LONDON — Right in the heart of London on Oct. 10, Ukrainian officials and experts reaffirmed their nation’s commitment to generating 25 percent of the country’s energy from renewables before the year 2035.
The pledge was given at a renewable energy conference focused on Ukraine at the headquarters of the European Bank for Reconstruction and Development, part of the Ukrainian Week in London and just two days after the United Nations issued a critical warning about “disastrous” consequences if global warming remains unaddressed.
The UN’s Intergovernmental Panel on Climate Change, or IPCC, said on Oct. 8 that the planet faces catastrophic consequences unless the global community undertakes “rapid, far-reaching and unprecedented changes in all aspects of society.”
For its part, Ukraine is stepping up and seems to be punching above its weight in the renewable energy sector — despite having considerable reserves of natural gas.
Officials in London said that Ukraine was working hard to meet the same renewables goals set in the European Union, while experts affirmed that the country was on track to reach a 25-percent share of renewable energy in total output before 2035, even though the country only currently produces 2 percent of its energy from renewables.
Recent years have seen significant growth in renewable energy projects across Ukraine, but mostly in the sunny south and south-eastern coastal regions. The growth has been encouraged by lucrative feed-in tariffs, EBRD subsidies and significant interest from prospecting European investors.
For example, on Sept. 6, Norwegian company NBT AS signed a multimillion-euro contract with the Power Construction Corporation of China Limited, or POWERCHINA, to build a large 250-megawatt wind power plant in Kherson Oblast. Scatec Solar, another Norwegian company, has signed agreements securing two projects with a total capacity of 83 megawatts in central Ukraine. Other investors in the past two years alone include: Eco
Optima, UDP Renewables, TIU Canada, Rengy Development, Recom, and Rener.
Roman Voloshchak, a power engineer, descends the stairs of one of the four wind turbines at the Eco-Optima wind farm, located near the western Ukrainian town of Staryi Sambir, on Feb. 21, 2017. (Yuliana Romanyshyn)
Untapped west
But there are other regions to invest in.
Ukraine’s extensive Black Sea coastline, vast flat steppelands that receive months of steady sunshine, and its mountainous, windy Carpathian region are all seen by investors to be rich in untapped energy-generating potential.
Marina Petrov, the deputy head of the EBRD in Ukraine, said that Ukraine had added 500 megawatts of renewable output in the last nine months alone, compared to a total of 1,000 megawatts added over the past three years.
“Since 2009 the government of Ukraine has wanted to develop renewables because they realized that nuclear and coal-fire stations will soon be in need of replacement,” she said. “The EBRD is cooperating closely with the government in this area, and we want Ukraine to move into even greener ways of extracting renewable energy.”
Petrov said that the EBRD is working actively in Ukraine to build a sustainable renewable sector, and keep investors ahead of the market and informed about regulatory changes. She said that Ukraine is committed to being compliant with EU standards while also improving the openness of the electricity market.
Rodion Morozov, the head of the Ecological Projects Department for state-owned Ukrgazbank, said that his bank had funded two thirds of all of Ukraine’s renewable projects since 2016, and was ready to put up even more cash for green energy projects.
“We’re ready to keep developing our renewable portfolio,” he said. “We have a lot of appetite for new projects and more cooperation… and the involvement of a state bank gives assurances to strategic partners, who can know that their investment has protection.”
According to Morozov, Ukrgazbank has funded 742 megawatts of renewable energy projects since 2016 at a cost of 436 million euros, resulting in a carbon dioxide emissions reduction of 715,000 metric tons annually.
Ukrgazbank alone has so far funded 97 solar farms, five wind farms, 12 biofuel stations and 18 hydropower stations.
“These 132 assets have saved Ukraine from burning 343 million cubic meters of gas,” said the banking director.
Andriy Kobolev, the CEO of state oil and gas company Naftogaz, said that his company is ready to start taking renewables more seriously, while also moving ahead with the extraction of shale gas as well.
“We hope that the gas wars between Ukraine and Russia are drawing to a close,” he said. “And Naftogaz is looking into renewables… We already have a few small solar projects in partnership with international investors… (and) we’re looking at more options and meeting with possible investors in London this week.”
Oleksander Buglak, head of Financial Institutions for state savings bank Oschadbank, said that he thinks the popularity of investing in renewables will continue to increase, but that the government has to set stable rules of the game.
“It’s very trendy to own renewable assets in Ukraine right now,” he said. “Every businessman wants to own something in this sector… but the profitability in renewable energy is heavily driven by regulation and rates — so that uncertainty has to be removed.”
William Coppoolse, CEO of ENGIE Ukraine, said French multinational ENGIE was eyeing more renewable acquisitions and investments in Ukraine.
“We’re moving very strongly into renewables…globally, ENGIE will reach 11,000 megawatts of output by 2021 — that’s Ukraine’s total target before 2035,” he said, adding that Ukrainian developers should be mindful of conserving the energy they have, and not just producing more.
In London, renewable energy is an area of prospective investment that has created palpable excitement at conferences this week.
Some investors pointed to opportunities linked to the expected growth in Ukraine’s agricultural sector — farms will look to installing biofuel, wind and solar technology to reduce costs and maximize profits from rising output.
Investor confidence in the sector is also stronger than ever before, as Ukraine moves to pass new laws that streamline investor entry to the sector and protect businesses from any changes in energy tariffs.
“Investors can already seek arbitration under both international and Ukrainian law — through international energy treaties to which Ukraine is a signatory — if they encounter a dispute,” said Anna Vlasyuk, a lawyer for Ukraine’s National Investment Council.
