In just two years, the lightning-speed work of one company has turned Ukraine from a nation with almost no capacity to generate solar power to one with two of Europe’s largest solar power plants.
The dominating company is Vienna-based Activ Solar, which has been linked to President Viktor Yanukovych and close associates.
Its spectacular success has raised questions about transparency and whether Ukraine is open to other competitors needed to boost solar power production in the nation.
Developers of two of Europe’s largest solar power plants in Crimea and Odesa Oblast, Activ Solar is linked to Andriy Klyuyev, a pro-presidential politician serving as national security chief, and his lawmaker brother Serhiy.
Both Activ Solar and the Klyuyevs have repeatedly denied any ownership, despite a trail of documents and other evidence pointing to strong links. For instance, the Klyuyev brothers’ relatives serve as top managers of the company.
Yet Activ Solar officials claim “there is no direct or indirect relationship between” the company and any government officials.
“Christian Dries, an Austrian businessman and the owner of Austrian company Diamond Aircraft Industries, is the majority shareholder of Activ Solar. The remaining shares are owned by the Activ Solar management,” the company said.
The company added: “Activ Solar is a company with high business standards. Ukraine’s government or officials have not lobbied for its interests in any manner.”
However, during a visit to Greece last October, Yanukovych said: “I made a proposal to the president [of Greece] during our conversation about turn-key construction of solar power stations on the territory of Greece. We have this capability and are ready to do it at any time.”
While Yanukovych never mentioned Activ Solar by name, it is Ukraine’s dominant solar power player. Moreover, the Ukrainska Pravda online news site has produced copies of a Ukrainian Foreign Ministry letter dated April 25, which states that Ukraine’s embassy in Greece had initiated a meeting between the management of Activ Solar and interested Greek private structures regarding cooperation in solar energy.
The president’s office was not immediately able to explain why officials had lobbied the interests of Activ Solar.
The company claims to be foreign-owned and to have a domestic solar technology manufacturing business in Ukraine. But it has also imported large amounts of solar power technology from abroad – all to build and resell solar power plants.
The business
According to Ukraine’s State Agency on Energy Efficiency and Energy Saving, only 0.17 percent of all electricity produced in Ukraine came from renewable energy sources last year. Officials expect this figure to go up to 0.5 percent this year.
Compared to the well-developed European Union renewable energy market, however, Ukraine has a long way to go.
According to Ukraine’s newly published 2030 energy strategy, Ukraine aims to generate 10 percent of its energy from renewable energy sources by 2030, decreasing the nation’s reliance on traditional energy sources, like fossil fuels and nuclear energy.
Ukraine ranked 30th in a renewable energy attractiveness index created by Ernst & Young, an auditing and business consultancy firm, in May. On the solar energy index alone, it is placed 21st.
The report says that in order for Ukraine to meet the target it needs to fix “complex permitting procedures and inadequate grid.”
The company
In Ukraine, Activ Solar has been leading the charge. Plants that it has developed account for 99 percent of the nation’s solar energy generating capacity.
At the beginning of 2011, there were less than seven megawatts of solar power capacity in Ukraine. As of July, there is 270 megawatts developed by Activ Solar. That’s enough to meet the needs of approximately 68,000 households.
Activ Solar claims to have pumped $1.6 billion into Ukraine’s energy sector.
Two plants built by Activ Solar are ranked number three and number eleven by capacity in the world. With 105 megawatt peak capacity, Crimea’s Perovo was the world’s biggest solar power plant until rivals in India and the U.S. overtook it. It remains number one in Europe.
The company’s plans are ambitious. This year Activ Solar aims to top 2011’s outcome, but would not speculate on the specifics.
The company also said they secured a pipeline of solar projects in the U.S. and are also exploring opportunities to develop solar power parks in the Black Sea region, South Africa and South America.
Moreover, they said their strategy “is to develop and build solar power stations and not to own them.”
The company claims that it builds solar power plants for resale to strategic investors.
Finding out who owns the solar power plants that Activ Solar has built is challenging. Ownership is partially hidden behind offshore companies.
Family ties
Activ Solar is headed by CEO Kaveh Ertefai, son-in-law of Serhiy Klyuyev. Andriy Klyuyev’s son Bohdan is the company’s business development manager.
Ownership of Activ Solar has recently been reshuffled.
Information from the Austrian company registry published last October by respected Ukrainska Pravda shows Activ Solar’s shareholders previously included Ertefai, Liechtenstein-based P&A Corporate Trust and Slav Beteiligung GmbH.
Slav Beteiligung GmbH has been jointly owned by the Klyuyev brothers through another Austrian company. But now the sole shareholder is the Liechtenstein-based trust.
Responding to Kyiv Post questions, Activ Solar said: “Slav owned an empty shell called Active Solar Holdings GmbH. Mr. Ertefai bought this shell, renamed it as Activ Solar and founded the company which is in operation today.” Activ Solar also said that Liechtenstein-based trust is managing the shares of company owners.
According to the company, since the 2008 sale, Slav has not been a shareholder. It had dropped its solar energy investment plans after the onset of the global financial crisis. “Kaveh Ertefai sourced seed investors for Activ Solar. In 2009, Mr. Christian Dries invested in the company,” the company wrote.
Yanukovych link
P&A Corporate Trust also owns British-based company Blythe (Europe) Ltd, which in turn owns a 35 percent share of Tantalit, according to Ukrainska Pravda.
Tantalit owns 129 hectares of the luxurious estate north of Kyiv called Mezhyhirya, where Yanukovych lives and admits to owning only a small plot. The nominal director of Tantalit is a lawyer who completed Viktor Yanukovych Jr.’s 2010 income declaration.
Speaking on condition of anonymity to avoid offending authorities, several Ukrainian analysts said the company appears to be owned or backed by Yanukovych and the Klyuyev brothers. Its success is rooted in this backing, they added.
Outspoken Ukrainian economist Andriy Novak said that Activ Solar’s “secret is simple: Exploitation of financial and lobbying opportunities of its owners, who as it is known, are the Klyuyev brothers.”
Novak nevertheless praised investments into renewable energy for helping to “decrease Ukraine’s energy dependence on Russia.”
Serhiy Dyachenko of Kyiv-based think tank Razumkov Center said non-transparent procedures do not give all companies equal access to enter the market, obtain permits, financial support and green tariffs. “Activ Solar solves these issues better than others,” Dyachenko said.
“Without the blessing of the Klyuyevs and Yanukovych, it is impossible to make a serious and successful entrance onto this market,” Novak added.
Analysts point out that to make a real impact for national energy security, capacity needs to be boosted to much higher levels for solar power and other forms of alternative energy. For this to happen, Ukraine needs to attract huge levels of foreign investment.
This won’t happen unless fair rules are established for all players, the analysts said.
Kyiv Post staff writer Yuriy Onyshkiv can be reached at [email protected].
