Massachusetts-based Briggs Capital plans to invest US$250 million in
the Ukraine bioenergy sector within the next several years, according to
its CEO Rhode Robertson. The announcement was made amid significant
problems in Ukraine’s renewable energy industry, namely the sharp
decrease in the “green tariff,” which occurred in early 2015.
"Our President Barack Obama and Secretary of State John Kerry do not
want the globe to rely on the coal sector,” said Robertson. “Therefore,
U.S. government agencies are ready to provide up to US$250 million in
loans with a low interest rate for the development of bioenergy sector
in Ukraine."
The project will consist of 20 biomass plants in Kiev and Kharkov
Oblasts, which will process agricultural waste into pellets. Experts
estimate the potential capacity of the project will reach 500 MW, which
will double the overall capacity of the renewable energy in Ukraine.
Ukrainian Agro Valley Association, a joint endeavor between
Ukrainians, Ukrainian/Americans and Americans to propel commerce and
education between the countries, expressed interest to participate in
the project, while the First Deputy Head of Presidential Administration
Vitaliy Kovalchuk promised full state support.
"We were pleasantly surprised on how Ukrainian side is interested in
our project, as they are even willing to change the legislative
framework to facilitate its implementation,” said Robertson. "Terms and
conditions of loans are such that we need to create jobs both in Ukraine
and in the U.S., so we plan to bring five Ukrainian companies and five
[U.S.] companies [to the project].” The projects are expected to create 20,000-30,000 jobs, while the
operation of the project will be left to the hands of Ukrainian
managers. Construction is expected to begin at the end of 2015, while
the first plant may be launched already in 2017.
Lack of Transparency
While this development is promising, investors say that the prospects
of Ukraine’s renewable energy sector remain quite unpredictable.
Chairman of the State Agency for Energy Efficiency and Energy Sergei
Savchuk recently stated that the government plans to increase the share
of renewables from the current 1 percent to 11 percent by 2020, which
would mean about 6,500 MW capacity.
“Based on the regulations of the European Union, Ukraine authorities
have developed and adopted the draft plan for the development of the
renewable energy sector of Ukraine until 2020,” said Savchuk. “The
required amount of investment for implementation of this plan is about
EUR16 billion.”
At the same time, U.S. businesses that have already invested in
Ukraine’s renewable sector state that the industry has a very low level
of transparency due to leaders in the Energy and Coal Ministry, which
have made no effort to support the industry. For example, the American Chamber of Commerce, which invested in biogas projects, was disappointed in the business and political environment.
"I visited [Volodymyr Demchishin, Minister of Energy and Coal of
Ukraine] representing the American Chamber of Commerce, which has
invested in Ukraine’s project for the production of bioenergy from
households wastes,” said representative of U.S. business in Ukraine,
Stanislav Kruglyakov. “I represented the foreign investors who have put
money in the Ukrainian economy, and come to know what to expect in the
issue of alternative energy development. I was told that in fact our
industry has no right to exist, as it has been promoted by corrupt
forces of the ex-President Victor Yanukovych.” At the same time, the press-service of Energy and Coal Ministry
denies these claims, starting that Volodymyr Demchishin supports all
potential renewable energy projects.
New Green Tariffs
Kruglyakov pointed to another "extremely unhealthy situation" for the
Ukraine renewable industry since the National Commission for Regulation
in the Energy and Utilities (NKREKU) recently sharply reduced its
feed-in tariff. NKREKU’s reduced the size of the green tariff by 10-20 percent,
depending on the type of energy, in January 2015, and then by 50-55
percent in February 2015.
"They just picked up and cut [the green tariff] by 50 percent without
any explanation, referring to the resolution of the Cabinet of
Ministers, which introduced the emergency situation in the energy
industry. Yes, there is such a decision, but this did not stipulate that
it is necessary to trim this rate by 50 percent," said Stanislav
Kruglyakov.
However, by March 25 the size of green tariff had been raised twice.
Market participants say that this only partly compensated losses that
occurred due to the devaluation of the Ukraine hrvynia against hard
currencies. For instance, the tariff is now at UAH11.6-15.8
(US$0.55-0.75) per kWh for solar power plants and UAH2.2-3.9
(US$0.10-0.28) per kWh for wind power plants. This is about 2 to 2.5
times lower than 2014 rates, since the exchange rate of the hryvnia
dropped.
“[The reduction of the] green tariff gave a very bad signal to
foreign investors that have already put their money in Ukrainian
renewable energy,” said Alexander Liviko, the head of the subcommittee
on alternative and renewable energy of Verhovny Rada (Parliament). “We
need as quickly as possible to pass [new] legislation [for alternative
energy] to signal that we keep our commitments and that we are still
reliable partners."
http://www.renewableenergyworld.com/articles/2015/05/us-companies-invest-millions-in-ukraine-bioenergy-despite-turbulent-policy.html