NIKOPOL – Next to a 40-year-old Soviet-era metallurgical plant here, Chinese-made solar panels spreading over 20 football fields speak of Ukraine’s ‘solar rush.’
The 10.5 mw, $13 million plant was built in five months. It joins another solar plant in this industrial city on Dnipropetrovsk Region’s southern, sunny border.
“We are going to break ground on four to five more solar projects in Ukraine in the next six months,” said Michael Yurkovich, who traveled here from Calgary, Canada for the inauguration Friday. Yurkovich, is president of Refraction Asset Management, an investment company that focuses on renewable energy projects.
Standing nearby, Elena Skrypnyk, contractor for the plant, reviewed her company’s solar projects.
“We are building seven projects around Ukraine -- we have more in the pipeline," said Skrypnyk, CEO of Helios Strategia. This Kyiv-based company says it is the largest builder of commercial solar plants in Ukraine.
The rush is spurred by investors’ desire to lock in Ukraine’s ‘green tariffs’ for solar power. At 15 euro cents per kWh, Ukraine’s tariff is among the highest in Europe. After a solar plant is constructed in Ukraine, the investors apply for a power purchase agreement. Currently, the National Electricity Regulatory Commission grants agreements with rates valid for 12 years.
But, the 15 cent tariff is only guaranteed for projects commissioned by the end of next year. Investors sense that Ukraine’s Rada could change of the rules of the game.
In mid-January, Alexander Dombrovsky, acting head of the Rada Committee for Fuel and Energy, told reporters that major solar projects – like a 1 GW project planned for Chernobyl – should not be granted the green feed in tariff. Instead, their power should be sold at auction. This could slash the tariff by 80%.
Ukraine’s nuclear, gas and coal lobbies complain that they produce 90% of the nation’s electricity and have to subsidize renewables. In response, renewable investors say the government has set a 2020 goal to produce 11% of the nation’s electricity from three renewables – solar, wind and biogas. Ukraine also has committed to the European Commission’s goal of 27% from renewables by 2030.
With this policy push-pull expected to continue, renewable investors are moving fast.
“We have another two Canadian solar companies coming in this week,” said Roman Waschuk, Canada’s Ambassador to Ukraine, who made the 600km trip south from Kyiv for the green ribbon cutting here. “We have a wind company coming in February.”
He said investment is boosted by the new Canada Ukraine Free Trade Agreement that went into effect last August. Even with the high green tariff, Refraction officials estimate that the Nikopol solar plant, which is self financed, will only pay for itself in 10 years.
Hani Tabsh, chief operating officer for Refraction, has practical advice for new comers looking for a site in Ukraine.
“You have to have power lines, good connection to the grid, land permits, and community support,” he said, warming up after the frigid opening ceremony.
The Nikopol site checks all those boxes.
It is built on a former industrial slag field, adjacent to the looming 1960s structures of the Nikopol Ferroalloy Plant, one of the world’s largest producers of ferromanganese. A massive user of electricity, the plant suffered electricity shortages in the 1990s that endangered its core furnaces.
“This is a case of turning a brownfield into a solar plant,” Amb. Waschuk said, as plumes of steam rose in the subfreezing temperature from the plant’s smokestacks.
With the plant Nikopol’s largest employer, the solar inauguration was welcomed by Andrei Petrovich Fisak, mayor of this city of 120,000, and by Oleg Miikhailovich Kurzhman, first deputy governor of Dnipropetrovsk Region.
As solar projects become increasingly common in Ukraine, no problems were encountered when importing panels and solar inverters, said Valentyna Beliakova, director of TIU Canada Ltd., the implementing company for Refraction. The 32,304 panels were supplied by JA Solar of Shanghai. The 392 inverters came from SMA Solar Technology AG of Niestetal, Germany.
Over the last decade, Beliakova has seen solar’s bumpy road.
At first, solar was a monopoly of one oligarchic group. Then, in 2014, Russia annexed Crimea, Ukraine’s sunniest region.
“From 2014 to 2016, nobody came, nobody invested,” recalled Beliakova, who has worked on renewable energy projects in Ukraine since 2011. “Now, it is one project after another.”
In a reflection of that turnaround, Beliakova is to pose this week for a photo shoot for a Bloomberg story on Ukraine’s solar power boom.
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Posted Jan. 28, 2018