The alternative energy market is facing turbulent times. The state Commission on Energy and Utilities cut subsidies for solar energy by 55 percent, down to $0.23-$0.3 per unit of electricity, on Feb. 27, making it less attractive for producers.
Meanwhile, the rest of the green energy market is also looking at a sharp contraction in a nation that desperately needs more renewable sources of energy to replace its dependence on nuclear power, coal and Russian gas.
Green energy, which encompasses all kinds of electrical power obtained from renewable sources, currently accounts for six percent of Ukraine’s annual energy output, estimated at $3.71 billion. While Ukraine’s coal and gas reserves are substantial, they are insufficient to meet the nation’s massive and energy-wasting needs.
The alternative energy sector is supported by the European Bank for Reconstruction and Development, explains Nataliia Slobodian of International Center for Policy Studies in Kyiv. Slobodian says that the “creation of unfavorable financial conditions for the renewable energy will inevitably lead to the redivision of the market. Small companies will either leave or freeze their development strategies and the wind power giants will win. Then, the giants will get their favorable conditions back.”
Energy Minister Volodymyr Demchyshyn told Focus magazine in a Feb. 23 interview that “alternative energy is interesting but expensive. At the moment, Ukraine is not financially ready to develop such projects.” Demchyshyn seems to favor extracting available resources, mostly coal and gas.
Guerman Ainbinder, head of DTEK’s subsidiary, Wind Power, believes the recent move of the regulator won’t stimulate production enough to reach the target of having 11 percent of energy produced from renewable sources by 2020.
He thinks policymakers are too shortsighted to see the rich prospects of alternative energy.
“We understand that times are hard,” comments Igor Tynnyi, owner of Hidroenergoinvest, a hydroelectricity maker. “No one from the state authorities cared enough to talk to the investors who invested some $3 billion (over the four years). Now we will be forced to (redress) our losses in courts. They will hear us one way or another.”
Oleksandr Repkin of Tokmak Solar Energy explains that the fact that the solar energy market in Ukraine is heavily dominated by companies linked to former top government officials is one of the main reasons for current austerity measures. As the result, the remaining “bona fide” market players are suffering losses, he added.
Maksym Sysoiev, an expert on energy law with Dentons, says lawsuits will follow soon and court rulings will bring serious losses to the budget as the regulator’s decision on cutting the tariffs is wrong. Wind Parks of Ukraine, an energy company, has already filed lawsuits against the tariff commission.
Meanwhile, politicians believe that the nation’s alternative energy market is a mess. Yuriy Chyzmar, a member of parliament with Oleh Lyashko’s Radical Party, says it’s corrupt and overseen by poorly qualified staff.
Kyiv Post staff writer Olena Gordiienko can be reached at [email protected].
