Ukraine - Local requirements may stifle huge ambition

UKRAINE: The Ukrainian wind industry is entering 2012 with ambitious plans for further development. However, the country's image abroad, widespread corruption and restrictive legislation may dampen investors' enthusiasm.

A number of planned projects should come to fruition this year, including construction of a 500MW wind farm in the Chernivtsi region by Ukrainian financial holding NICA and four 200MW wind farms by French company Filasa International in Crimea. DTEK, Ukraine's largest energy company, has plans to build several large wind farms on the coast of the Azov Sea, totalling 1.2GW.

The Ukrainian government has introduced some measures to support wind-power development. An attractive feed-in tariff of EUR0.113/kWh is in place until 1 January 2030. This will be cut by 10% for plants built after 2014, 20% after 2019 and 30% after 2024.

Ukraine's very ambitious goal is to have 20-25% of wind power in its energy mix by 2025-30. At the end of 2011, total wind-power capacity was about 112MW, representing less than 0.5% of the energy mix.

According to Ukrainian energy analysts, one of the main barriers standing in the way of wind development is newly implemented legislation demanding that, from 1 January 2012, at least 30% of the raw materials, fixed assets and services used in the construction of wind farms should be of Ukrainian origin. This will rise to 50% after 1 January 2014.