A handful of alternative energy investment projects unveiled in recent weeks are providing a glimmer of hope that Ukraine’s fragile economy may someday run on cleaner, more efficient power.
The European Bank for Reconstruction and Development announced on Oct. 8 that it would provide 5.7 million euros in financing for a 10 million euro solar energy plant that is being developed in Vinnytsia Oblast by Rengy Development.
With a planned capacity of 4.5 megawatts, the project is tiny compared to the 270 megawatts solar power capacity installed in recent years by Activ Solar, a company which has been linked by documents and reports to National Security and Defense Council chief Andriy Klyuyev. But it is still significant, as it represents the first solar power investment by the EBRD in Ukraine.
News about the EBRD-backed project came days after DTEK unveiled the 60 megawatt Botievo Wind Power Plant, describing it as the largest in Ukraine wind-based electricity generator in Ukraine thus far.
DTEK is the energy holding of Rinat Akhmetov, Ukraine’s richest billionaire. Already controlling nearly all of Ukraine’s thermoelectric generation market, the company said it planned on boosting capacity of the Zaporizhya-based wind power plant to 110 megawatts by 2013.
“The development of alternative energy is the overall strategy for developing our energy,” President Viktor Yanukovych said on Oct. 4 while visiting Botievo plant of pro-presidential Party of Regions ally Akhmetov. “For us, such steps are very important, from the standpoint of modernizing our country, specifically with alternative energy resources.”
In late September, Eastern Investment Group announced it would this autumn launch operation of its first biofuel boiler at a 6 megawatt heat-and-power plant in the village of Ivankiv, Kyiv Oblast. By March of next year, new boilers would be added boosting total capacity to 18 megawatts.
While none of the projects are themselves large enough to make a major impact, they are the latest signs that the nation is slowly, yet gradually chiseling away at heavy dependence on expensive Russian natural gas imports and dirty domestic fossil fuel-based power, such as coal-burning thermoelectric generation.
Dmytro Marunych, director of Kyiv-based Institute for Energy Studies, said the projects are themselves “tiny,” when compared to Ukraine’s current energy production and import needs.
Just several years ago the country had nearly no renewable energy generating capacities. If Ukraine continues to attract alternative energy investments at the current rate, it will expand its share of “renewable energy sources in the country’s energy balance from the current one percent to 4-7 percent by 2020, and up to 10 percent in 2030,” Marunych said.
A faster switch over is not possible, according to Marunych, with the current high levels of bureaucratic barriers and cronyism at play.
Some foreign investors that have expressed interest in exploring alternative energy projects in Ukraine say they are not on equal footing with companies co-owned by oligarchs and those with close ties to government officials.
Unlike Activ Solar and other companies, foreign investors say they do not have equal access to arrangements that offer duty-free imports on technology that need to be brought into the country, or so-called green tariffs in which the government agrees to buy electricity from cleaner energy producers at higher prices.
While visiting Akhmetov’s Botievo plant, Yanukovych stressed that “these are only the first steps,” adding that government would work to help support such investments.
But Volodymyr Omelchenko, energy analyst at Kyiv-based Razumkov Center think tank, said foreign investors will most likely not be treated equally in Ukraine as local businesses that are close to the government.
“Let’s hope for the best, but the priority is given to businessmen that are close to the authorities,” he said. “Also, the poor investment climate scares off true foreign investors.”
Kyiv Post staff writer Yuriy Onyshkiv can be reached at [email protected].
