Wind Solar Energy

Ukraine Wind & Solar Energy
Investment Opportunity

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Opportunity summary

Opportunity to invest in wind energy in Ukraine.

Transformation of Ukraine’s energy sector on going. Wind energy is a priority area. Generous government feed in tariffs (FiTs) the highest in Europe are incentivising its growth.

Ukraine has excellent wind conditions and an abundance of available land for wind parks.

Wind Solar Energy LLC (WSE) has signed preliminary power purchase agreements (pre PPAs) with the Ukrainian authorities to lock in high FiTs until 2030 on a 400 MW wind park project pipeline.

The wind parks are very profitable forecast IRR rates are 23 26%, pay back periods are 4 5 years, after which parks generate profit with low opex for 20+ years.

Ukraine - macro environment

Ukraine is the largest country in Europe by area, and with 45 million inhabitants the eighth largest country by population.

It possesses rich farmlands, a well developed industrial base, a well educated labour force, and substantial mineral resources.

In recent years, considerable Western support, in particular from the IMF, EBRD, US government agencies and EU institutions, has helped Ukraine to make significant reform progress, and to address the long term challenges of underdeveloped infrastructure and institutions.

After a fall in GDP in 2014 15, the economy grew by 2% per annum in 2016 and 2017, and is projected by the World Bank to grow by 3.5% in 2018.

Reform progress

Tax reform

Anticorruption drive and improved transparency

Currency stability and reduction in inflation

Global Doing Business rank has improved from

152 in 2012 to 71 in 2018

Key macroeconomic indicators
2012 2013 2014 2015 2016 2017 2018
GDP GROWTH (%) 0.2 0 -6.6 -9.8 2.4 2.5 3.5
NOMINAL GDP (US$BN) 176 180 132 91 93 104 112
INWARD FDI (US$BN) 8.2 4.5 0.8 3.1 3.4 2.8 2.8
INFLATION (CPI % AV) 0.6 -0.3 12.1 48.7 13.9 12.8 9.5
UAH/USD EX RATE 8 8 11.9 21.8 25.7 26.5 27.3
Ukraine wind and solar energy market

The main form of state incentive and support for renewable energy in Ukraine has been the Green Tariff, a feed in tariff (FiT) introduced in 2009 as a special preferential price for electricity produced from alternative energy sources, and paid until 2030.

Ukraine has one of the highest FITs for electricity produced from renewable energy sources in the world.

As a result, renewable energy has grown rapidly from just 48GWh in 2010 to 2TWh in 2017

The FiT is established at the date the energy plant is commissioned, and runs until 1 st January 2030.

FiT is fixed in EUR, and is recalculated quarterly based on the official EUR/UAH exchange rate set by the national bank, resulting in minimal currency risks.

Wholesale electricity market operator Energorynok is required to purchase renewable power before other forms of energy (nuclear, coal…)

There is a supportive regulatory regime in place for renewable energy producers in terms of land access and environmental legislation.

FiT for wind energy in Ukraine (EUR/kWh)
2017-2019 0.068 0.102
2020-2024 0.06 0.09
2025-2029 0.053 0.079
FiT for solar energy in Ukraine (EUR/kWh)
2017-2019 0.15 0.164
2020-2024 0.135 0.148
2025-2029 0.12 0.131
Solar energy installed capacity in Ukraine 2009-2018 (MW)
Solar energy installed capacity in Ukraine 2009-2018 (MW)
Transition from a FiT to an auction based system
But FiT still available provided pre PPA signed in 2019

In December 2018, the Parliament (Verkhovna Rada) of Ukraine passed a “Law about Auctions” for the implementation of a new scheme for renewable energy producers based on auctions.

Date of implementation: 1 January 2020

Auction scheme:

• Participants submit closed offers that contain a technical proposal (the amount of capacity that the participant intends to put into operation) and a price offer (price per 1 kWh hour of electricity). Winners will be determined based on technical and price proposals, with price the main criteria.

Period of new support : 20 years

Despite the introduction of auctions from next year, the feed in tariff will be available until the end of 2029 for the following renewable energy producers:

• Producers that put into operation wind farms before 1 January 2020

• Producers that conclude a preliminary power purchase agreement (“pre PPA”) before 31 December 2019, and put into operation a wind farm within 3 years after the signing of the pre PPA.

t should be noted that FiT will be available until 2030 and is subject to decrease from 2020 for wind projects by 10%, with a further decrease by 1.5% each year for the next 3 years.