UKRAINE RENEWABLE ENERGY NEWSLETTER ISSUE # 20 12 December 2011 in This Issue I. Legal and Regulatory Developments II. Investmen
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UKRAINE RENEWABLE ENERGY NEWSLETTER ISSUE # 20 12 December 2011 IMEPOWER View During last months the progress has been observed with construction of wind and solar power plants. Wind Parks of Ukraine Ltd. remains the most active wind farm developer in Ukraine working in parallel on several projects in southern regions using Fuhrlander turbines. Second developer that succeeded to install the first turbine was Vindkraft Ukraine. It is worth noting that it was the first Vestas turbine that was installed in Ukraine with more turbines coming in the nearest years as Vestas has been chosen by DTEK as turbine supplier for the first wind power plant being built by DTEK. Active Solar is on good pace with commissioning its solar power plants and has set the regional record of 80 MW solar power plant after completion Okhotnikovo solar park. In general, it is worth noting that strong local developers relying on own financial resources and local political support are winning the race by commissioning their RES plants ahead of competitors. Encouraging sample of Vindkraft Ukraine shows that international developers also have chances for success. There have not been major developments with commissioning of biomass or small hydro power plants, while many projects are underway. Unfortunately, the President has vetoed the Law introducing green tariffs for biogas plants that makes questionable the economics of relevant projects. We hope that this story is not over yet and this decision can be revised next year. In This Issue I. Legal and Regulatory Developments 1.1. The Parliament adopted amendments to the Law “On the Power Sector” concerning local content requirement 1.2. The President vetoed the Law introducing the green tariff for biogas plants 1.3. The President reorganized the National Electricity Regulatory Commission 1.4. Wind park Ochakivsky received a license for electricity production 1.5. The NERC revised green tariffs for renewable energy producers in November and December 2011 II. Investment News 2.1. Voskhod Solar plans to construct solar power plants with total capacity up to 300 MW in Mykolaiv oblast 2.2. Activ Solar completed construction of 80 MW Okhotnikovo solar park 2.3. Activ Solar increased the capacity of Perovo solar power plant up to 40 MW 2.4. Kvazar looks for at least EUR 9 million from investor 2.5. Ekotechnik Praha intends to construct solar power plants in Ukraine in 2012 2.6. Rengy Development plans to build 50 MW solar power plants in Vinnytsia oblast 2.7. Development of renewable power projects by Wind Parks of Ukraine Ltd. 2.8. Fuhrlander will start assembling wind turbines at Kramatorsk by the end of the year 2.9. Vindkraft Ukraine installed the first wind turbine in Kherson oblast 2.10. Ukraine will construct transmission lines using EU funds to connect renewable energy facilities 2.11. DTEK has chosen Vestas as technical partner for construction of Botiyevsky wind power plant 2.12. British company ETHA TECH plans to build a waste recycling plant in Mykolaiv III. Commercial and Economic Developments 3.1. Ukrainian interest rates 3.2. Ukrainian exchange rates Yuri Kubrushko [email protected] Liliya Surzhenko [email protected] UKRAINE RENEWABLE ENERGY NEWSLETTER ISSUE # 20 12 December 2011 Legal and THE PARLIAMENT ADOPTED AMENDMENTS TO THE LAW “ON THE POWER Regulatory SECTOR” CONCERNING LOCAL CONTENT REQUIREMENT Developments The Law on Amendments to the Article 17.1 of the Law “On the Power Sector” (concerning the share of components of the Ukrainian origin in the cost of construction of power facilities) states that the share of raw materials, materials, main assets, works and services of the Ukrainian origin in the construction cost of power facilities that generate electricity from alternative (renewable) energy sources, the construction of which is initiated after 01 January 2012 and which are commissioned before 01 January 2013, should be at least 15%; for power facilities, the construction of which is initiated after 01 January 2012 and which are commissioned after 01 January 2013 - at least 30%; for power facilities, the construction of which is initiated after 01 January 2012 and which are commissioned after 01 January 2014 – at least 50%. Additionally, for solar power facilities commissioned after 01 January 2013 the share of materials and raw materials of the Ukrainian origin in the production cost of solar modules should be at least 30%, and after 01 January 2014 – at least 50%. The procedure for determining the share of raw materials, materials, main assets, works and services of the Ukrainian origin in the construction cost shall be approved by the National Electricity Regulatory Commission (NERC). The procedure for issuing certificates confirming the Ukrainian origin of goods for the purposes of this Law shall be approved by the Cabinet of Ministers. The Law shall come into force from 01 January 2012. It is our understanding that newly approved amendments will allow renewable power facilities, the construction of which has been initiated before 01 January 2012, to avoid necessity of complying with the local content requirement. THE PRESIDENT VETOED THE LAW INTRODUCING THE GREEN TARIFF FOR BIOGAS PLANTS In November 2011 the Parliament adopted the Law introducing green tariff for electricity produced from biogas. However, the President has vetoed the law, arguing against: - promotion of the development of electricity generation from biogas, reasoning that its cost after 2017 will be higher than the cost of traditional power generated from fossil fuels; - provision of the Law, under which alternative energy sources and traditional types of fuel can be used simultaneously; - provisions of the Law, according to which control over the use of funds received from the green tariff is imposed on the National Electricity Regulatory Commission, as this could strengthen the administrative pressure and would require additional expenses for organization of the specified control. At the same time, leading experts of renewable energy market of Ukraine expressed support to the idea of introducing the green tariff for electricity produced from biogas that prompted Parliament Committee for Fuel and Energy Sector to ask the President to re-consider partially his decision. THE PRESIDENT REORGANIZED THE NATIONAL ELECTRICITY REGULATORY COMMISSION The President liquidated the National Electricity Regulatory Commission and initiated creation of new commission for the electricity market regulation. Yuri Kubrushko [email protected] Liliya Surzhenko [email protected] UKRAINE RENEWABLE ENERGY NEWSLETTER ISSUE # 20 12 December 2011 This decision was confirmed by the Presidential Decree No. 1057/2011 dated 23 November 2011. The same day Viktor Yanukovych issued another Decree No. 1059/2011 establishing the National Commission on Energy Regulation. The main tasks of new agency will include the state regulation of activities of natural monopolies and business entities, operating in adjacent market, in the electricity and heat supply sector, markets of natural gas, oil (associated) gas, coal mines gas (methane) and shale stratum gas, oil and oil products, etc. By its structure, the new Commission is a state collegial body subordinated to the President and accountable to the Parliament. WIND PARK OCHAKIVSKY RECEIVED A LICENSE FOR ELECTRICITY PRODUCTION Wind Park Ochakivsky (Mykolaiv oblast, southern Ukraine) received a license for 20 years for the production of 75 million kWh of electricity per year. The National Electricity Regulatory Commission adopted this decision at its extraordinary public meeting on 28 November 2011. Wind Park Ochakivsky has completed the construction of the first WPP stage consisting of ten 2.5 MW wind turbines of Fuhrlander FL 2500-100. The cost of construction is about 350 million UAH; the payback period is 7 years. Under the project, it is planned to install 100 industrial wind turbines. According to the plans of the company, the second stage of construction in Ochakiv region will be started in 2013. Though, next year it is planned to build two relatively small WPPs in other regions of Mykolaiv oblast. THE NERC REVISED GREEN TARIFFS FOR RENEWABLE ENERGY PRODUCERS IN NOVEMBER AND DECEMBER 2011 In November 2011, tariffs for the electricity produced using renewable energy sources were increased by 1.44% compared to October level: for wind plants with installed capacity of more than 2 MW – 1 245.4 UAH/MWh, for small hydro power plants – 853.9 UAH/MWh, for biomass plants – 1 364.0 UAH/MWh, for ground objects of solar power – 5 123.8 UAH/MWh and for solar power objects mounted (up to 100 kW) and on facades (regardless of capacity) – 4 696.8 UAH/MWh. In December 2011, tariffs for the electricity produced using renewable energy sources were decreased till its minimum fixed level: for wind plants with installed capacity of more than 2 MW – 1 227.7 UAH/MWh, for small hydro power plants – 841.8 UAH/MWh, for biomass plants – 1 344.6 UAH/MWh, for ground objects of solar power – 5 050.9 UAH/MWh and for solar power objects mounted (up to 100 kW) and on facades (regardless of capacity) – 4 630.0 UAH/MWh. The green tariffs are revised on a monthly basis based on the exchange rate of EUR against UAH. Investment VOSKHOD SOLAR PLANS TO CONSTRUCT SOLAR POWER PLANTS WITH News TOTAL CAPACITY UP TO 300 MW IN MYKOLAIV OBLAST Voskhod Solar LLC plans to construct two solar power plants in Mykolaiv oblast – in Ochakiv and Berezanka regions. One of the plants will be constructed near Ochakiv, where a former military landing field was located. The area of the field is over 500 hectares. The Ministry of Defense gave a preliminarily consent to use this land for energy needs. Earlier Mykolaiv Oblast State Administration gave a permit to Voskhod Solar to develop land plot design for allocation of 107.975 hectares to construct a solar Yuri Kubrushko [email protected] Liliya Surzhenko [email protected] UKRAINE RENEWABLE ENERGY NEWSLETTER ISSUE # 20 12 December 2011 power plant in Berezanka region (resolution No 237 dated 09 September 2011).