On April 1, 2009 the Verkhovna Rada (Parliament) of Ukraine adopted the amendments to the Law of Ukraine “On the Electric Power Industry”, thereby establishing green tariffs to stimulate generation of the electricity from alternative sources.
The green tariff for wind power plants is based on the level of retail tariffs for consumers of voltage class II as of January 1st, 2009 multiplied by the green tariff factor for electricity generated from renewable source, e.g. for WPP-300, that is: 0.5846 x 2.1 = 1.23 UAH/kWh.
The Euro equivalent is established by recalculation the green tariff (1.23 UAH/kWh) with the official exchange rate of the National Bank of Ukraine as of January 1st 2009, that is: 1.23 / 10.8554 = 0.1131 €/kWh. The applicable green tariff is recalculated on a monthly basis by conversion of Euro equivalent using the actual exchange rate. But the actual value of the green tariff cannot be less than 1.23 UAH/kWh.
The tariff is valid until 2030 for all the facilities put into operation before 2014. For those put into service after the mentioned date the factor will be reduced. Applicable regulatory documents adopted in 2009: Resolution 126 of the Cabinet of Ministers of Ukraine of February 19, 2009 On peculiarities of interconnection to the electrical networks of electric power industry facilities that generate the electric power using alternative energy sources; Resolution 32 of the NERC of January 22, 2009 “On approval of the procedure for establishing, reconsidering and suspending the green tariff for economic entities”; Resolution 828 of the NERC of July 16, 2009 “On approval of amendments made to the Procedure of establishing, reconsidering and suspending the green tariff for economic entities"; Resolution 838 of the NERC of July 16, 2009 “On approval of model contracts to be made with the economic entities that generate electric power using alternative energy sources".
In 1996 the President of the Ukraine declared wind generation a national priority and established a target of 200 MW by 2010. This has resulted in 94 MW of installed wind capacity in the Ukraine. Annual wind power production is targeted to reach 1990 MW by 2010, but this seems unlikely to be achieved given the current state of things.
Wind energy is currently only being generated by a few small state wind farms; while the lack of any private wind farm projects is due to a shortage of local know-how and government incentives.
It is estimated that the Ukraine has 5,000 MW of mid term potential for wind generation in over 40 percent of its territory. Wind energy potential in the country is big enough to generate about 70 million MWh per year.
Wind power plants are required to sell all the electricity they generate to the state-owned company Energorynok, which operates Ukraine’s wholesale electricity market, and the latter has an obligation to buy all of it.
Ukraine aims to meet 19% of its total energy requirement from renewable sources by 2030. State and local authorities are keen to support initiatives to increase renewable energy generation, not least because some regions, particularly in the south and west, still suffer from electricity shortages.
Ukraine has a moderate technical potential for solar energy. The incidence of solar radiation increases from northwest to southeast with the highest potential on the Crimean peninsula. An emphasis has been put on the development of solar hot water heating. Hydro power currently meets 7 percent of the Ukrainian demand for electricity. Some 327 MW of potential new hydro projects exist, with 220 MW of that on the Tisa River alone.
Ukraine has considerable geothermal resources that are used primarily for heat supply. Total installed capacity of thermal systems is 13 MWth. Plans are in place to increase the thermal water utilization up to 250 MWth by 2010. There are prospects for binary geothermal plants using existing wells at abandoned oil and gas fields, and a 1.5 MWe pilot binary geothermal is scheduled for Poltova in 2005.
The biomass potential is 4.0 million toe, which includes livestock manure, straw, and lumber mill waste. There is strong interest in the use of livestock manure for biogas power generation as well as straw and wood combustion for district heating plants and combined heat and power facilities.
The major impediments to the growth of renewables are the uncertain economy, lack of financing and extreme bureaucracy. However, given the good technical potential and experience with existing capacity, renewable energy prospects are reasonably good.
Ukrainian Journal reported that the Ukrainian National Agency for Efficient Use of Energy Resources, the National Space Agency of Ukraine, Mitsubishi Heavy Industries and Sumitomo Group have signed a letter of intent on the joint manufacture of 1 MW and 2.4 MW wind turbines on the basis of Pivdenmash engineering plant in Dnipropetrovsk.
Nova-Eco is planning to start construction of the largest wind farm in Ukraine of 300 MW installed capacity in the Western (Chernomorskoe site) and the Eastern (Lenino site) parts of Crimean peninsula, where the average annual wind speeds of about 7.5 m/s provide for favorable commercial use of wind energy.
With the green tariff and about 35% capacity utilization factor taken into account, the investment payback period for WPP-300 will be about 7-8 years, with IRR above 23%.
The wind farms will consist of 150 wind turbines (100 for the Western and 50 for the Eastern site). The collection grids and the WPP substations have been designed by ABB Group, Sweden.
Ukrainian Wind Energy Association (UWEA) welcomes the adoption of feed-in tariffs in Ukraine in 2008, the Law “On Amendments to the Laws of Ukraine “On Electricity” and ”On Alternative Sources of Energy”, that was approved by Verkhovna Rada of Ukraine (359 parliamentarians out of 426 registered in the Hall of Session said “Yes” to “green” tariff in Ukraine).
According to the law “Green” tariff is “a special tariff for electricity generated at the power plants with use of alternative energy sources (except blast-furnace and coking gases; concerning hydro energy plants – at the SHPP with capacity less 10 MW)”.
The Law obliges wholesale electricity market of Ukraine to purchase electricity generated at the power plants with use of alternative sources of energy through special “green” tariffs which are to be adopted by the National Electricity Regulatory Commission of Ukraine. “Green” tariffs are available for 10 years period.
Meanwhile Ukrainian Wind Energy Association hopes that the appropriate methods for calculating renewable energies “green” tariffs will be developed and considering the successful experience of wind technologies development gained by the acknowledged world leaders – Germany, Spain, Denmark , the “green” tariffs validity period will be prolonged for 15-20 years. Such decisions that ensure fruitful investment attraction will make renewable energy market of Ukraine favorable and attractive for investors.
Ukraine with one of the best wind energy potential in Europe finally has got a chance to use it. Renewable energy is a key tool to solve problems related with current ever growing deficit of energy carriers; renewables give a real possibility to combat climate change on the planet.
Currently operational Ukrainian wind farms mainly consist of the old model wind turbines with a capacity of 94 MW. Since June 2003, the Belgian-built Turbowinds 600 kW turbines have also been assembled in Ukraine, with towers and blades manufactured locally.
All the Ukrainian wind farms so far have been constructed under the “Complex Programme for Wind Farms Construction” adopted by the Ukrainian Government in 1997. Ukraine belongs to the country where manufacturing production of wind turbines (licensed USW 56-100 turbines, a US originated model with a capacity of 107,5 kW) has been set up. Twenty three former military-industrial plants are now involved in component manufacturing while assembly is carried out at the Yuzhnyi Machinery plant in Dnipropetrovsk, the former rocket-building plant. The main problem that has restricted the development of wind power in Ukraine is the lack of financing.