Key message: Lack of quorum at the national energy regulator, political instability dampen investor confidence in an otherwise promising area far short of delivering 11 percent of energy needs
Ukraine’s renewable energy revolution has stalled.
With the country’s energy regulator incapable of setting tariffs anywhere in the country, dozens of energy projects have been frozen, panelists said at the Renewables Revolution panel at the Kyiv Post’s 6th annual Tiger Conference.
As the dicussion unfolded, it became clear why renewable energy sources, including solar and wind, account for only 1.6 percent of energy consumption in the nation.
International energy expert Edward Chow, a senior fellow at the Center for Stratgic and International Studies in Wahington, DC., moderated the discussion.
Ecology Minister Ostap Semerak, Renewable Energy Association chief Olexiy Orzhel, Batkivschyna Party member of parliament Oleksiy Ryabchyn, North University professor Petter Nore and KPMG Ukraine energy practice chief Dmitry Aleev joined Chow on the panel.
Hanging over the entire discussion was the paralysis of Ukraine’s National Energy Regulatory Commission. The body, which sets energy tariffs around the country, has been unable to attain a quorum since early November, when one of its members began calling in sick.
After President Petro Poroshenko failed to appoint a commissioner to replace the seat of one whose term on the commission had expired, NERC has been left without a quorum, depriving it of the ability to make a single decision.
The impasse has left 140 megawatts in 35 separate renewable energy projects frozen, totaling more than $150 million in investment.
But amid the gloom, there are signs of hope in what remains an extremely promising area of the Ukrainian economy.
Ukraine has added 183 megawatts in renewable power since the start of 2017, compared to 120 megawatts in 2016. Also, Ukrainians can attach solar panels to their homes and sell back the excess energy to state-owned electricity distributors.
The successes, however, are not big enough to allow Ukraine to achieve its 2020 goal of generating 11 percent of its energy from renewable sources.
Here are key quotes from speakers at the Renewables Revolution panel at the Kyiv Post’s 6th annual Tiger Conference in the Hilton Kyiv.
CSIS Senior Fellow Edward Chow (Oleg Petrasiuk)
- “I’ve been observing the Ukrainian energy scene for more than a decade and a half. That’s a pretty dismal thing to have to do.”
- “Ukraine has a brand internationally. It’s not necessarily a good brand: it’s energy corruption.”
- “The hardest thing for investors is the uncertainty.”
Batkivschyna Member of Parliament Olexiy Ryabchyn (Oleg Petrasiuk)
- “The impasse at NERC (National Energy Regulatory Commission) is “because of the president, [who is] willing to play a game with some of the oligarchs.”
- “Even if you have the political will, even if it’s in your political party’s agenda, even if it’s in the law, it can be stopped by vested interests.”
- “The best thing for [investors] to do is to wait for the nomination committee to appoint a new member of NERC.”
North University Professor Petter Nore (Oleg Petrasiuk)
- “Are state policies consistent and predictable? If they’re not, all boards in the world will put an extra rate of return on that investment, which makes it less competitive. So that’s why, to put it bluntly, it’s more difficult to attract investment to some countries than others.”
- “There are lots of potential projects out there. How can Ukraine be special to these investors?”
- “When you have an operating and well-functioning state, that’s when things come together.”
KPMG energy practice chief Dmitry Aleev (Oleg Petrasiuk)
- “In addition to regulatory risks including timely approval of connection agreements and consistency of state policy regarding renewables, investors shall also consider the infrastructure readiness for their projects and cooperation with buy-in of local communities and local authorities for successful start and effective and efficient operations of projects.”
- “Fixed high sales tariffs until 2030 make [renewables] investments financially very attractive.”
Ecology and Natural Resources Minister Ostap Semerak (Oleg Petrasiuk)
- “Sometimes we have broken the ideal of the renewables strategy 2020 by increasing gas production, but we think that [gas] is the bridge energy resource from fossil to renewable energy.”
- “The worst place for a solar station in Ukraine is better than the best place in Germany.”
- “I am asking and claiming today that all investors working in this sector should be organized and be active, that is the best way to provide a stable situation.”
Renewable Energy Association Chief
Olexiy Orzhel (Oleg Petrasiuk)
- “Small and medium sized players are interested in developing the market, and that’s why it hasn’t been ruined since 2014.”
- “Only after 2014, we had no more than 30 megawatts of installed capacity as surplus in the sector. It’s a really poor number compared to the worldwide surplus in installed capacity, but 2017 shows a better trend.”
TIU-Canada Director Valentyna Beliakova (non-panelist)
(Valentyna Bielkova’s company has built a solar station in Nikopol, the first investment to occur under the Canada-Ukraine free trade agreement. The power plant is idling without approval from the National Energy Regulatory Commission, which could be months without a quorum. (Oleg Petrasiuk)
- “Since the energy market cannot count on generation, it’s therefore in danger of collapse.”
- “When a generating company and the oblenergos [regional energy distributors] cannot receive income, then after a while they will be incapable of even paying for necessary resources for work.”
- “So there’s no time. This will lead to a collapse. A decision must be made.”
