Development of “green” energy in Ukraine

Discussions continue in Ukrainian society about the fate of the so-called “green tariff“ to support energy production from renewable sources. The state and business continue to look for an effective mechanism that would balance the interests of the state in the development of RES and private investors. Introduction of the so-called “auctions” is most likely to occur. Discussions are continuing on how to implement it.

According to the National Renewable Energy Action Plan, 11% of renewable energy sources in the final energy consumption will be reached in Ukraine by 2020, and 25% by 2039.

In 2018, the share of alternative energy production in the entire market was 1.8%, while more than 8% of funds were spent on paying for this volume. If this trend continues, Ukraine’s energy system may soon be under threat as someone needs to pay for the high tariff.

In September, the Security Service of Ukraine drew attention to the matter by sending a letter to the Prime Minister of Ukraine stating that the large-scale connection of new RES facilities to the energy system of Ukraine puts it at risk. The main problem of RES remains the inability to save energy cheaply and efficiently, and then, as a result, distortions in the energy balance. In the classical sense, thermal power plants can fill the gap, but there is another way.

However, despite the good intentions of such discussions, they have already begun to harm the market. Investors put the implementation of many projects on pause in waiting for the adoption of new ” rules of the game“, any sharp change in them negatively affects the market, and we have already felt it.

And as for international experience? They started developing alternative energy much earlier than many countries, facing the same problems as Ukraine is now. Let’s take Denmark and Lithuania for comparison.Let’s take Denmark and Lithuania for comparison.

Most national plans for RES development are based on the European Union Directive 2009/28 / EC. According to this document, EU member states should provide about 20% of the total balance with energy produced from alternative sources by 2020. More than 11 countries have already surpassed this mark.

Developed countries simultaneously use different methods for stimulating renewable energy producers. Alongside the “green tariff”, it can be grants, fiscal and tax incentives. For example, in Lithuania, along with the usual “green tariff“, there is a Special Programme for Climate Change fund, which provides grants for projects that contribute to reducing greenhouse gas emissions.

In Austria, energy production from biomass accounts for a major part of the energy balance, with only 10% VAT on biomass, with a total rate of 20%. In Denmark, a bank guarantee mechanism of 500,000 kronor per renewable energy project (about 67,000 euros) is widely used.

In 2009 Denmark adopted a law “On renewable energy sources”. Acceptance of new applications for the “green tariff” stopped in 2017 by implementing “tariff auctions”. The approach is very differentiated and may depend on the date of commissioning of the object, its location, and many other factors. For construction, it is necessary to conduct research that will confirm the economic feasibility, the company which will build is determined by the tender win.

Lithuanian experience can serve as a good example for Ukraine.

Back in 2010, Lithuania was by 70% dependent on Russian gas supplies. The situation was worsened by the end of the Ignalina nuclear power plant’s operating life and its closure. However, the situation has changed drastically in almost 9 years, about 70% of the heat is produced from biomass. The state created an energy exchange where all producers could buy biomass in a competitive environment. The price of heat decreased by 30-40% in some regions after the introduction of the exchange.

As for other types of RES in Lithuania, the main focus of the Lithuanian government is not on large producers, but on private households. The state compensates for 25% of the cost of solar power plants that are installed in private homes, so for an ordinary Lithuanian, the price is between 4 and 10 thousand euros.

Currently, the plan is to stop using this mechanism, offering equipment for leasing instead. According to the Republic of Lithuania government plan, the opportunity to install a power plant for several hundred euros a month will become very popular among the general public, and this, in turn, will have a positive impact on the country’s energy balance and its stability as generation will be decentralized, losses from transportation will be minimal as part of the energy will be consumed by private households.

In sum, we can and should talk about the development of “green” energy and ways to stimulate it. However, we should take into account the realities of the market and not scare off investors with our “initiatives”. At the same time, RES is not limited to solar energy, most European countries develop wind energy, waste and biomass processing alongside solar energy.

Considering the possibilities of Ukraine, the emphasis can be made on energy from biomass. Agricultural waste is ideal for this purpose. In addition, Ukraine has enough marginal land, where it is not profitable to grow traditional crops, but where energy crops can be planted. Therefore, the potential of switching to this alternative energy source is considerable. According to the Prime Minister of Ukraine Volodymyr Hroisman, in 2018 we produced 21 billion cubic meters of gas. About the same amount was imported. If we replace imported gas with biomass, we can easily turn from natural gas importers into exporters. May this be the way to energy independence?

Petro Bahrii, businessman, co-owner of Clear Energy

The material was taken from Dengi.ua