You're reading: Investment in renewable power falls to 1.2 billion euros amid green tariff crisis

Foreign investment in Ukraine’s renewables sunk to 1.2 billion euros in 2020, according to the State Agency on Energy Efficiency. This is three times less than in 2019, when green developers poured 3.7 billion euros in building renewable power plants in Ukraine.

Private investors and investment companies that have contributed to the development of the local green energy — solar and wind power plants — come from 13 countries, including Canada, China, France, South Korea, Britain and the United States, the state agency reported.

One of the major investors was Chinese CNBM Engineering that currently produces 22% of all the solar energy in Ukraine.

With the help of foreign and local money, in 2020, the production of green energy in Ukraine has increased by 1.6 gigawatts bringing the total amount of green power in Ukraine to more than 8.5 gigawatts. In 2019, investors built 4.5 gigawatts.

In 2019, green energy secured 11.6% of the country’s overall energy generation, according to the National Energy and Utilities Regulator.

The investment has declined amid the green energy crisis in Ukraine — the government owes $1 billion to the producers of renewable energy.

The Ukrainian government is obliged to buy all green electricity from renewable power plants at some of the highest tariffs in Europe and, in 2020, the state didn’t have money to do that.

The investors, who had put their money in Ukraine hoping for quick returns, are threatening to turn to international arbitration if the authorities don’t pay what they promised in accordance with the green tariff agreements.

Igor Tynny, the cofounder of the Ukrainian Renewable Energy Association, believes this happens because officials disrespect investors. The unwillingness to pay “costs the country dear — foreign direct investment into Ukraine has come to a complete halt,” he told Ukraine 24, a TV channel that belongs to billionaire oligarch Rinat Akhmetov, whose energy firm DTEK is one of the biggest green power developers in Ukraine.

Controversially, the state pays for green energy in euros, 0.16 euros for a kilowatt. This means the cost of one kilowatt is increasing when the national currency, the hryvnia, weakens. For reference, 1 euro was worth Hr 26.5 at the start of 2020, and it is Hr 34 today.

Such high tariffs on renewable energy were set about a decade ago by the government of fugitive President Viktor Yanukovych. His allies brothers Andriy and Serhiy Klyuyev were among the first local investors in renewables.

After the change of government following the EuroMaidan Revolution in 2014, more investors entered the market. The green tariffs have been reduced several times but they are still some of the highest in Europe.

In 2020, global green energy production has increased by 90%. In contrast, energy production from coal, oil and gas is rapidly declining. In Ukraine, thermal and nuclear sources of energy still bring nearly 66% of the total electricity.