Ukraine’s renewable energy sector, fueled by generous rates paid to producers, has been a darling of foreign investors in recent years.
More than 450 separate enterprises are generating power from renewables, mostly solar, and multiple experts tell the Kyiv Post that it is one area of the Ukrainian economy that is not seen as a closed and restricted marketplace.
The European Investment Bank, for example, says it has grown its total energy portfolio in Ukraine to 1.6 billion euros while the European Bank for Reconstruction and Development has injected almost 1 billion euros. To such European Union financial institutions, renewables and energy efficiency stand out as priority areas of investment.
And the green energy sector has witnessed a surge in foreign direct investment from private companies too, as other areas of the economy have struggled to secure the confidence of foreign firms throughout these times of conflict and instability for Ukraine. From Norway to China, companies have been energized into action on renewables here by lucrative incentives and a generous feed-in tariff.
But the green energy sector also has a number of critics and detractors, especially populist lawmakers in areas tightly connected to coal mining or natural gas extraction, and from the influential fossil fuel industry here. Meanwhile, the renewable sector faces a great deal of internal friction, as well as disruptive legislative challenges.
Read main story: A battle over ‘unaffordable’ renewable tariff is brewing
Despite the lucrative conditions and substantial investments, renewables have only just met 3.7 percent of Ukraine’s energy needs. The green tariff is coming to an end, and some oligarchs — notably Ihor Kolomoisky — have allegedly lobbied lawmakers and legislators to undermine it, and the whole renewable sector.
Separately, many of the harshest critics of the Ukrainian renewable industry, often from competing areas of the energy sector, argue that renewables are “disruptive,” only being pursued because they’re “fashionable” and that more green energy is a condition of closer integration with the European Union.
Some critics argue that the future of Ukraine’s energy security and energy independence is becoming too reliant on a faltering renewable drive, while abundant and cheap fuel is being left in the ground.
A number of energy experts lament that while Ukrainian officials have been prioritizing eco-friendly and renewable projects, they are wasting time: an estimated trillion cubic meters of natural gas has been left largely untapped in the ground, while an unknown amount is still tucked away in an offshore shelf under the Black Sea.
They also argue that the way renewable energy projects have been costed and implemented has impacted consumers, especially commercial enterprises. A high renewable feed-in tariff, commonly called the green tariff, makes renewable energy several times more expensive than in other European countries and has contributed to higher transmission costs for electricity, which is then passed onto consumers.
And other areas of the energy sector have not received the level of special attention that renewables have been getting, some critics argued.
Nuclear, which still provides a staggering 55 percent of the country’s electricity, is a neglected and dilapidated part of Ukraine’s energy landscape and needs far more attention, multiple experts say. Safety and security at aging reactors and neglected plants is a recurring concern.
And European energy experts point to broader threats to the entire energy sector which may undermine a renewable future. Successive governments continue stalling on major reforms, and the energy business has gone from “one extreme to another” — a wholly integrated state monopoly, to a sector dominated by feuding oligarchs like Kolomoisky and Rinat Akhmetov.
