Renewable energy in Ukraine – results for the year and forecasts for 2022 – RES / NV

January 18, 13:00

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Renewable energy sources

Record-breaking cheap solar and wind are displacing fossil fuels from global energy markets faster than governments expected. However, in Ukraine, renewable energy sources (RES) after a quick release for the second year in crisis. Experts and market participants hope that in the new year 2022, state regulation of renewable energy will be more appropriate, and Ukraine will not remain outside the global green transition.

What was 2021 like for renewable energy

Against the background of uncertainty about feed-in tariffs and the consequences of the coronavirus crisis, 2021 cannot be considered successful for Ukrainian renewable energy. New green energy subsidy mechanisms that should replace feed-in tariffs, such as green auctions and net metering, are still in development. However, while the state is hesitant, economic factors are making their own adjustments. Therefore, despite the lack of state support, renewables are competitive and continue to grow.

According to the State Agency for Energy Efficiency, the installed capacity of renewable energy facilities in Ukraine increased by 8.3% in the first half of 2021.

In Ukraine, the market is growing mainly due to domestic and commercial solar power plants (SES) for personal consumption. Even in the conditions of the Ukrainian climate and short daylight hours in winter, small supplementary power plants with a capacity of 3-5 kW provide households with tangible savings.

“The market began to grow outside the introductory tariff, and new business models appeared. We began to actively develop our PPA (Special contracts for the sale of electricity) – a model in which a power plant is built for the consumption of a specific business. This year, successful projects were implemented in mining plants, mining and processing plant and a number of large enterprises. Companies install SES for two reasons. The first is the desire to reduce operating costs, because the cost of electricity increases several times a year and will continue to grow as planned. The second reason relates to the European Green Deal and the transboundary carbon regulation mechanism. (swimming). Products exported by Ukraine to Europe will be subject to an additional tax if they are produced using dirty energy. Not only large companies, but also water and utility utilities are interested in installing SES. Such enterprises do not pursue profits, but only replace part of their consumption, since for them the cost of electricity is a painful issue. Notes Andrey Zinchenko, co-founder of GO Greencubator, energy expert .

international trends

Since the beginning of 2020, the prices of raw materials and logistics for renewable energy equipment have increased. However, despite this, according to the Lazard report, wind and solar energy remain the cheapest in the world.

The International Energy Agency reports that in 2021 a historic record was set for the introduction of renewable energy capacities. The agency predicts that renewable energy will grow by more than 60% in the next five years.

in 2020 “Green energy” in the European Union for the first time has become more than Fossil.” This rapid growth is possible thanks to government programs to phase out fossil fuels and support the green generation. For example, Spain provided $215 million in the state budget for renewable energy projects, and Portugal provided 10 million euros in subsidies for farmers who want to install solar power plants.

Deloitte anticipates that the main renewable energy trends in 2022 will be:

  1. Developing new generation technologies. Using artificial intelligence to improve energy operations.
  2. Implementation of new business models (at In particular, business models for energy storage systems and expansion of renewable energy projects into new markets).
  3. Infrastructure development for renewable energy projects.
  4. Improve supply chains.
  5. Implementing the principles of circular economy (RRational use of resources and recycling of secondary raw materials).

What restricts the RES market in Ukraine

Economically, RES has been competitive for a long time. More and more citizens and businesses are not dependent on state-regulated monopolies and are cutting costs through their generation. However, the market is not developing as fast as it could. This is due to incomplete legislation, lack of support mechanisms and appropriate lending programs, as well as the failure of the state to fulfill its obligations towards producers in the renewable energy sector.

One of the factors impeding the growth of renewable energy is cross-subsidization – an artificial reduction in the price of electricity for the population. Such a policy leads to the deterioration of the electricity market and condemns it to the accumulation of internal debts.

How scientific and engineering developments are changing the renewable energy market

The potential of renewable energy is believed to be able to provide sufficient and reliable electrical supply around the world until 2050. This is proven by simulation results conducted by Lappeenrant University of Technology. (Finland). This prospect encourages private and public investors to mobilize billions of dollars to improve renewable energy technologies. Particular attention is paid to technologies for long-term storage of electricity from renewable sources, such as green hydrogen and storage systems.

“In order to make renewable energy equipment more efficient and affordable, manufacturers are combining different technologies, constantly looking for ways to reduce material use and production costs, and introducing innovative components. One of the trends is the development of energy storage technologies. (energy storage). Sometimes solutions come from other areas. Therefore, batteries are becoming much more efficient and cheaper in parallel with the development of the electric vehicle market. Another promising area emerging alongside RES is the equipment recycling industry. Technologies are being developed to reuse silver, aluminum and lithium, thanks to which green energy will be 100% environmentally friendly and waste-free “Notes Alexey Badeka, founder and CEO of the company Atmosphere ”, co-founder and board member of the Solar Energy Association of Ukraine.

Will 2022 be better?

The progressive world is moving towards decarbonizing the economy. Ukraine also pledged to reduce greenhouse gas emissions by 65% ​​by 2030 compared to 1990 levels. During a panel discussion at the United Nations Climate Change Conference (COP26) Ukraine’s Energy Minister stated that the ministry’s strategy is to increase the share of renewable energy generation to 25%.

The projected electricity balance of the Unified Electricity System of Ukraine for 2022 also assumes an increase in the share of RES to 9.2% compared to 7.8%, which was mentioned in a similar forecast for 2021.

In particular, the market anticipates the introduction of a new net-billing support system for small distributed generation, which will allow solar power plant owners to sell the excess electricity generated to suppliers at market price.

It is also expected to adopt a bill on amendments to some laws of Ukraine on stimulating the production of electricity from alternative energy sources on a market basis, which will allow producers of green electricity to act as independent market participants and increase income.

Another long-awaited change in the legislation is Bill No. 5436-D on the development of energy storage systems, which was adopted as the basis on November 16, 2021. The project provides for the creation of a new market participant – an operator of the energy storage system, which will balance the operation of the energy system and increase of stable electricity supply to consumers.

In addition, since 2019, market players have been waiting for the first green auction. This mechanism will give a boost to competition among investors and stimulate companies that offer the lowest electricity prices.

Strategic objectives for the development of renewable energy sources (And theFrom the presentation by Oleksandr Martynyuk, Ministry of Energy of Ukraine dated 29.10.2021) :

Green energy is an unconditional global trend in the coming decades. For individual consumers, homeowners and businesses, it allows them to gain energy independence and reduce the cost of electricity that is constantly increasing in price.

For the state, RES resource development is a guarantee of stable investments and a guarantee of Ukraine’s continued ability to profitably export products. Between 36% and 42% of Ukrainian exports go to the European Union, so delaying the transition to green energy will cost the Ukrainian economy dearly. A study conducted by the Kyiv School of Economics showed that the introduction of a mechanism for cross-border carbon regulation (SVAM) could lead to a decline in Ukraine’s GDP by 0.08% annually in 2026-2030.

“It is important for us today to create such market conditions so that after 2023 the Ukrainian energy market will be fully integrated into the pan-European market and work in accordance with the rules, procedures and regulations in force in Europe. ( …) We need to put in place an ambitious but absolutely necessary program to phase out the use of coal in the production of electricity. It is important for us to focus heavily on supporting renewable energy sources. But the subsidy is not what it was, which created large debts for the state. We continue to have problems not in using electricity produced from renewable energy sources, but in paying for it. We must create conditions for the development of renewable energy, but with the minimum possible additional burden on the electricity market and in a way that does not cause technical disruption to the energy system.”pointed Deputy Energy Minister for European Integration Yaroslav Demchenkov At the Ukrainian Energy Security Dialogue Conference.

The environmental component is no less important. Ukraine should contribute to combating climate change and reducing greenhouse gas emissions. In addition, every kilowatt of green energy means saving atmospheric air, quality and life expectancy for people. According to the international analytical center EMBER, Ukrainian thermal generation is responsible for the majority of harmful air emissions in Europe. Toxic substances such as fly ash, sulfur dioxide and nitrogen oxides have been linked to thousands of deaths in Ukraine and the European Union.

Ukraine has enough potential to make the renewable energy market a platform for developing new business models and attracting foreign investment in 2022. After all, even under unfavorable political conditions, Ukrainian citizens and companies are increasingly choosing profitable and clean renewable energy technologies.

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