Three years have passed since the first energy cooperative was established in Kharkiv region. What are the results of this pilot project? Is there any potential in such associations in Ukraine?
Kharkiv Energy Cluster was established in 2016 on the initiative of the public organizations of the Institute for Sustainable Development (Kharkiv,Ukraine) and the Foundation for Management Initiatives (Lublin, Poland) and with the support of the Ministry of Foreign Affairs of the Republic of Poland, the Kharkiv National University of Radio Electronics, and the Office of Investment Promotion and image projects of Kharkiv City Council.
The main purpose of the cluster was implementation of local renewable energy projects by integrating the capabilities of local citizens, organizations, businesses, and attracting investment from international institutions.
Source of the photo: https://www.euractiv.com/
The world experience
An energy cooperative is a new form of market participant for the Ukrainian energy sector; meanwhile, it is a common practice for Europe and the USA. This form of energy association is common in Sweden, Austria, Denmark and the Netherlands. For instance, there are more than 700 energy cooperatives in Germany, generating half of the country’s renewable energy capacity. It is the cooperatives that have become the driving force in switching German energy sector from fossil fuels to renewable energy. Initially, most cooperatives were set up to equip private houses with solar panels to satisfy own electricity needs. Having generated surplus electricity, they started selling it at the “green” tariff.
There are around 5,000 energy associations operating in the UK. And in the USA, 750 cooperatives in 46 states have formed the largest network, Touchstone Energy Cooperatives, and supply electricity to tens of millions of American citizens.
Today, the Kharkiv Energy Cluster’s members are: 22 engineering companies, 16 construction companies, 6 equipment manufacturers, 4 financial and consulting institutions.
By concerted efforts of the cluster’s members, 16 energy efficient buildings were created – with a capacity of 54.6 MW in solar power, 8.2 MW in heat generation, and 6.8 MW – in biogas generation. With the cluster’s participation, three photovoltaic electricity cooperatives were created: the first – on the roof of a multi dwelling unit (capacity 0.26 MW), the second – on the roofs of 4 private houses (capacity 80 kW), the third – on the roofs of 6 private houses (150 kW).
Stanislav Ignatiev, Executive Director of the Institute for Sustainable Development and the founder of the Kharkiv Energy Cluster
Among the benefits of participating in such cooperative is selling 100% of the generated energy, project payback for 4-4.5 years (payback of construction by an individual makes up 6-8 years), the opportunity to sell or lease a share in the cooperative, and project refinancing after repaying a loan in a bank.
However, since registration is made for a legal entity, connecting to the grids can be somewhat complicated. In addition, the cooperative pays VAT on received profits. Moreover, lack of rural communities’ trust in cooperatives, low social activity to initiate their formation, and lack of flawless legal framework restrain the emergence of new energy cooperatives.
Thanks to the Kharkiv Energy Cluster, energy efficient communities are functioning now in the village of Vesele, Kharkiv district, Hrynky village, Globinsky district, Poltava region, and the town of Kryve ozero, Mykolaiv region.
Vesele uses only renewable energy sources. For this purpose, two solid fuel boilers were built for heating the school and the club, a heat pump was purchased for heating the hospital, and solar panels were installed to illuminate the streets. Another project in the village of Vesele was constructing a 6-MW solar power plant.
In the community from Poltava region, all the social sphere units are heated using local agrobiomass. And on the roof of the kindergarten, there is a grid solar power station, the suplus electricity of which is sold at the “green” tariff.
The Kharkiv Energy Cluster’s example shows the effectiveness of associations of citizens, and small and medium businesses, breaking the old patterns concerning participation in such associations. In developed countries, energy clusters have become full-fledged market players; in Ukraine, they can accelerate the development of innovative renewable energy projects, local communities, and strengthen Ukraine’s energy independence.
Source: IB Centre’s materials from the SEF KYIV 2019 Forum