final assignment · 2012-07-09 · final assignment sergii bobliakh pr4s100 ukraine . promitheas-4:...

PROMITHEAS-4: Knowledge transfer and research needs for preparing mitigation/adaptation policy portfolios

PROMITHEAS – 4 Training Procedure

E – class

Final Assignment

Sergii BOBLIAKH

pr4s100

Ukraine


TABLE OF CONTENTS

Table of Contents __________________________________________________ 2

DECLARATION ON PLAGIARISM AND COLLUSION __________________ 3

Chapter 1 _________________________________________________________ 4

Present a Climate Change policy instrument of your country. __________________ 4

Chapter 2 _________________________________________________________ 7

Present the data that need to be collected for the policy instrument selected in

Chapter 1 _____________________________________________________________ 7

Chapter 3 ________________________________________________________ 10

Describe the Business-As-Usual scenario, according to the selected policy

instrument in Chapter 1. ________________________________________________ 10

Chapter 4 ________________________________________________________ 13

Evaluate the policy instrument that you chose on Chapter 1. __________________ 13

References _______________________________________________________ 17


3

DECLARATION ON PLAGIARISM AND COLLUSION

This form should be completed by the student and appended to any piece of work that is

submitted for summative assessment. The following defines plagiarism:

“Plagiarism” occurs when a student misrepresents, as his/her own work, the work, written

or otherwise, of any other person (including another student) or of any institution.

Examples of forms of plagiarism include:

the verbatim (word for word) copying of another’s work without appropriate and

correctly presented acknowledgement;

the close paraphrasing of another’s work by simply changing a few words or

altering the order of presentation, without appropriate and correctly presented

acknowledgement;

unacknowledged quotation of phrases from another’s work;

the deliberate and detailed presentation of another’s concept as one’s own”.

“Another’s work” covers all material, including, for example, written work,

diagrams, designs, charts, musical compositions and pictures, from all sources,

including, for example, the internet, journals, textbooks and essays. The following

defines collusion:

“Collusion” occurs when, unless with official approval (e.g. in the case of group projects),

two or more students consciously collaborate in the preparation and production of work

which is ultimately submitted by each in an identical, or substantially similar, form and/or

is represented by each to be the product of his or her individual efforts.

“Collusion” also occurs where there is unauthorized co-operation between a student and

another person in the preparation and production of work which is presented as the

student’s own.

STUDENT DECLARATION

I confirm that I have read and understood the above definitions of plagiarism and collusion.

I confirm that I have not committed plagiarism when completing the attached piece of

work, nor have I colluded with any other student in the preparation and production of this

work.

Sergii Bobliakh

June 30, 2012

Ukraine


4

Chapter 1

Present a Climate Change policy instrument of your country.

Module 1

Instructor: Prof. Dimitrios Mavrakis

Mark: __/10

The issue of climate change is not local but global. That is why every country in the

world must not be pessimistic to that problem and take some action to tackle it. In last

decades climate change became more obvious worldwide in a form of extremely high

temperatures in some parts of our planet, and in forms of very severe winters in others. By

taking some actions, different countries, organizations and parties start doing some

contribution to solve this problem. In this way we got different treaties, documents and

protocols which are asking to decrease emission of greenhouse gases (main contributors to

climate change and global warming).

Ukraine, as a new independent state, after collapse of USSR, became involved in

climate change issues. The main reason for that is because Ukraine belongs to high energy

intensity countries. Also, Ukraine is in top 20 CO2 emitters.

The United Nations Framework Convention on Climate Change (UN FCCC) is the first

and major international legal instrument to address climate change issues at a global scale.

Ukraine signed the United Nations Framework Convention on Climate change in June

1992. Ukrainian Parliament ratified it in October 1996 and from August 1997 Ukraine

became the Party.

Kyoto Protocol was signed on March 15, 1999 in NY City and it was ratified by

Ukrainian Parliament on February 4, 2004. After time than Protocol came to force in 2005,

Ukraine became a Party to it. To stimulate a reduction of greenhouse gases, the Kyoto

Protocol offers relevant for Ukraine flexible mechanisms such as joint implementations

projects (JI) (Article 6 of KP) and emissions trading (article 17 of KP).

Examples of JI projects in Ukraine: the installation of a new waste heat recovery system

at the Alchevsk Coke Plant (with an estimated emission reduction of 11.0 million t CO2 eq

for the period 2008–2012) and the “Reduction of natural gas emissions at OJSC ‘Odesagas’

gate stations and gas distribution networks” project (with an estimated emission reduction

of 1.9 million t CO2 eq for the period 2008–2012). The majority of JI projects are supported

by European Union countries (including Germany, Ireland, Denmark, Netherlands and

United Kingdom of Great Britain and Northern Ireland) and the remaining projects are

supported by Japan and Switzerland.

Ministry of Environmental Protection of Ukraine responsible for development and

implementation Climate Change Policy in Ukraine and implementation of UN FCCC and

Kyoto Protocol according the Decree of the Ukrainian Government.

According to the Kyoto Protocol, during 2008…2012 period, total greenhouse gas

emissions in Ukraine should not exceed the level of 1990.

Energy intensity in Ukraine is very high, that is why it is the main priority of the

government to increase energy efficiency. As part of the Copenhagen Accord, Ukraine

committed to ensuring that emissions remain 20% below 1990 levels in 2020 [1].

The national policy of Ukraine includes the following legal framework as mitigation

policy instruments:

- Law for the establishment of “Green” tariff (feed-in-tariff).

- Law that offers tax incentives for energy efficiency and renewable energy

investment.

- “Law on energy conservation” was adopted by the Verkhovna Rada of Ukraine on

July 1, 1994.

- Law on alternative sources of energy.

- Ukraine’s Energy Strategy for the Period Until 2030, adopted in March 2006 [2].

- Program on state support of development of non-traditional and renewable energy

sources [3].


5

At present time, in Ukraine there is no national adaptation policies adopted.

In my answer I chose feed-in-tariff policy instrument, which can be a powerful

instrument to promote renewable energy power generation and to reduce greenhouse gas

emissions . Frankly speaking, this policy instrument was one of the basic mitigation’s steps

in Ukraine.

To attract more money in renewable energy, Ukrainian government introduced in

September 25, 2008 the law 'On feed-in tariff'. “A feed-in-tariff is a policy mechanism

designed to accelerate investment in renewable energy technologies. It achieves this by

offering long-term contracts to renewable energy producers, typically based on the cost of

generation of each technology” [4].

The goal of feed-in-tariff is to offer cost-based compensation to renewable energy

producers, providing the price certainty and long-term contracts that help finance

renewable energy investments.

In Ukraine not all sources of green energy production can receive feed-in-tariff, but

some are eligible. They are: solar energy, wind energy, hydro energy (only small

hydropower plants with the generation capacity not exceeding 10 MW). The feed-in-tariffs

for renewable power producers in Ukraine are set by the national regulator. As of January

5, 2012 the following tariffs per kWh were applied: biomass – UAH 1.3446 (EUR 0.13),

wind – UAH 1.23 (EUR 0.12), small hydro – UAH 0.8418 (EUR 0.08), solar - UAH

5.0509 (EUR 0.46) [5]. In case of significant fluctuations of the national currency against

Euro the feed-in-tariffs are adjusted to reflect the changes. Feed-in-tariff ensures that those who produce electricity from renewable energy sources

have a guaranteed return of their investments. This policy instrument has proven to be very

adaptable and effective in developed and developing countries. Also, feed-in-tariff become

the policy instrument of choice for so many countries in the world, because it is already

proven to promote electric power at the lowest cost. Unlike research and development

subsidies or tax credits, feed-in-tariff is usually funded by customers, as part of their bill.

Today, feed-in-tariffs can be found in such countries worldwide [6]: Algeria, Kenya,

Mauritius, Argentina, Brazil, Canada, Ecuador, Nicaragua, USA, India, Indonesia, South

Korea, Pakistan, Philippines, Sri Lanka, Thailand, Israel, Turkey, Australia, Austria,

Croatia, Cyprus, Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary,

Ireland, Italy, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Netherlands, Portugal,

Slovak Republic, Slovenia, Spain, Switzerland and Ukraine.

Adoption of feed-in-tariffs in Ukraine was very problematic, because scientists from the

Institute of Energy of the National Academy of Sciences of Ukraine declared that this will

ruin country’s energy sector. They told that renewable energy is unprofitable and losses

will be covered by ordinary people. But feed-in-tariff was adopted and today we consider

that it was an important step toward the increase use of renewables for energy production.

The electricity market of Ukraine is obliged to buy with a feed-in-tariff all the electricity

produced by renewables that was not sold directly to consumers or distributing companies.

All of this is a very big advantage of current policy instrument, because grid access is

guaranteed by law.

According to the Ukrainian law, any judicial entity can provide electricity to the grid. In

reality, electricity producing equipment must have a capacity of more than 5 kW, because

for such capacity producers must get permissions from the National inspections.

Feed-in-tariff is guaranteed by law till 2030, but from this year there is a requirement

that “green electricity” producers have to use at least 30 percent of domestic feedstock or

equipment. Starting from 2014 this value must be 50%. Because of that, today, some

foreign investors moved their factories to Ukraine. For example, Danish Vestas Wind Sys-

tems will produce wind turbine towers and nacelles at Southern Machine Building Works

[7], German “Fuhrlaender” will produce wind power units at Kramatorsk City [7].

Also, there are disadvantages in this policy instrument. For example, in Ukraine

guarantees to obtain feed-in-tariffs are given to those investors, who already completed

construction and not before it. In addition, renewable electricity projects are highly capital

intensive, and lack of microcredit programs for households can be a problem as well. Also,


6

Ukraine doesn’t have a single regulatory body that would support renewable industry.

Today, the implementation networks of “green” electricity production in Ukraine consist of:

- Cabinet of Ministers of Ukraine;

- Ministry of Energy and Coal Industry of Ukraine;

- National Electricity Regulatory Commission of Ukraine;

- Supreme Council of Ukraine;

- State Agency on energy Efficiency and Energy Conversation of Ukraine.

Legislation on feed-in-tariff has evolved substantially and now it is quite mature. It has

some improvements all the time. For example, on November 18, 2011 the latest

amendment was adopted by Ukrainian Parliament and signed on December 8, 2011 by the

president. This means that Ukrainian government is paying too much attention to this issue

and wants to make it more attractive for investors and users. On the contrary, the Ukrainian

government wants not only to reduce green house gases by promoting renewables, but it is

looking for some benefits for Ukrainian economy. As a result, Ukraine is supporting only

those technologies, which are able to compete with the technologies working on traditional

fossil fuels. That is why president of Ukraine didn’t sign the law that was adopted by the

Parliament on October 6, 2011, which asked to give “green tariff” to electricity generated

from biogas.

Also, current legislation on feed-in-tariffs needs to be revised and improved, especially

regarding coordination of the work of the electricity generating facilities and their

connection to the general grid.

If we will look at the rate of the feed-in-tariffs in Ukraine, one can say that they are very

high. Even thought, investors say that there are some economic and administrative barriers.

Today, there is a big concern among investors about the stability of the investment

climate in Ukraine, the level of business conditions for all market players, long-term

development strategy of the energy market in the country and most importantly -

transparency of the market. All of this is very important to Ukraine, because to implement

successfully this policy instrument, Ukrainian market needs to attract billions of euros in

the investment. Among administrative barriers are permits obtaining and land ranting.

Schemes of land seizures still take place. These seizures are especially popular in the

Crimean peninsula, which is a good place for wind farms. Investors are asking for big plot

of land and latter divide it among others companies.

Because renewable energy is a young industry in Ukraine, there is a lack of experience

in the preparation of the technical documentation that accompanies a project, as well as

lack of specialists at the installation and maintenance phases. As for general grid, it has

limited capabilities to receive electricity from renewables as well as it can be characterized

as unstable. Ukrainian law doesn’t have procedure and legislation that will answer to the

question who is responsible for grid connection and who should pay for that. In reality, all

this work is a responsibility of the renewable energy companies. Also, there is no

information how much electricity can be transfer and distributed by the grid. Procedures

with land obtaining are also complicated. Very often wind farms are not constructing on the

best for that spots.

Also, there are no appropriate advocacy and information campaigns for households

regarding the benefits of small scale electricity generation.

As a conclusion, I can say that adoption of feed-in-tariffs in Ukraine has very positive

influence on the support of renewable energy and on the reduction of greenhouse gases

during energy production. According to World Bank, in 1996 Ukraine ranked 11th in the

world for total CO2 emissions, and in 2009 it ranked 22 [8]. Also, in 1990 Ukraine had

688.3 million tons CO2 eq in Energy sector and in 2009 only 255,7 million tons CO2 eq ( -

62.8% change in the last reported year, as compared with the base year) [9]. The share of

renewable energy sources in total final energy consumption also increased from 4% in1999

to 5% in 2011. Installed capacity of wind energy at the end of 2011 reached 151.1 MW [10]

(compare to 8 MW at 1997).

So, we can see obvious improvement in increasing capacity of renewables and CO2

reduction in energy sector, and feed-in-tariff is playing not a last role in all this changes.


7

Chapter 2

Present the data that need to be collected for the policy instrument selected in Chapter 1 and the sources that provide them. Module 4

Instructor: Dr. Harry Kambezidis

Mark: __/10

To implement feed-in-tariff policy instrument successfully, one needs to collect a lot of

data.

First of all, one needs to collect adopted policy documents aiming to create and regulate

renewable electricity market. For example, for my home country Ukraine, these policy

documents include:

- Cabinet of Ministers of Ukraine Decree on the program of state support for

alternative and renewable energy and small hydro and thermal power;

- Law of Ukraine on alternative sources of energy;

- energy strategy of Ukraine till 2030;

- Cabinet of Ministers of Ukraine Decree on approval of the granting of preferential

loans for investment projects on energy saving technologies for production of

alternative energy sources and others.

All these documents will help to understand current situation in this question in Ukraine

from the judicial point of view. Unfortunately, Ukraine doesn’t have a single regulatory and

coordinating body that defines and systematize the sequence of actions in the industry.

Main bodies that give advices and take part in regulation of green electricity production

in Ukraine are presented in table 1.

Table 1

Regulatory and coordinating bodies, which regulate green electricity production in Ukraine

Agency Regulation

Cabinet of Ministers of Ukraine

Web-site: http://www.kmu.gov.ua/control/

Implementation of state policy on

alternative energy sources and its

management

State Agency on Energy Efficiency and

Energy Conservation of Ukraine

Web-site: http://saee.gov.ua/en/

Coordination of work and control over

the execution of implementing the State

Program to support the development of

renewable energy sources and small

hydro and thermal power plants

Supreme Council of Ukraine

Web-site:

http://portal.rada.gov.ua/rada/control/uk/index

Choosing of main directions of state

policy on alternative energy sources and

implementing of legal framework within

it

National Electricity Regulatory Commission

of Ukraine

Web-site: http://www.nerc.gov.ua/

Billing of the costs of connecting to the

grid of the power facilities that generate

electricity using alternative energy

sources during the approval of the

investment programs of electric grid

owners; annual disclosure of information

on the cost of connection to the electric

grids of power facilities objects that

generate electricity using alternative

energy sources; adoption of feed-in tariffs

Ministry of Energy and Coal Industry of

Ukraine

Web-site:

http://mpe.kmu.gov.ua/fuel/control/uk/index

Licensing of biogas production and

storage


8

Second, renewable electricity projects are mostly highly capital intensive, especially

those for solar energy. Even though the feed-in-tariff rate in Ukraine is high and grid access

is guaranteed by law [2], investors complain that a significant share of the feed-in rate is

‘‘eaten up’’ with inflation. That is why investors are interested in economic statistics of

Ukraine. They want to see possible risks and see tendency of economic growth.

State Statistics Committee of Ukraine is the government agency responsible for

collection and dissemination of statistics in Ukraine. For brevity it also referred to as

Derzhkomstat. In 2010 the committee was transformed into the State Service of Statistics

under the Ministry of Economic Development and Trade. The official website of

Committee is http://www.ukrstat.gov.ua/. On this site users can easily find such data, that

important to feed-in-tariff policy instrument: the official inflation rate, GDP, GDP per

capita, national energy balance, etc.

Third, as feed-in-in tariff is mainly used to promote renewable energy, one will need a

lot of data about climate in Ukraine. For example, to install a wind turbine, one must have

information about number of windy days in that area, wind maps, wind direction (wind

rose), wind speed change with height [11]. If all these data will be satisfied to investor,

he/she will invest his/her money in that project. The same situation with solar energy. To

build a new solar plant, investors must know about the number of sunny days in that area

and staff like that. All these information can be provided according to the official request

by the National Meteorological Service in Ukraine (Ukrainian Hydrometeorological

Center). Official website http://meteo.gov.ua/en/.

Forth, hydro energy has feed-in-tariff in Ukraine too. Today, there are 84 small hydro

plants in Ukraine. Without doubt, before building new dumb, investors will request

information about the emergencies, which were caused by floods on that river. This

information can be received from the http://www.mns.gov.ua/ (Ministry of Emergencies).

Information about emergencies also important to wind farms; because, strong rotation of

blades can damage or even destroy a wind turbine.

Fifth, to receive feed-in-tariff in Ukraine, one must take couple steps. One of them is an

agreement on connection to the grid. There is no clarity whom you need to contact

(oblenergo (27 regional supply companies) or NPC ”Ukrenergo”) about connection to the

grid. However, in most cases people contact to NPC “Ukrenergo”

(http://www.ukrenergo.energy.gov.ua) if installed capacity is over 100 MW, and to

oblenergo, if it is lower than that. If you generate electricity from alternative energy

sources, you have to approve your project with NPC “Ukrenergo” regardless of the

installed capacity. Required documents: application to issue Technical Specifications and

other relevant technical information; a receipt on payment of the fee for issue of Technical

Conditions.

Also, on a way to receiving feed-in-tariff, one needs to obtain a document on

commissioning of facilities from the Architecture and building control commission

(GASK) http://www.dabi.gov.ua/.

After receiving feed-in-tariff from the National Electricity Regulatory Commission of

Ukraine, one needs to gain membership in Wholesale Electricity Market (Energorynok)

WEM http://www.er.gov.ua/. Required documents: application; short description of the

applicant’s business with indication of the territory in which the applicant plans to operate

in the first month, and afterwards – based on power supply agreements; data on annual

volume of transactions that applicant plans to execute in WEM; legal address and bank

information of the applicant confirmed by the signature of the CEO and stamp of the entity

(two copies); memorandum of agreement with the Settlement System Manager, of the

calculations of volumes, forms, deadlines, data transmission and procedures needed for

payments in accordance with WEM’s Rules; note on the nature of anticipated transactions,

agreed with the Settlement System Manager; note from NERC on no arrears for the regular

fee for license; letters of recommendation from the full members of WEM; notarized copy

of the Charter; notarized copy of the State Registration Certificate; copy of the VAT

payer’s registration certificate; copy of the document on the appointment of manager;

samples of signatures of top officials with signing authority while operating in WEM.

http://meteo.gov.ua/en/

http://www.mns.gov.ua/

http://www.ukrenergo.energy.gov.ua/

http://www.dabi.gov.ua/


9

Next step is requiring signing an agreement on sale of power at feed-in-tariff with State

Enterprise WEM (Energorynok). Required documents: application. Energorynok then sells

power to the oblenergos and large industrial firms.

There is a distribution company in each of Ukraine’s 25 regions, plus one each in the

cities of Kyiv and Sevastopol. Among these 27 regional distribution companies, there is a

mix of state and private ownership. The distribution companies, called oblenergos, also

own small cogeneration assets, mainly to produce heat for district heating.

Finally, legalization of the usage of land can be one of the largest barriers to successful

implementation of feed-in-tariff projects. In Ukraine, farmlands may not be used as sites for

location of power generating facilities. To locate a power production plant on a farmland,

you need to cause change of designated purpose of the land plot, which in most cases is

prohibited. The procedure of changing the designated purpose is rather time consuming and

expensive. It takes a lot of time to allocate land if it is in communal and government

ownership, and to obtain a certificate of title to it.


10

CHAPTER 3

Describe the Business-As-Usual scenario, according to the selected policy instrument in Chapter 1.

Module 5

Instructor: Dr. Popi Konidari

Mark: __/10

First of all, before I will give answer to this question, I want to define what does

Business-As-Usual scenario (BAU) means. In the literature we can find information that it

is a scenario that will be developed, according to the existing policy and trends, without

taking into account new policy instruments targets. Also, BAU scenario can be named as

reference scenario or baseline.

- The objectives of the BAU scenario can be as follows:

- energy savings;

- reduction of GHG emissions. This reduction can be achieved through the

mechanism of the implemented climate policies;

- adaptation to climate change impacts.

The BAU scenario can provide us evolution of current mitigation and adaptation

policies of a country. Based on this scenario the outcomes of the other scenarios will be

compared against BAU. The climate change impacts for the country in the BAU scenario

are considered as moderate.

To decrease carbon emissions and to enhance security of supply, in 1996 Ukrainian

government set a target that renewable energy will cover 10% of energy consumption.

Unfortunately Ukraine didn’t reach this target. Also, according to the Energy Strategy to

2030 [2], renewable energy must cover 18.3% of primary energy consumption in Ukraine.

It is worth to mention that Ukraine signed and ratified United Nations Framework

Convention on Climate Change. In addition, the Kyoto Protocol was ratified as well. The

government has also committed to ensuring that emissions remain at half of 1990’s levels

by 2050. Today, energy intensity near 3 times higher than in the countries of the European

Union. That is why Ukrainian government is planning to increase energy efficiency and to

reduce energy intensity. As part of the Copenhagen Accord, Ukraine committed to ensuring

that emissions remain 20% below 1990 levels in 2020 [1].

Table 1 provides Ukrainian government commitments.

Table 1

Ukrainian government commitments

Renewable energy Target – 18.3% of primary energy

consumption from renewables by 2030.

Green House Gas emissions A Copenhagen Accord is asking to keep

GHG emissions 20% below the 1990.

Energy intensity in Ukraine is very high, that is why it is the main priority of the

government to increase energy efficiency. The national policy of Ukraine includes the

following legal framework as mitigation policy instruments:

- Law on alternative sources of energy;

- Law for the establishment of “Green” tariff (feed-in-tariff);

- Law that offers tax incentives for energy efficiency and renewable energy

investment;

- “Law on energy conservation” was adopted by the Verkhovna Rada of Ukraine on

July 1, 1994;

- Ukraine’s Energy Strategy for the Period Until 2030, adopted in March 2006 [2].

- Program on state support of development of non-traditional and renewable energy

sources [3].


11

As for the Law of Ukraine on Alternative Sources of Energy, it was passes by

Ukrainian Parliament on November 29, 2001. This law defines legal, economic

environmental and organizational framework for the use of alternative energy sources and

promoting their use in energy complex.

The main principles of state policy on alternative energy sources are:

- reduce consumption of traditional energy resources and dependence in their imports

by increasing production and consumption from alternative sources;

- environmental safety by operation alternative energy facilities and transmission,

transportation, supply, storage and consumption of energy, produced from alternative

sources;

- support and promotion of science and technology in this field;

- attracting domestic and foreign investment and support entrepreneurship in the field

of alternative energy sources, including the development and implementation of national

and local programs development of alternative energy.

Main legislative acts governing the alternative energy in Ukraine are following:

- the Law of Ukraine «On Alternative Energy Sources» #555-IV dd. 20.02.2003;

- the Law of Ukraine «On Alternative Types of Liquid and Gaseous Fuel» # 1391-

XIV dd.14.01.2000;

- the Law of Ukraine «On Electrical Power Industry» # 575/97 dd.16.10.1997.

According to the energy strategy of Ukraine till 2030 it is planned to achieve the

following indexes:

Table 2

BAU scenario for use of alternative energy (mil. t.r.f.t./year) [12]

Years

2005 2010 2020 2030

Renewable energy

sources, total incl. 1,661 3,842 12,054 35,53

Bio energy 1,3 2,7 6,3 9,2

Solar energy 0,003 0,032 0,284, 1,1

Small hydropower 0,12 0,52 0,85 1,13

Geothermal energy 0,02 0,08 0,19 0,7

Wind energy 0,018 0,21 0,53 0,7

Ambient energy 0,2 0,3 3,9 22,7

Also, Ukraine created legislative base concerning climate change.

Law for the establishment of “Green” tariff (feed-in-tariff) can be considered as one

of the basic mitigation steps which were done by Ukraine. The law for the establishment of

this tariff Ukrainian parliament passed on September 25, 2008.

Before to this law, tariffs were set for each generating plant by the National

Electricity Regulatory Commission. The feed-in-tariff was then amended in April 2009 –

About Amendments to the Law of Ukraine “On Electricity” to Encourage the Use of

Alternative Energy Sources № 1220-VI, 2009.04.01.

The goal of feed-in-tariff is to offer cost-based compensation to renewable energy

producers, providing the price certainty and long-term contracts that help finance

renewable energy investments.

In Ukraine not all sources of green energy production can receive feed-in-tariff, but

some are eligible. They are: solar energy, wind energy, hydro energy (only small

hydropower plants with the generation capacity not exceeding 10 MW). The feed-in-tariffs

for renewable power producers in Ukraine are set by the national regulator. As of January

5, 2012 the following tariffs per kWh were applied: biomass – UAH 1.3446 (EUR 0.13),

wind – UAH 1.23 (EUR 0.12), small hydro – UAH 0.8418 (EUR 0.08), solar - UAH

5.0509 (EUR 0.46) [5]. In case of significant fluctuations of the national currency against

Euro the feed-in-tariffs are adjusted to reflect the changes.


12

Under the current law, every month feed-in-tariff is set by the National Electricity

Regulatory Commission. The tariff rate that generators receive for their output is based

upon the retail tariff rate for customers of second-class voltage in January 2009. This 2009

tariff rate was converted into EUR at the central bank rate in January 2009 (53.85

EUR/MWh) and every month National Electricity Regulatory Commission reconverts the

EUR rate back into UAH, using the current official central bank conversion rate on the day

the rates are set. The tariff the generators received is then adjusted by technology bands

adjusted for each technology. Therefore, the EUR rate in January 2009 effectively acts as a

minimum amount when formulating monthly rates [13].

Table 3 shows the effective minimum rates for the feed-in-tariffs based on the

January 2009 retail tariff rate. The technology factors will be reduced by 10, 20 and 30%

from the base in 2014, 2019, and 2024 respectively. In addition, for solar power and small

hydropower, the retail tariff rate used in the calculation increased by a factor of 1.8 when

the green tariffs were formulated [14].

Table 3

Effective minimum green tariff rates based on January 2009 retail tariff rate

(EUR/MWH) [15]

Technology

Retailed rate

in January

2009

Technology

factor Tariff rate

wind <600 kW 53.85 1.2 64.62

>2.000 kW 53.85 1.4 75.39

>2.000 kW 53.85 2.1 113.09

Biomass 53.85 2.3 123.86

Solar

Ground 96.93 4.8 465.26

Roof mounted<100 kW 96.93 4.4 426.49

Roof mounted>100 kW 96.93 4.6 445.88

Small hydro (<10 MW) 96.93 0.8 77.54

Table 4 shows the green feed-in-tariff rates in March 2011, which were based upon

the EUR-UAH conversion rate in February 2011.

Table 4

Green tariffs for renewable power generation in Ukraine in March 2011 [16]

Technology

UAH/MWh EUR/MWh

Retailed

rate

Technology

factor Tariff rate Tariff rate

wind <600 kW 586.6 1.2 703.92 64.94

>2.000 kW 586.6 1.4 821.24 75.77

>2.000 kW 586.6 2.1 1,231.86 113.65

Biomass 586.6 2.3 1,349.18 124.47

Solar

Ground 1,055.88 4.8 5,068.18 467.58

Roof mounted<100 kW 1,055.88 4.4 4,645.87 428.62

Roof mounted>100 kW 1,055.88 4.6 4,857.05 448.10

Small hydro (<10 MW) 1,055.88 0.8 844.70 77.93

To receive the feed-in-tariff in Ukraine starting from January 1, 2012, one must

consider that a minimum of 30% of the raw materials, capital assets, and construction

services has to be of Ukrainian origin. This requirement will rise to 50% on January 1,

2014. In addition, from January 1, 2012 , 30% of the material used in solar power plants

has to be of Ukrainian origin to receive the tariff [2]. All output of system registered for

the feed-in-tariff is purchased by the market operator, thus developers are not required to

sign power purchasing agreements with a supplier.


13

CHAPTER 4

Evaluate the policy instrument that you chose on Chapter 1.

Module 6B

Instructor: Dr. Popi Konidari

Mark: __/10

“To evaluate feed-in-tariff policy instrument I used AMS method, which consists of

three standard multi-criteria methods: the Analytical Hierarchy Process (AHP), the Multi-

Attribute Utility Theory (MAUT) and the Simple Multi-Attribute Ranking Technique

(SMART). AHP provides weight coefficients and MAUT/SMART grades for the

performance of interactions under selected criteria [17-18].

For the first step, according to my opinion, I determined the interaction forms of feed-

in-tariff policy instrument. The four classification categories are the following.

Objectives - establishment of a feed-in-tariff – a special tariff rate – at which there is

purchased the electric energy, as generated by power generation facilities using alternative

energy sources (except for blast furnace and coke gases, and as regards the use of hydro

power it only pertains to that generated by small hydro power plants of installed capacity

not exceeding 10 MW).

Target groups – feed-in-tariff is set for each business entity that produces electrical

energy using alternative energy sources and for each power industry object.

Implementation network of feed-in-tariffs in Ukraine consists from important steps that

must be done by renewable energy producers. First of all, one must apply to the National

Electricity Regulatory Commission of Ukraine for a license to produce electric energy; to

file NERC a request for a “green tariff” to be prescribed; to become a member at the

Wholesale Electricity Market (Energorynok).

Produced electric power from renewable energy sources may be sold directly to

Energorynok or directly to the consumers. However, due to high cost of “green energy” in

practice all producers are selling through the Energorynok, which enjoying the monopoly

position.

In Ukraine implementation network of “green” electricity production consists of:

- Cabinet of Ministers of Ukraine;

- Ministry of Energy and Coal Industry of Ukraine;

- National Electricity Regulatory Commission of Ukraine;

- Supreme Council of Ukraine;

- State Agency on energy Efficiency and Energy Conversation of Ukraine.

Also, Ukraine has trained personnel capable in supporting implementation of the

instrument. They have skills, knowledge and experience in climate policy issues, usage of

technologies, tools, methods and analyses regarding these issues.

Rules and influencing mechanisms

The feed-in-tariff may be prescribed if:

- the electric power Producer uses alternative power sources only. In case the

technology of electric power production is based on the simultaneous use of traditional

types of fuel, the feed-in-tariff may not be applied

- not less than 30% (since January 1, 2012) and no less than 50% (since January 1,

2014) of the materials, raw materials, capital assets, works and services involved in

construction of electric power generating facilities has to be of Ukrainian origin;

- there are available finished energy generating facilities, as connected to the network.

Conformity of the facilities to the project documents, requirements of the state

standards, construction standards and rules to be witnessed by an appropriate Certificate.

Essential Aspects of feed-in-tariff:

- the laws of Ukraine provide for a fixed minimum rate of the feed-in- tariff and binds

the “Green” tariff on Euro, thus, in case of implementation of a project of generation of

electric energy from alternative energy sources, the investor is protected against UAH

potential inflation;


14

- the feed-in-tariff rate will be reduced by 10, 20 and 30% from the base in 2014, 2019,

and 2024 respectively;

- the whole electric energy generated from objects that got feed-in-tariff, must be paid

fully according to installed feed-in-tariff rate;

- feed-in-tariff will take place in Ukraine until January 1, 2030.

After that I created my criteria tree.

All three forms of interactions create a first level. Also, each of this forms I divided into

secondary forms of interactions (fig.1).

Fig.1. The AHP hierarchy

The next step was determination of weight coefficients. I did that on my own preference

(using scale from 1 to 9). Table 1 provides pairwise comparisons between the interaction

levels.

Table 1 Criteria (second level) Establishment of

a feed-in-tariff

Production of alternative energy

under the feed-in-tariff

Implementation network, Rules and influencing

mechanisms

Establishment of a feed-in-tariff

1.000 0.2 3

Production of alternative energy


5 1.000 7

Implementation network,


0.33 0.14 1.000

Column sum 6.33 1.34 11.00

Table 2

Normalized matrix Criteria Establishment of

a feed-in-tariff

Production of

alternative energy


Implementation

network,

Rules and

Row sum Weight

Coef.


0.158 0.149 0.273 0.580 0.193

Production of

alternative energy under

the feed-in-tariff

0.789 0.745 0.636 2.171 0.724

Implementation

network, Rules and influencing

mechanisms

0.053 0.106 0.091 0.250 0.083

After testing consistency of weight coefficients, by using Saaty method, I got that

λmax = 3.065; CI=0.032; CR=0.05.


Production of alternative energy under

the feed-in-tariff

Renewables promotion

Reduction of CO2 during energy

production

Mitigation of climate change by

acceleration of

investments in renewable energy

technologies

Indirect environmental effects

Energy independence

Cost efficiency

Dynamic cost efficiency

Competiveness

Implementation network,


Implementation network capacity

Administrative feasibility

Financial feasibility


15

Then, I did pairwise comparison for subcriteria under each criterion.

Table 3 provides pairwise comparison between sub-criteria of “Establishment of a

feed-in-tariff”.

Table 3 Establishment

of a feed-in-tariff

Renewables

promotion

Reduction of CO2 during

energy production

Indirect

environmental effects

Energy

independence


1 5 9 3

Reduction of CO2 during energy production

0.2 1 5 2


0.111 0.2 1 0.25 Energy independence 0.333 0.5 4 1 Column sum 1.64 6.7 19 6.25

Table 4

Normalized matrix Establishment

of a feed-in-tariff

Renewables

promotion

Reduction of CO2

during energy

production

Indirect

environmental

effects

Energy

independence

Row

sum

Weight

Coef.

Renewables

promotion

0.608 0.746 0.474 0.480 2.308 0.58


production

0.122 0.149 0.263 0.320 0.854 0.21

Indirect

environmental

effects

0.068 0.03 0.053 0.04 0.190 0.05

Energy

independence 0.203 0.075 0.211 0.160 0.648 0.16

After testing consistency of weight coefficients by using Saaty method, I got that

λmax = 4.23; CI=0.0756; CR=0.084.

Table 5 provides pairwise comparison between sub-criteria of “Production of alternative

energy under the feed-in-tariff”.

Table 5 Production of alternative

energy under the feed-in-tariff

Cost

efficiency

Dynamic cost efficiency Competiveness

Cost efficiency 1 6 7

Dynamic cost efficiency 0.17 1 2

Competiveness 0.14 0.5 1

Column sum 1.31 7.5 10.0

Table 6

Normalized matrix Criteria Cost efficiency Dynamic cost

efficiency

Competiveness Row sum Weight

Coef.

Cost efficiency 0.764 0.8 0.7 2.264 0.755

Dynamic cost efficiency 0.127 0.133 0.2 0.461 0.154

Competiveness 0.109 0.067 0.1 0.276 0.092


λmax = 3.032; CI=0.016; CR=0.028.

Table 7 provides pairwise comparison between sub-criteria of “Implementation

network, Rules and influencing mechanisms”.

Table 7 Implementation network,


Implementation

network capacity

Administrative

feasibility


Implementation network capacity 1 2 3

Administrative feasibility 0.5 1 2


0.33 0.5 1

Column sum 1.83 3.5 6


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Table 8

Normalized matrix Criteria Implementation

network capacity

Administrative

feasibility

Financial

feasibility

Row sum Weight

Coef.

Implementation

network capacity 0.545 0.571 0.5 1.617 0.539

Administrative feasibility 0.273 0.286 0.33 0.892 0.297


0.182 0.143 0.167 0.491 0.164


λmax = 3.009; CI=0.0046; CR=0.0079.

Then I graded the type and size of interactions.

Because of lack of appropriate data I used SMART. I graded on my own interaction

type and size under a particular criterion/subcriterion using scale. To convert my DM

grades into SMART I used , where mi – is DM’s grade (in this case is mine).

I used such scale of performance of the policy instrument regarding to every criterion.

Table 9

Grades for sub-criteria of “Establishment of a feed-in-tariff” Establishment of a feed-in-

tariff



production


Energy independence

DM SMART DM SMART DM SMART DM SMART 5 9.98 3 3.98 1 1.58 2 2.51

Table 10

Grades for sub-criteria of “Production of alternative energy under the feed-in-tariff” Production of

alternative

energy under the

feed-in-tariff

Cost efficiency Dynamic cost efficiency

Competiveness

DM SMART DM SMART DM SMART 3 3.98 2 2.51 3 3.98

Table 11

Grades for sub-criteria of “Implementation network, Rules and influencing mechanisms” Implementation

network, Rules and

influencing

mechanisms

Implementation

network capacity

Administrative

feasibility


DM SMART DM SMART DM SMART 3 3.98 2 2.51 1 1.58

Calculation of grades

To calculate grades I used such equation [18]:

So, the grade for sub-criteria of “Establishment of a feed-in-tariff”(grade 1) will be

equal:

Grade1= 9.98*0.58+3.98*0.21+1.58*0.05+2.51*0.16=7.1048.

Grade for sub-criteria of “Production of alternative energy under the feed-in-

tariff”(grade 2) will be equal:

Grade 2= 3.98*0.755+2.51*0.154+3.98*0.092=3.7576.

Grade for sub-criteria of “Implementation network, Rules and influencing mechanisms“

grade 3) will be equal:

Grade 3= 3.98*0.755+2.51*0.297+1.58*0.164=3.14981.

Total grade=7.1048*0.193+3.7576*0.724+3.14981*0.083= 4.35.


17

REFERENCES 1.National Environmental Investment Agency of Ukraine, Government of Ukraine,

2010 Letter to the UNFCCC. Available at:

http://unfccc.int/files/meetings/cop_15/copenhagen_accord/application/pdf/ukrainecpha

ccord_app1.pdf.

2.Energy Strategy of Ukraine to 2030. Available at:

http://mpe.kmu.gov.ua/fuel/control/uk/doccatalog/list?currDir=50505

3.Cabinet of Ministers of Ukraine. Decree of 31 December 1997 No. 1505 “On the

Programme of state support for development of non-traditional and renewable energy

sources and small hydro and thermal energy”.

4.Policymaker's Guide to Feed-in Tariff Policies, U.S. National Renewable Energy Lab.

Available at: www.nrel.gov/docs/fy10osti/44849.pdf.

5. Green tariff and future of Ukraine. Available in Ukrainian language at:

http://jkg-portal.com.ua/ua/publication/one/alternativne-majbutne-ukrajini.

6.Miguel Mendonça and David Jacobs. Feed-in Tariffs Go Global: Policy in Practice.

Available at: http://www.renewableenergyworld.com/rea/news/article/2009/09/feed-in-

tariffs-go-global-policy-in-practice.

7. Wind Energy Developments in Ukraine. Available at:

http://www.mywindpowersystem.com/2011/12/wind-energy-developments-in-ukraine/

8. World carbon dioxide emissions data by country. Available at:

http://www.guardian.co.uk/news/datablog/2011/jan/31/world-carbon-dioxide-emissions-

country-data-co2.

9. National inventory report of anthropogenic emissions by sources and removals by

sinks of greenhouse gases in Ukraine for 1990-2009. – Kiev. – 2011. – 519 p.

10. Tendencies of wind energy sector development in Ukraine. www.uwea.com.ua

11.S. Bobliakh. Renewable energy. – National University of Lesja Ukrainka. – Lutsk. –

2012. – 227 p.

12. Arzinger. «Energy law guide. Traditional Energies. Renewable Energies. Carbon

Trading». -Kyiv, - 2009/

13. NERC. Decree of 16.07.2009 - 828 Approving the amendments to the Order of the

installation, revision and termination of "green" tariff for business entities. NERC Website,

available at:

http://www.nerc.gov.ua/control/uk/publish/article/main?art_id=82048&cat_id=34446.

14. Derived from NERC, Decree of 16.07.2009 No 828 Approving the amendments to

the Order of the installation, revision and termination of "green" tariff for business entities.

15. Policymaker's Guide to Feed-in Tariff Policies, U.S. National Renewable Energy

Lab. Available at: www.nrel.gov/docs/fy10osti/44849.pdf.

16. Biogas: The Energy Revolution’s All-rounder. Available at:

http://www.german-biogas-industry.com/overview/biogas-the-energy-revolutions-all

rounder/.

17. http://www.scribd.com/doc/82122327/saaty.

18. Popi Konidari, Dimitrios Mavrakis. Multi-criteria evaluation of climate policy

interactions. – Wiley InterScience. – 2006.

19. Lectures from Module 6B and Modul 6A.

http://unfccc.int/files/meetings/cop_15/copenhagen_accord/application/pdf/ukrainecphaccord_app1.pdf

http://unfccc.int/files/meetings/cop_15/copenhagen_accord/application/pdf/ukrainecphaccord_app1.pdf

http://jkg-portal.com.ua/ua/publication/one/alternativne-majbutne-ukrajini

http://www.renewableenergyworld.com/rea/u/miguel-mendonca-65479;jsessionid=9D2A5DAE89569065DC3F87CB60E1D533

http://www.renewableenergyworld.com/rea/news/article/2009/09/feed-in-tariffs-go-global-policy-in-practice

http://www.renewableenergyworld.com/rea/news/article/2009/09/feed-in-tariffs-go-global-policy-in-practice

http://www.guardian.co.uk/news/datablog/2011/jan/31/world-carbon-dioxide-emissions-country-data-co2

http://www.guardian.co.uk/news/datablog/2011/jan/31/world-carbon-dioxide-emissions-country-data-co2

http://www.uwea.com.ua/

http://www.nerc.gov.ua/control/uk/publish/article/main?art_id=82048&cat_id=34446

http://www.nrel.gov/docs/fy10osti/44849.pdf

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