Many nations strive for 20 percent of energy supplies from renewable sources.
Four stiff price hikes on Russian natural gas imports in as many years may have done what no amount of persuasion could: Ukrainians have started thinking about, and investing into, alternative energy sources.
The nation is among the most wasteful users of natural gas and dirty fossil fuels, such as coal-burning generators. It guzzles as much natural gas as the entire African continent, by one estimate. Steel mills, farms and even households are notorious wasters.
But Ukraine may have finally gotten its energy wake-up call, courtesy of free-market pricing.
Few expect alternative energy technologies to completely replace the Russian gas imports that are the lifeblood of the economy. But renewable and more diverse energy supplies can eventually make a significant dent in gas imports, which reached 60 billion cubic meters last year.
Few saw the upside of investing into alternative energy when Ukraine was importing natural gas from Russia at below $50 per 1,000 cubic meters in 2005. Back then, Ukraine was using up to 80 billion cubic meters of gas annually, most imported from Russia and Central Asia.
But this year, with the import price rising to possibly $235, more businesses have cut consumption. Many are also starting to invest into cleaner and cheaper sources.
Considering that alternative energy accounts for less than 1 percent of Ukraine’s consumption, there is much room for improvement. The goal for most European countries is to get 20 percent of their energy from renewable sources by 2020.
Ukrainian leaders are, at last, talking about the issue.
“If we utilize all the potential of alternative energy, we could cut annual consumption of gas by [an additional] 10 billion cubic meters,” Prime Minister Yulia Tymoshenko said last month. She said companies should get tax breaks for energy-saving projects. The government has set aside Hr 2 billion for such projects this year. “We need to provide long-term tax reductions for companies working on energy saving projects,” Tymoshenko said.
At current prices, cutting energy consumption by 10 billion cubic meters annually could save Ukraine more than $2 billion – a sizeable amount in a $180 billion a year economy.
Igor Aksyutov, commercial director of Zorg Ukraine, a company that produces equipment for making biogas from pig and cattle manure, said interest is finally starting to catch on. “For the first two weeks of this year, we have already signed four contracts. It’s the same that we had for the whole of last year,” said Aksyutov, who has sold nine biogas stations in the four years since the company started. “Now we are working on five more contracts,” he added.
Aksyutov’s plants can make fuel out of anything from poultry excrement, beer grain to beet waste. Given that Ukraine is home to a vast agriculture sector rich in such things many consider to be waste, biogas technology is considered to have lots of potential.
“We collected 2,000 applications and plan to sell 80 to 100 stations this year,” Aksyutov said. “Ten years ago … there were few biogas stations. When gas became more expensive, more and more customers appeared.”
The estimated $35 per 1,000 cubic meters cost that goes into producing biogas at a typical plant is attractive compared to what Ukrainian industry will pay this year for natural gas.
But there’s a catch. The up to $2 million installation cost is beyond the financial reach of most farmers. Also, bureaucratic barriers, such as registration of such technologies, are major stumbling blocks on the road to “greener and cleaner” energy.
Ukraine is far behind many other nations in Europe. By comparison, 12 percent of Germany’s energy comes from alternative sources, and nearly a quarter of Austria’s. Domestic extraction accounts for just a third of Ukraine’s natural gas needs.
While steel mills have in recent years sharply cut down on gas, massive amounts of wasteful consumption can be traced to Soviet-designed buildings, including apartment complexes, hospitals and schools. Centrally-controlled heating utilities, for example, do not allow many households to individually control temperature. If hot-water radiators are too hot in the winter, Ukrainians simply open the windows to cool off their apartments. Few citizens have incentive to insulate.
Yevhen Sukhin, head of the Sukhin special design bureau, says heating boilers that work off sawdust, wood waste and seed husks are one part of a broader solution. In six years, his firm has equipped 100 schools and hospitals in Ukraine. Today, he receives dozens of inquiries daily. “One year ago nobody was interested in our plants,” said Sukhin, who once headed the national agency for efficient use of energy resources.
Sukhin recently installed a new 3.6 megawatt plant in the city of Ivano-Frankivsk. He said the firm’s solution, which burns scrap like wood chips, is ideal for regions rich in these resources, such as Ivano-Frankivsk.
“Two tons of wood-based raw materials can replace 1,000 cubic meters of gas in our two-megawatt boiler,” Sukhin said. “Two tons of wood, including its transportation and drying, cost Hr 400. I am sure 1,000 cubic meters of gas will never cost Hr 400 again. Using straw will be a little bit more expensive” at Hr 600 per ton, yet still competitive.
The Ivano-Frankivsk facility cost the city Hr 4.5 million, an investment that should pay off in five years. Experts said another alternative is geothermal energy, which captures higher temperatures underground, in wells, for example, to produce energy.
Ihor Kurochkin, an expert at the National Agency for Efficient Use of Energy Resources, said some cities could get 80 percent of their hot water needs through geothermal technologies.
