UKRAINE :WAYS TO INCREASE

RENEWABLE ENERGY SHARE

KOSTIANTYN GURAEXPERT VIEW

ENERGY EFFICIENCY AND RENEWABLE ENERGY SECTORAL POLICIES

2

Households Industry

State and local programs of co-financing of energy efficiency

Households stimulation on installation of wind and solar plants

Energy labelling systems

Full metering of energy consumption

Stimulation of recipients of subsidies to save energy

Services, Public Entities and Agriculture

Transport andNon-energy use

Energy Performance Contracts

The mechanism of energy management

Stimulation through energy tax

Energy Performance Contracts

Stimulation of liquid biofuels production

Extension of electric vehicles usage

33% 32% 8% 17% 10%

0,09 0,09 0,1 0,1 0,1 0,11 0,11

0,150,17

0,31

Germany Romania Lithuania Croatia HungarySlovak RepublicPoland Bulgaria Belarus Ukraine

Energy intensity in European countries (IEA,2014)

14,0911,65

9,60

8,80

6,92

6,38

0,73

0,53

0,49

2013/2014 2014/2015 2015/2016

Public Entities

District heating

companies

Population

- 19%

- 14%19,09

16,47

23,62

121236

56

202

207

301

39

131

6990

177

39

2014 2015 2016

Public Entities

District Heating

Plants

Population

Industry

452

752

466

Reduction of gas consumption

during heating periods 2013 /

2014, 2014 / 2015 and 2015 / 2016*

New biomass heat generation

facilities

launched in 2014, 2015, 2016 **

bln m3MW

1 670 MW

KEY PRIORITY: SUBSTITUTION OF NATURAL GAS

*According to "Naftogaz Ukraine“ (Excluding Crimea, Luhansk and Donetsk regions).

**According to regional state administrations.

More than €384 mln

investments attracted

3

Ukraine's 2020 Renewable Energy Strategy

National Renewable Energy Action Plan

(Order of the Cabinet of Ministers №902-р 01.10.2014)

11% energy produced from

renewablesin final energy consumption

4

2009 2016 2020

Power plants

installed

capacity

4 625 MW 7 977 MW 10 900 MW

Power

generation11 471 GWh 18 726 GWh 26 000 GWh

Heat and

Cooling

1 473 thou. toe 3 576 thou. toe 5 850 thou. toe

14 730 thou. Gcal 35 760 thou. Gcal 58 500 thou. Gcal

Transport 52 thou. toe 298 thou. toe 505 thou. toe

TARGETS OF NATIONAL RENEWABLE ENERGY ACTION PLAN TILL 2020 (NREAP)

€ 12 BLN– REQUIRED INVESTMENTS TILL 2020

FOR NREAP IMPLEMENTATION

5

Premium for Ukrainian equipment usage isprovided – 5-10% to existing tariff;

Signing of bankable long-term PowerPurchase Agreement (PPA) with feed-in tariff

till 2030;

Stimulating tariffs for heat produced fromalternative sources envisaged.

LAW OF UKRAINE «ON FOSTERING RENEWABLE ENERGY DEVELOPMENT»

Technology/Comm.Year 2015 2016 2017-2019 2020-2024 2025-2029

Biomass 123.86 123.86 123.86 111.48 99.09

Biogas 123.86 123.86 123.86 111.48 99.09

Geothermal 150.25 150.25 150.25 135.17 120.09

Small Hydro (0.2-1MW) 139.48 139.48 139.48 125.48 111.48

Small Hydro (1-10MW) 104.47 104.47 104.47 94.24 83.47

Solar (ground based) 169.64 159.94 150.25 135.17 120.09

Solar (roof based) 180.41 172.33 163.71 147.56 130.86

Wind (>2MW) 101.78 101.78 101.78 90.47 79.16

Solar (private households) 200.32 190.09 180.94 162.63 144.86

Wind (private households) 116.06 116.06 116.06 104.47 93.16

38

100123.86

Poland Germany Ukraine

Average biomass feed-in tariff,

EUR/MWh

6

INSTALLED CAPACITY OF RENEWABLE ENERGY OBJECTS WORKING UNDER THE "GREEN" TARIFF

412 432531

698

426 426

438

46280 87

90

93

35 35

39

39

1417

20

28

Cap

aci

ty, M

W

Біогаз

Біомаса

Малі ГЕС

ВЕС

СЕС

2014

Biomass

Small Hydro

Solar

967997

1 118

1 320

2015 2016 9 months 2017

Biogas

Wind

During 2.5 years were installed 353 MW and € 345 mln investments attracted 7

21 40 94 132244298430625

11091309

1635

2323

ІV qt. 2014І qt. 2015ІІ qt. 2015ІІІ qt. 2015ІV qt. 2015І qt. 2016ІІ qt. 2016ІІІ qt. 2016IV qt. 2016І qt. 2017ІІ qt. 2017ІІІ qt. 2017

Number of private households

DYNAMICS OF SOLAR INSTALLATIONS

IN PRIVATE HOUSEHOLDS

0,1 0,3 0,8 1,2 2,2 3,4 5,17,9

16,720,1

24,9

37,1

ІV qt. 2014І qt. 2015ІІ qt. 2015ІІІ qt. 2015ІVqt. 2015І qt. 2016ІІ qt. 2016ІІІ qt. 2016IV qt. 2016І qt. 2017ІІ qt. 2017ІІІ qt. 2017

Installed capacity, MW

€ 34,7 mln investments attracted

The number of private houses eligible for solar panels installation is 6,5 mln

8

UAMAP comprises detailed information on more than 60 implemented and 52 potential projects that require investments & soft loans in amount of

€ 1,2 bln

SAEE

22www.uamap.org.ua

9

ADDITIONAL INSTRUMENT TO IMPLEMENT STATE STRATEGY IN ENERGY EFFICIENCY AND RENEWABLE ENERGY FIELDS

Investment Division of SAEE:The first stage: communication with local authorities and business;Second stage: communication with representatives of credit institutions and IFIs;Third stage: define projects with feasibility studies;fourth stage: collaboration with SCS "GIDC" to attract investment in projects.

State Company Subdivision «Green Investment Development Center» created by SAEE decree

Places for projects implementation screening

Feasibility studies development

Projects support at the national level3.

2.1.

Web: www.gidc.in.ua

Received

300 projectsto attract investment

State Company Subdivision «Green

Investment Development Center»

Department on Investment Activity

in Renewable Energyof SAEE

&10

FINANCIAL GAPS

• Lack of long-term financing instruments in renewable energy sector;

• Not enough of private equity capital to receive loans;

• Lack of collateral to secure loans;

• Absence of professional technical and financial expertise of renewable energy projects;

• Undeveloped insurance market with lack of financing products for renewable energy companies;

• Deficit of bankable ready to start renewable energy projects.

ADVANTAGES

Feed-in tariff till 2030 is fixed to EUR currency and Guaranteed by Law:

• 100% of power produced within feed-in tariff must be purchased by Market Operator (Guaranteed Buyer);

• Renewable energy projects’ developers have an option to obtain PPA at the construction phase till 2030;

• Investment attractiveness of RES Heat Production Market.

ADVANTAGES AND CHALLENGES OF RENEWABLE ENERGY MARKET

GIF UA could simultaneously support green projectsdevelopment as co-owner and guarantor for obtaining aloan;

GIF UA provides financing at the start of the project inthe amount of 20% of total equity;

The rest - 80% may be covered by the owner of theproject with attracting funds from other stakeholdersplus obtaining a loan from lending institutions;

Turnover of GIF UA comes from the sale of its share incommissioned projects.

Investments required

2014-2020

Investments attracted

2014-2020Financial gap

till 2020

11

R

e

p

o

r

t

i

n

g

Recommendation to finance the project

«А» Donors

«В» Lending Institutions, Banks

«С» IFIs, Private Investors

GIF UA

Supervisory Board (IFI’s, other donors, …)

Executive Committee

Technical Office

PROJECT OWNER/

INITIATOR

who is ready to implement the project

but lacks funding

Investment projects

(with feasibility study)

Investment projects

(without feasibility study)

1

2

3

4

GIF UA: Scheme of operation in brief

Elaboration of project documentation

Cooperation Customer appeals to GIFand selects interestingproject(s) or offers hisown.

Application Form isprocessed by TechnicalOffice of GIF

Decision on the form offinancing and interactionwith project

GIF assesses and offersits share in RES project

Financial institutions "A", "B", "C" finance the project

Signing a contract Credits and cost-sharing. Implementation of

project

1

7

5

6

2

3

REFUSAL APPROVAL

Application Form

4

5-6-7

SolarGeothermal

WindHydro

BiomassBiogas

GIF UA

Lending Institution

Private investor

Project owner/initiator

«D» City, district and regional

councils

12

Kostiantyn Gurakostiantyn.gura@gmail.com

Adviser on a Voluntary Basis to Head of State Agency on Energy Efficiency and Energy Saving of Ukraine