Wind energy can partially compensate for the lost power generation capacities, but...
Andriy Konechenkov, Chairman of the Board of the Ukrainian Wind Energy Association
On June 20, 2024, russia launched another massive missile attack on Ukrainian energy facilities. This immediately led to increased duration of electricity supply⚡️ disruptions for both businesses and households. Ukraine’s energy infrastructure is intentionally destroyed by russia in order to cause maximum damage to the economy and undermine public morale before the next heating season. The state should respond decisively and do everything possible to maximize the inflow of investments into Ukraine from domestic and foreign investors.
The 10 GW loss of traditional power generation capacities should be compensated for by new distributed generation capacities. And here we have 4GW wind energy projects that are ready for implementation and will be useful and effective. At the same time the status of these projects has not yet changed from "ready for construction" to "under construction" due to a number of complicated factors.
Some of the most significant of them are the lack of insurance against war risks, and there is an unrepaid debt problem that still exists in the electricity market. Investors in renewable energy sources (RES) experience an underpayment of 40% for both 2022 and 5 months of this year. Obviously, it`s impossible to build new capacities without financial resources. Moreover, investors who have already invested their own funds in the Ukrainian economy are concerned about the potential threat of further deterioration of the business environment and market conditions (in particular, due to the possible cancellation of PSOs for the NPC "Ukrenergo" to provide financial support to RES enterprises at the transmission tariff rate of the system operator), and therefore they are also cautious about making further investments. Besides, the liquidation of PSOs for the NPC "Ukrenergo" was not supported by the EBRD which is one of the key investors in Ukraine. The above-mentioned factors also discourage other potential international investors from entering the Ukrainian market.
This has already resulted in lost time.
At the end of this month, the Energy Community Secretariat, led by Artur Lorkowski, is expected to gather all participants in the Ukrainian renewable energy market and other relevant stakeholders to present its road map for overcoming existing market challenges. The UWEA has a hope that the solutions proposed at the presentation will contribute to normalization and further development of the market and will be focused, in particular, on introduction of auctions, effective instruments for insuring against war risks, as well as measures aimed at improving solvency of the NPC "Ukrenergo" and Energoatom in order, among other things, to use this resource to physically launch the implementation of as many renewable energy and peaking power generation projects as possible in the short term.
We also would like to once again highlight the danger of the decision to cancel PSOs for the NPC "Ukrenergo", and we hope that the voice of the business community will be heard and the relevant decision will not be made.