of the project or other sources. Simply put, Ukrainians need to look for sources of financing primarily within the country in order to obtain additional funding from Europe.

Similar conditions exist for other European financial organizations willing to invest in this sector of the Ukrainian economy. The founders of such projects need to understand that the investment market is primarily a market that operates according to its own rules and laws, without charity. And if you are not ready to invest in your project, the process of finding funding is extremely complicated.

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However, it should be noted that, provided these very simple requirements are met, there are quite positive examples of cooperation between European and Ukrainian capital. So, literally in October a wind power plant with the participation of the EBRD and NEFCO was opened in the Lviv region with a capacity of 20.7 MW. The project cost was 36 million euros. So Europe is ready to make real investments in the field of renewable energy in Ukraine, but we should not forget that we ourselves must be ready to invest in our country.

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