TRANSITION OF UKRAINE TO THE RENEWABLE ENERGY BY 2050 RESULTS OF MODELING OF THE REFERENCE AND ALTERNATIVE SCENARIOS FOR THE DEVELOPMENT OF UKRAINE'S ENERGY SECTOR TRANSITION OF UKRAINE TO THE RENEWABLE ENERGY BY 2050 RESULTS OF MODELING OF THE REFERENCE AND ALTERNATIVE SCENARIOS FOR THE DEVELOPMENT OF UKRAINE'S ENERGY SECTOR Y УДК 620.97(477)»…/2050»=111 П27 TRANSITION OF UKRAINE TO THE RENEWABLE ENERGY BY 2050 results of modeling of the reference and alternative scenarios for the development of energy sector Authors of the report: Dr. Oleksandr Diachuk1, PhD in Engineering, Leading Research Officer, Lead of the authors’ group (introduction, sections: 1.3, 2.2, 2.4 – 2.6, 3, 4.1, 5); Dr. Maksym Chepeliev2, PhD in Economics (sections: 2.1, 6); Dr. Roman Podolets1, PhD in Economics, Leading Research Officer (sections: 2.1, 2.3, 4.2); Dr. Galyna Trypolska1, PhD in Economics, Senior Research Officer (sections: 1.2, 3.3, 4.1, 4.4); Dr. Vitalii Venger1, PhD in Economics, Leading Research Officer (section 4.3); Tetiana Saprykina1, Junior Research Officer (sections: 3.1, 3.2); Roman Yukhymets1, Research Officer (section 1.1). 1 State organization “Institute for Economics and Forecasting” of the National Academy of Sciences of Ukraine 2 Purdue University, USA Edited by: Yuliia Oharenko, coordinator of the project “Scenarios for Ukraine’s Energy Sector Development by 2050”, and Oksana Aliieva, coordinator of the Climate Change and Energy Policy Program, Heinrich Boell Foundation Regional Office in Ukraine. Design and page layout: Anastasiia Skokova. П27 “Transition of Ukraine to the Renewable Energy by 2050” / О. Diachuk, М. Chepeliev, R. Podolets, G. Trypolska and oth. ; edited by Y. Oharenko and O. Aliieva // Heinrich Boell Foundation Regional Office in Ukriane. – Kyiv : Publishing house “Art Book” Ltd., 2017. – 88 p. ISBN 978-617-7242-39-9 The study “Transition of Ukraine to the Renewable Energy by 2050” was carried out in 2016-2017 by the State Organization “Institute for Economics and Forecasting” of the National Academy of Sciences of Ukraine with the support of the Heinrich Boell Foundation Regional Office in Ukraine and in cooperation with civil society organizations, public authorities, specialized in renewables business associations and independent experts. This study presents results of modeling of the reference and alternative scenarios for the development of Ukraine’s energy sector by 2050 and demonstrates how the transition from fossil fuels to renewable energy can be achieved and what economic impacts it will have. УДК 620.97(477)»…/2050»=111 ISBN 978-617-7242-39-9 © Heinrich Boell Foundation Regional Office in Ukraine, 2017 © State Organization “Institute for Economics and Forecasting” of the National Academy of Sciences of Ukraine, 2017 FOREWORD Just recently we believed that we have an undepletable source international consensus on the need of transition to renewable of almost free energy made of coal and gas. Today we painfully energy for reducing the emissions of greenhouse gases and realise that the years of delays and disregard of the necessity counteracting climate change give us an insight about the necessary for finding other ways to meet energy needs of Ukraine have direction for modernization of the energy sector in Ukraine. caused the energy crisis. That is why we decided that the first step towards the The conflict in Donbas and the lack of access to our own energy transition in Ukraine should be a study, which will show deposits of coal, outdated units of Ukraine’s nuclear power that replacement of traditional energy sources with renewable plants, the lack of investment in energy innovations and latest ones is possible and most importantly will answer the question technologies, rising cost of energy resources make clear that on what we can do for this. there is no time to postpone the problem. Kind regards, At the same time, rapid development of the renewable Head of the Heinrich Boell Foundation energy, the reduction in prices of solar and wind technologies, Regional Office in Ukraine, Sergej Sumlenny their higher environmental and social standards as well as the Ukraine has chosen energy independence as one of the energy brings additional investments into Ukraine’s economy priority directions for development. Therefore, today we are and opens up new horizons of development. confidently moving towards reduction and substitution of gas We are aware that the potential of clean energy consumption, increasing energy efficiency in various aspects of development is significant. According to the National life of the population and development of renewable energy. Renewable Energy Action Plan by 2020, we should provide There are many achievements in Ukraine. Over the past 11% of the energy needs of the state by renewable energy 3 years, about EUR 700 million have been invested in ‘‘green’’ sources in 2020. In addition to this, the share of ‘‘green’’ projects in Ukraine thanks to the consistent action of the energy in the total primary energy supply should be 25% in Government and the improvement of the legislative framework 2035. So, we continue to look for ways to accelerate the in the field of renewable energy. Almost EUR 400 million are transition to sustainable energy not only to achieve energy invested in the development of 1,670 MW of new thermal independence, but also to provide a decent future for future capacities using alternative energy sources. About EUR generations. That’s why this work is extremely important, as it 300 million were allocated by the business to set up 278 MW demonstrates the opportunities that are now open to Ukraine of renewable energy facilities. under the condition of intensifying the efforts of all market All these examples prove effectiveness of legislation, players towards sustainable energy and economic growth. which is the result of the fruitful cooperation between the Government, the Parliament, the State Agency on Energy Best regards, Efficiency and Energy Saving and all market participants. Head of the State Agency on Energy Efficiency This is confirmed by the fact that Ukraine has begun a and Energy Saving of Ukraine global energy transition for future economic growth. Renewable A key feature of today’s global economic processes Localization of these problems is not exclusive, is the rapid increase in the competitive struggle between therefore Ukraine should actively participate in low carbon countries for limited natural resources, the main ones being economic development initiatives, taking full care of present energy products and food. Almost no country in the world can and future generations. The task of scientists and experts in be fully self-sufficient with such resources. this context is to implement a comprehensive analysis of the As the results of many scientific studies show, the interdependencies between the conditions of use of natural use of traditional energy resources (coal, oil, gas) causes resources and the risks that it has for the environment. significant damage to the ecosystem of the planet and causes The State Organization ‘‘Institute for Economics and climate change, which in turn affects the health and living Forecasting’’ of the National Academy of Sciences of Ukraine conditions of the population and, as a consequence, the world is grateful for the proposal and support to the Heinrich and national economies. To address this problem, the world Boell Foundation Regional Office in Ukraine in conducting community is actively developing technologies and means of a scientific study on the possibilities of Ukraine to move to using renewable and clean energy sources such as wind, solar almost 100% use of renewable energy sources by 2050. Such a radiation, renewable bioenergy resources, and other in the transformation of the energy sector can become an important last decades. factor in the socio-economic development of Ukraine, which 3 will improve the living conditions of the population, transformation of energy and the economy, as well as increase competitiveness of the economy, resolving the challenges and threats, are not fully defined and examined as problem of an energy dependence, etc. Of course, such of today. However, we are sure that this movement is in the an “energy transition” will require significant resources right direction! (human, financial, technological), and will require the implementation of appropriate structural changes in Regards, Authors’ Group of the State Organization Ukraine’s economy. Presented results are the first step in “Institute for Economics and Forecasting” the “energy transition”. Further research should be carried of the National Academy of Sciences of Ukraine out considering that potential benefits of the long-term ORGANIZATIONS THAT SUPPORT THE TRANSITION OF UKRAINE TO THE RENEWABLE ENERGY BY 2050 Ukrainian Climate Network Ecoclub 4 ACKNOWLEDGEMENTS Heinrich Boell Foundation Regional Office in Ukraine and the State Organization “Institute for Economics and Forecasting” of the National Academy of Sciences of Ukraine express their sincere gratitude to the organizations and experts who participated in the research project, provided consulting support, took part in discussions, assisted in data collection and verification: Association of the Energy Auditors Regional Youth Environmental Union “Ecosphere” Vadym Lytvyn Oksana Stankevych-Volosianchuk Bioenergy Association of Ukraine Rengy Development Georgiy Geletukha Narek Arutiunian Tetiana Zheliezna Rentechno Group “Center for Environmental Initiatives “Ecoaction”