Ukraine structures market for wind -- High power purchase price

Ukraine will soon have a market framework for the development of wind and other renewable resources with the recent approval of legislation introducing pre-determined purchase prices for wind power production. While the details of the wind power tariff must be hammered out by the National Electricity Regulatory Commission before a mid-January deadline, the law calls for a fixed price roughly double that of the wholesale price of electricity in Ukraine. With electricity prices currently running at about EUR 0.045/kWh, that would make for a healthy incentive price for wind power in the region of EUR 0.090/kWh says Andrei Konenchenkov of the Ukrainian Wind Energy Association (UWEA).

The association is pushing for the period in which the incentive will be paid to be extended to 15 or 20 years from the current ten years proposed. The so-called green tariff fills a virtual void for incentives for wind energy and other renewable resources. Previous subsidies were notoriously under funded despite a state program launched in the 1990s to develop wind energy.

Ukraine is estimated to have significant wind power potential and is likely to now be on the radar of an increasing number of foreign developers. Based on projects already in the pipeline, UWEA estimates the country could have 900 MW of installed wind capacity in 2012. According to a draft state program for promoting wind power developed this year, Ukraine could have 16 GW of installed capacity in 2030.

The country currently has just 89 MW in ten wind plants. The majority of the turbines in use are US Windpower 100 kW machines made under licence in Ukraine. The USW 56-100 model was once ubiquitous in the hills of California. US Windpower became Kenetech Wind Power, a publicly traded company in the US and a leading turbine supplier before its bankruptcy in 1996.

Components for the Ukrainian version of the 56-100 model are manufactured at 23 former military-industrial plants while assembly takes place at a former rocket-building plant. For the past five years, 600 kW turbines from Belgian Turbowinds, which once operated as HMZ Windmaster before its bankruptcy in 1995, have also been assembled in Ukraine, with towers and blades manufactured locally.

Ukraine is soon set to enter the world of megawatt class wind development, with two major projects in the pipeline. The first is a 300 MW project being developed by Nova-Eco, a consortium of foreign investors led by Portugal's Martifer. The project is split into 200 MW planned for the west of the Crimea peninsula and 100 MW for the east of the energy-dependent peninsula. Local company Konkord Group is also planning a 100 MW project on the Crimea peninsula.

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