Analysis: Ukraine to push wind capacity despite unrest

UKRAINE: The expansion of Ukraine's wind power capacity will continue, despite the current political instability in the country. At least this is the view of the two leading wind developers in the region and the country's new government.

DTEK's Botievo wind farm in Ukraine
DTEK's Botievo wind farm in Ukraine

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Analysts at the Ukraine's energy ministry believe that the recent change of power in the country will accelerate the implementation of wind power and other renewables projects. Paradoxically, the dispute with Russia could aid this as Ukraine looks to reduce its dependency on Russian gas.

The new Ukranian government is also considering providing additional benefits to the investors of wind power projects, in particular reducing bureaucratic hurdles associated with granting state allowances for building new wind farms. However, the government has no plans to reduce the local content requirement for the building of wind power plants, which should reach 50% from 1 July.

Despite the current problems in the region, it also believes that the ever growing support of western countries will help to increase Ukraine's credit rating, which currently remains poor, blocking the country from receiving loans for the implementation of wind projects by potential local investors.

Large project

One of these is the LLC Wind Power company, which is part of DTEK, one of Ukraine's largest energy holding companies, owned by Ukranian billionaire Rinat Akhmetov. In April, LLC commissioned 35 wind turbines for the second stage of the Botievsky wind farm, located in the Zaporozhye region, and which is part of the Priazovsky wind project, thus increasing its capacity up to 200MW.

It will generate about 600 million kilowatt hours of electricity annually and will be the largest wind plant in Ukraine. The total investment in the construction of the wind farm amounted to EUR 340 million. Part of the funds for the project were provided by Germany's Landesbank Berlin.

In addition to Botievsky, DTEK also plans to continue developing two other wind farms as partof the Priazovsky complex: the Primorsky and Berdyansky projects. Full commissioning of the three additions to the Priazovsky complex, taking it to a total capacity of 550MW, is expected before the end of 2017. Vestas will supply all Priazovsky turbines.

Although Botievsky and Priazovsky are in the Russian-speaking regions of Ukraine, the Zaporozhe region in the south is currently stable. Still, DTEK, and Akhmetov, are believed to have a good relationship with the Russian government and a compromise deal with them could probably be achieved.

Other projects previously announced may also still go ahead, including Eco-Optima' wind farm in the Starosambirskyi area of the Lviv region, for which the investment is estimated at EUR 15 million, and a project by a consortium of Belgium Greenworx Holding NV and Turkish Guris Construction and Engineering.

According to Vitaly Murashkin, a senior analyst at the "Alternative" Association, which is one of Ukraine's leading associations in the field of renewable energy, Investors still interested in the Ukrainian wind power market include German developer WKN and French utility Compagnie Nationale du Rhône a.

The total capacity of the country's wind power plants should reach 4GW by 2030, however, according to the current Ukranian government, these plans should already be implemented by 2020-2022. At present, total capacity is estimated at 500MW, of which about 370MW is connected to the grid.

At the same time, nothing scares off investors more than political and regional uncertainty. Evidence of this follows Russia's occupation of the Crimea, where Compagnie Nationale du Rhône dropped plans to build a 50MW wind power plant. The same decision has also been taken by WKN, which planned to build two plants in the Krasnoperekopskiy and Dzhankojsky areas of Crimea before the change of power with total capacity of 400MW.

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