PV outlook in the Ukraine looks cloudier
For the period 2015 to 2018, continued political unrest and renewable energy policy revisions cloud the outlook concludes IHS.
Ukraine, which had been the 13th largest market in the world in 2013, is now predicted by IHS to fall outside the top-20 in 2014. At the end of 2013, Ukraine had 747 MW of solar PV capacity in operation and a pipeline of 700 MW. The Crimea region hosts 300 MW of PV systems. The driver for these investments was the generous feed-in tariff (FIT) – up to $0.61/kWh – in place since 2010.
"The evolution of the political situation in Ukraine, culminating with Russia’s annexation of the Crimea region in March 2014, has raised a string of questions regarding the outlook for existing and planned PV investments in the country," explained Josefin Berg, IHS senior PV market analyst.
IHS expects that PV plants in Crimea will eventually fall out of the Ukraine support scheme. In the news, contradicting statements have circulated lately. Ukraine’s interim energy minister Yuriy Prodan has stated as reported in domestic media that the FIT for the Crimea PV plants will be abolished as the government establishes a new legislation regarding occupied territories. On the contrary, the European-Ukrainian Energy Agency stated there could be continued FIT payments to PV plants in Crimea even after the annexation. Exactly what will happen depends on the evolution of the power and utility structure in Crimea. As the local electricity market reshapes to accommodate the new geopolitical situation, IHS sees a significant risk for Crimea PV plants to end up with void feed-in tariff contracts.
IHS predicts that the currently ongoing reform of the support scheme is set to scale down, but not be abolish the FIT rates for solar. Ukraine’s 2030 renewable energy target is likely to remain in place as the country seeks closer ties with the EU. The European Bank for Reconstruction and Development is already a prominent financier of Ukraine renewables projects via the Ukraine Sustainable Energy Lending Facility (USELF). Ukraine’s continued high country risk will limit near-term renewable energy investments outside multilateral funding schemes.
"Ukraine represents less than 1% of global PV demand so the direct global impact will be limited," said Berg. "Suppliers with orders from Ukraine face cancellations and delays, as investors reconsider their plans. For investors, the events in Ukraine demonstrate how PV investment attractiveness stretches beyond mere policy support. Investors will certainly need to carefully consider country risk indicators and wider attractiveness measures when considering future investment".
Related articles and links:
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