Making money off the wind. Windpower facilities in the context of the renewable energy development in Ukraine and globally

Today, the development of renewable energy is one of the key issues for modern society. The increase in clean energy technologies and implementation of the Paris Agreement expedite the end of the period of widespread use of coal. Wind power is potentially the largest source of green energy.

Advantages of wind power plants

The wind power industry provides the world with clean energy without any toxic emission into the atmosphere or generation of waste. Unlike gas or coal, wind is an inexhaustible and renewable source of energy. Wind farms are quite simple and inexpensive to maintain. They can be quickly installed and, moreover, their adjoining areas can easily be used for agricultural purposes and are absolutely safe for humans.

Wind energy contributes to the area’s development: its population gets jobs, local budgets – fees and taxes, and the national economy gets investments and new technologies. In addition, the development of renewable energy improves the country’s energy independence and stabilizes electricity prices.

Global wind power

In 2018, renewables accounted for 12.9% of global electricity generation. According to the International Renewable Energy Agency (IRENA), this amount will reach 86% by 2050. In the future, wind power industry can satisfy more than one third of the world’s electricity needs.

Global development of renewable energy sources by 2050. Source: IRENA 2019

Wind and solar is expected to become the main sources of electricity, leaving coal, oil and nuclear power behind. For this, by 2050, the global wind power capacity should reach 6000 GW (485 GW, Asia – 2 656 GW, Europe – 1 150 GW, South America – 183 GW, Africa – 527 GW, Australia – 62 GW), which is 10 times as bigger as the current capacity. To achieve these goal and preserve the climate for the period from 2016 to 2040, a global investment of 3.4 trillion dollars is planned for the development of solar energy technologies and 3.1 trillion dollars – for wind power.

The Ukrainian wind

The rapid growth of the wind energy sector is also observable in Ukraine. The National Commission for the State Regulation of Energy and Utilities (NEURC) predicts that by end of 2019, wind power will increase by 113% – to 1,136 MW.

In 2018, it was 533 MW. Last year, wind electricity generation reached 1 181.071 mln kWh. With the Botiyev Wind Power Plant, one of the largest in Europe (200 MW capacity), Zaporizhzhya region was the country’s leader in wind power in 2018.

It is wind and solar power plants that make up the largest share of renewable energy. They generated 82% of the total green electricity in 2018. Although the share of renewables (without hydroelectric power plants) in the energy balance of Ukraine is still 1.9%, it is growing rapidly – in 2018, the sector’s capacity increased by 51%.

The prospects of renewable energy in Ukraine 

Ukraine is attractive to investors – the country has many areas suitable for installing wind power projects and a desire to strengthen energy independence. In addition, the experts stress on the attractiveness of Ukraine’s legislation in the field of renewable energy sources (the Laws of Ukraine On the Electricity Market”, “On Environmental Impact Assessment”, “On Introduction of Certain Changes to Laws of Ukraine regarding Ensuring Competitive Conditions for Generation of Electricity from Alternative Energy Sources“).

The main impetus to attracting investment in the industry is the “green” tariff – a statutory price of electricity from renewable energy sources, at which the state undertakes to buy electricity. There is also an allowance to the “green” tariff for industrial power stations for using energy equipment made in Ukraine. The “green” tariff expires on December 31, 2029 and the renewable energy market requires revising the system of energy producers’ support.

“GREEN” AUCTIONS FOR SOLAR AND WIND POWER PLANTS

Date of the new system’s launch – January 1, 2020

Period of auction winner support (РРА)- 20 years

Quota planning period – annually for 5 years

Mandatory participation in auctions – new solar power plants with capacity > 1 MW from 2020; new wind power stations > MW from 2020

Bank guarantee amount – EUR 5,000 for participation;

Greentariff reduction – starting from 2020
for solar power – by 25% +2,5% in the next 3 years
for wind power – by 10%

Allowance to the “green” tariff for the use of equipment made in Ukraine by wind power stations – up to 10%

The launch of “green” auctions as a competitive pricing mechanism will become one of the industry’s new tools, but this is not enough for a seamless transition to the “green” tariff system. In order not to lose potential and current investors, it is crucial to entice the state structures (Ministry of Energy and Coal Industry of Ukraine, Verkhovna Rada Committee on EnergyHousing and Utilities Services, NEURC) into thoroughly analyzing the experience of other countries in the field of renewable energy, their legislation on special tariffs along with the current crediting rates. Also it’s necessary to compare the energy generation cost and the “green” tariff, as well as the cost of grid connection in Ukraine and in other countries.

In addition, great attention should be paid to developing balancing power capacities in Ukraine, and to work on legislation to encouraging installation of electricity accumulation facilities at power plants.

Source – exclusive materials of IB Centre from the SEF 2019 Forum

Additional info sources:

https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2019/Oct/IRENA_Future_of_wind_2019.pdf

http://uwea.com.ua/uploads/docs/uwea_2018_ua_web.pdf

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