Ukraine renewable energy market is headed for a rebound in 2021-2022, says analytical report just completed by Rada Capital.
After a boom between the 2017 and 2020 resulting in 7.2 GW of installed RES capacity and non-hydro RES reaching 8% of Ukraine’s total electricity production, 2020 has been a very challenging year for the RES industry in Ukraine bringing in a payment crisis and an FIT restructuring law.
In the second half of 2020, the situation started to improve through a much better payment discipline to RES producers and the Government working on measures that will provide sufficient funding for the FIT support mechanism and, more importantly, will allow RES producers not to rely exclusively on state subsidies. These include: significant increase of the TSO transmission tariff; the recent sales of green electricity on specially organized auctions; the planned introduction at the end of 2020 of legislation which will allow RES producers to sell electricity under bilateral PPAs. RES auctions offering 20-year support are planned for the beginning of 2021.
In October 2020, a Chinese-Ukrainian consortium announced the start of implementation of the first project, an 800 MW wind power farm, that will sell all the produced electricity outside of government support schemes, either under bi-lateral PPA’s or directly on the market. This announcement marks an important milestone on the market’s path towards subsidy independence.
Large international players such as Elementum Energy, CNBM, Scatec Solar, Onur Group, Better Energy, Hero Future Energies, Acciona, Akuo Energy, NBT, Total- Eren, Power China, VLC Renewables and others are active in the market and are currently implementing in excess of 3 GW of Wind and PV projects.
Current project market in Ukraine presents over 4 GW of well-developed ready-to-build opportunities, which can be realized under a variety of options: the current FIT support scheme, auctions, the upcoming bi-lateral PPA system or direct sale of electricity in the market. These opportunities will become increasingly in short supply once the market begins its recovery expected during the first half of 2021.