Times when green energy was a matter of concern only for environmental enthusiasts and tree huggers are long gone.
Times when green energy was a matter of concern only for environmental enthusiasts and tree huggers are long gone. Today, energy produced from renewable sources is seen as a new market full of opportunities by many influential business groups and investors both worldwide and in Ukraine.
Not only are renewable resources clean and environmentally friendly, proponents say, they offer potential for long-term profits.
“You don’t need trains of coal or a million cubic meters of gas to feed a wind or solar power plant.”– Roman Zinchenko, network coordinator at Greencubator.
“You don’t need trains of coal or a million cubic meters of gas to feed a wind or solar power plant,” said Roman Zinchenko, network coordinator at Greencubator, a Ukrainian nongovernmental organization promoting energy innovations. “Wind and sun are free of charge.”
Although less than 1 percent of Ukraine’s energy is currently provided by renewable resources, and the development of green projects is hampered by the difficulty of securing financing and unclear legislation, the country is seen as having great potential, particularly for wind and solar power.
Some of Ukraine’s biggest businessmen are getting involved.
DTEK, the energy subsidiary of the System Capital Management group, owned by Ukrainian billionaire Rinat Akhmetov, plans to construct a 200 megawatt wind power plant in Zaporizhya Oblast between 2011 and 2014. The total volume of capital investments in this project will exceed 300 million euros. DTEK has plans to build more wind power plants in the future with a total capacity of over 1,000 megawatts.
“DTEK regards the development of alternative energy as a strategically important direction of our business,” said Guerman Ainbinder, the company’s business development director.
“Now several ambitious projects are under way. If they are completed, then the volume of investments in renewable energy in Ukraine will rise beyond $1 billion.”
– Roman Zinchenko, network coordinator at Greencubator.
Wind power projects have been announced by Dnipropetrovsk-based Concord Group, French company Beten International and Smart Holding, controlled by Ukrainian businessmen Vadym Novinsky, among others.
“Now several ambitious projects are under way,” Greencubator’s Zinchenko said. “If they are completed, then the volume of investments in renewable energy in Ukraine will rise beyond $1 billion.”
He added that most of the renewable projects are wind power plants of 200-300 megawatts.
Apart from wind power plants, businesses are interested in plants powered by solar energy. Austrian company Activ Solar, reportedly controlled by Ukrainian businessmen and politicians Andriy and Serhiy Klyuyev, has already started installing an 8.5 megawatt solar power plant near the village of Rodnykove in Crimea. This is a pilot project that could be finished as early as this autumn and be followed up by a bigger one.
The driving force behind the interest in green energy is the “green tariff.” According to the law which was adopted on Apr. 1, 2009, the Ukrainian electricity market, represented by state company Energorynok, is obliged to buy electricity produced from alternative energy sources at a special price – the green tariff.
This price, agreed on an individual basis and depending on the energy resource, is higher than that generally used for purchasing electricity from traditional sources and is set until 2030.
The National Electricity Regulatory Commission of Ukraine has already approved green tariffs for five wind power plants, 20 small water-powered plants and two companies which produce electricity from biomass – sunflower oil producer Kirovohradoliya and Smilaenerhopromtrans energy company.
At the end of June, the tariff was also given to the Ukrainian Milk Company, which, alongside dairy products, produces electricity and heat power from cow manure.
The company’s farm, located in Velyky Krupol village near Kyiv, uses manure from its 4,000 cows and a biogas engine to produce 625 kilowatts of electricity and 686 kilowatts of thermal output. This is enough to power the whole plant and to sell the rest electricity to the grid. In such a way the company also solves a problem of organic wastes utilization, and after the manure goes through the biogas plant, leftovers can be used as agricultural fertilizer.
“Key regulations have not yet been adopted for implementation of the green tariff projects.”– Maksym Sysoiev, an associate at Paritet law firm.
Ukrainian Milk Company initially faced difficulties receiving green tariff because legislation does not state clearly whether cow manure can be identified as a biomass.
This is not the law’s only defect.
“Key regulations have not yet been adopted for implementation of the green tariff projects,” noted Maksym Sysoiev, an associate at Paritet law firm. These include a procedure on connection to power grids and for determining the amount of Ukrainian equipment used in the power plants – necessary to secure the special rate. “These imperfections in the legislation, among other factors, significantly slow down the progress of the industry,” he added.
A further problem for green projects is the high price of financing, said Yegor Samusenko, an analyst at Concorde Capital investment bank.
Samusenko said the green tariff is approximately the same as in Spain, but whereas loans can be taken there at 3-4 percent annually, rates in Ukraine are around 20 percent per year. This means that projects have been slower off the ground.
The green tariff was introduced in most Western countries about ten years ago. Since then, annual global investments in renewable energy projects have sky-rocketed, reaching $162 billion in 2009, slightly down from 2008, but still nearly four times 2004’s total of $46 billion, according to New Energy Finance.
European Union countries have committed to increasing the share of renewable energy to 20 percent by 2020. Some countries have already exceeded this figure, including Denmark, which produces over 20 percent of its energy from wind power plants. In Ukraine the share of energy produced from all renewable resources is less than 1 percent.
But the country’s potential is huge.
Crimea and the southern coast of the Black and Azov Sea are perfect for launching wind and solar power plants. Wind power plants can be also constructed in some regions of the Carpathian mountains. The north of the country, which is covered with forests and bogs, has the potential to develop biogas plants powered by biomass. Central regions with its corn fields have the same potential, as straw can be used for producing fuel pellets.
Kyiv Post staff writer Oksana Faryna can be reached at [email protected].
