Growing understanding of renewable energy potential in Ukraine, the Caucasus and Central Asia
Southern neighbours of Russia, which are heavily dependent on oil, have been showing increasing interest in renewable energy since the start of the full-scale war in Ukraine. There is now a better understanding of how fast deployment of renewable energy in the region is crucial to stabilise the region politically, speed up its economic development and solve many of the social and ecological problems.
Recently, REN21 and the United Nations Economic Commission for Europe (UNECE) published their UNECE Renewable Energy Status Report 2022 focusing on the 17 countries across South East and Eastern Europe, the Caucasus, Central Asia, and the Russian Federation. The report aims to promote the development of renewable energy in the region, examine the evidence and raise awareness about the vast potential of renewables and their benefits in the focus countries.
In the past months, we’ve seen that several other organisations and think tanks have organised events and published reports about reconstructing Ukraine in a green and sustainable way after the end of the war.
At EKOenergy, our core work concerns the additional social and environmental benefits that come about with widespread renewable energy use. We have increased our efforts to reach out to energy companies and consumers in Ukraine, the Caucasus and Central Asia. As part of these efforts, our Ukrainian volunteer EKO-Liana has reached out to Olga Sukhopara, Director of Development at the Ukrainian Association of Renewable Energy (UARE), and asked how Ukraine can cut its ties with fossil fuels and what she thinks the next steps for the renewables sector in Ukraine could be.
“Future ability to compete relies on the use of renewable energy”
The Ukrainian Association of Renewable Energy (UARE) is a non-commercial association also known for its comprehensive development of the RES sector and its popularisation. UARE was created to achieve energetically independent status for Ukraine and create a favorable environment for the development of renewable energy.
Ms. Sukhopara, how do you see the role of renewable energy in Ukraine during future reconstructions?
Before the full war started, Ukraine demonstrated a growth in the installed capacity of renewable energy technologies. Since 2009, the private sector has invested more than USD 12,3 bln in increasing the capacity as of 31 Dec 2020. Years 2018 (USD 2.4 bln), 2019 (4.1 bln) and 2022 (1.4 bln) were the most fruitful in terms of investment generated by renewables in Ukraine.
Moderate economic growth and the high share of nuclear power limited the rise of renewable energy. Nonetheless, renewables have shown an 8,7% share in electricity balance throughout 10 months of 2021. This is 0,6% more compared with the same period in 2020, when the share was 8,1%.
The role of renewable energy is growing as a response to the increasing threats to energy safety and independence. The war Russia initiated, nuclear blackmail in Ukraine as well as energy sanctions in Europe strengthen the argument for development of renewable energy markets.
“Technologies providing renewable energy should be at the core of energy sector development in Ukraine and must be in the national policy on rebuilding infrastructure.”
New residential buildings and offices have to be developed with cutting-edge technologies for energy management and self-sufficient renewable energy sources for real estate.
What do you think are the biggest challenges of Ukraine being powered by renewables?
Since 24 February 2022, the unprovoked Russian invasion of Ukraine is the most threatening challenge, but not the only one. The renewable industry in Ukraine, despite its rapid growth, has faced an environment with ad-hoc changes in energy market policy and constantly changing regulatory acts. In particular, the government of Ukraine as well as the Parliament have initiated several attempts to cut feed-in tariffs with no suggestions on market design improvements. Those initiatives were finalised with three reductions of feed-in-tariff and the recent one as of 1 August 2020. Another example is an introduction of changes to the rules of the Guaranteed Buyer operations which shifted over to renewables responsibility for trading imbalances of the Guaranteed Buyer. And the last example provoked by Russian aggression is the initiative of the government to cut feed-in tariffs for photovoltaics to 15% of the weighted average tariff in 2021. All those cut-offs were conducted with no renewables support policy improvements. For example, new auctions were not conducted for installed capacity. Moreover, the market premium on the contracts of differences was not designed at all.
We can summarise the challenges of the renewables industry in Ukraine in several simple categories: ad-hoc energy market policies, untransparent regulatory framework rapid changes, lack of human capital in the government and therefore inability to develop efficient evidence-based policies and last but certainly not the least- poor culture of innovative industries policy development which implies that wide society doesn’t understand a clear benefit of supporting newborn industries and the government is not motivated to force the change due to strong lobby of counterparties.
What ways are you looking, for now, to cut down on using gas and oil?
There are more than 45 000 households having installed photovoltaics at home as of December 2021. This is already a great step forward, but for a country with a 45 million population, it’s not that much. Thus, more innovative policies should be designed and implemented.
“Western companies in Ukraine are our allies in terms of energy market reforms.”
From your perspective for the upcoming year, what can we do more to convince consumers to buy renewables and speed up the energy transition? How do you see the role of the consumer?
Russia threatening to cut fossil gas supply to Europe has clearly shown that our future ability to compete relies on the use of renewable energy. Therefore, energy consumers are our allies, especially commercial consumers of electricity. It’s important to develop electricity markets that allow to mitigate price volatility risk, insure a predictable regulatory framework, and foster transmission of renewable energy among customers. Therefore, we need to work with businesses as well as households to make sure that we all are on the same path toward the development of our well-being.
Thanks a lot for this interview Ms. Sukhopara. Slava Ukraini!
Published on 24 October 2022