Solar Energy Market in Ukraine

Presentation for the Merar Investment Network website

Solar Energy Market in Ukraine

The New Energy Strategy of Ukraine until 2030

• New energy Strategy for Ukraine until 2030, which was approved by Ukrainian Government in spring 2006, estimates that Ukraine will nearly quadruple its use of non-conventional energy sources, which under Ukrainian legislation include renewable and waste energy sources – from 10.9 Mtoe in 2005 up to 40.4 Mtoe (Million Tones of Oil Equivalent) in 2030. This initiative would require investing about 60.4 billion UAH (6 billion EUR) into the renewable energy market.

• The highest growth is expected in the use of solar energy, wind farms and low-potential heat,although the growth will start from a very low base as currently the installed capacity (including small hydro power plants) is only 0.18 GW. Nevertheless, the total capacity of power plants generating electricity from alternative energy sources is supposed to grow up to 2.1 GW in 2030

• The Strategy envisages the development of renewables in accordance with the fundamental principles of the “Green Book”: European Strategy for Secure, Competitive and Sustainable Energy”. The Energy Strategy set out a number of incentives to stimulate renewable energy production and use.

Green Tariff = Feed In Tariff

• In 2009 the Ukrainian parliament adopted a law on subsidized tariffs for electricity produced by renewable sources, i.e., green tariffs. The Wholesale Electricity Market of Ukraine has an explicit obligation to purchase all volumes of electricity produced from alternative energy sources with a feed-in tariff.

• The feed-in tariff is established by the National Energy Regulation Commission for each generating company and will be effective until 1 January 2030. The green tariff shall differ from one type of energy source to another.

• The green tariff, as established separately for each generator producing electricity from alternative energy sources is denominated in Euros pursuant to the official EUR/UAH exchange rate established by the National Bank of Ukraine as of January 2009 (10.84 UAH per 1 EUR). Current exchange rate (23 April 2012) is 10.534 UAH per 1 EUR.

Feed-In Tariff for Solar Energy - Calculation• According to the Law, “the amount of the green tariff for legal entities that generate the electric

power from solar energy shall be established at the level of the retail tariff for consumers of class two voltage as of January 2009 calculated using the tariff factor applied for peak hours (for three-zone tariff classification), multiplied by green tariff factor for the electric power generated from solar energy”.

Generators of electricity from solar energy can benefit from the highest green tariff indexes:• 4.4 –for electric power facilities mounted (installed) on roofs of buildings, houses and structures,

with their installed capacity under 100 kW, as well as for facilities integrated in buildings’ facades regardless of their capacity;

• 4.6 –for electric power facilities mounted (installed) on roofs of buildings, houses and structures, with their installed capacity being over 100 kW;

• 4.8 –for ground installations.

Tariff factor for peak hours is 1.8 as stipulated by National Energy Regulation Commission (Decree # 529 dated 19/07/2005).

• However, the “green” tariff incentive is applied provided that:• Starting from January 1st 2012 the share of materials, components, works and services of the

Ukrainian origin in the project for the construction of “green” power generating facility is not less than 30%, and starting from January 1st 2014 –not less than 50%.

Feed-In Tariff rates for solar energy

Possible sources of funding

• Ukrainian State agencies are cooperating and implementing energy saving projects and developing new and renewable sources of energy with foreign organizations such as NEFCO, ADEME, SIDA as well as international organizations such as EBRD, the World Bank, IFC, USTDA, OPIC, etc.

• The IFC declared its intention to invest about USD 500 million in 2010 to support implementation of different projects (including those related to the power sector).

• EBRD approved the allocation of USD 50 million to development of the alternative power sector in Ukraine.

• The World Bank will dedicate USD 250 million in 2010 for implementation of the power projects in Ukraine.

We offer a full range of services on implementing of FiT projects.- development of a technical project;- assistance in applying for permits and in obtaining it (technical specification, urban planning, etc);- supplying the equipment;- installation services;- connection to electric grid;- commissioning of the system;- obtaining a license for generation at the National Commission for Regulating the Electric Power- obtaining the “FiT"- entering to the Wholesale Market of electrical enegy- preparation of the documents for concluding a sales contract with SE Energorynok

Our company has a successful experience in developing and confirming through all authorities the projects of solar photoelectric power plants.

We are ready to undertake the most challenging projects. The experience we've got allows us to confidently deal with any matters related to alternative sources of energy.

What we can offer