Ukrainian choice and «green tariff»: what awaits the energy market in the coming years?

Ukrainian choice and «green tariff»: what awaits the energy market in the coming years?

28.05.2017 Analytics

LET’S GO GREEN

2016 has set two opposing energy records. According to the International Energy Agency (IEA), oil production has fallen to a minimum level over the past 70 years. Mining companies continue to reduce costs associated with low oil prices. Mining has dropped to 2,4 billion barrels in 2016, compared with the average indicator of the last 15 years at 9 billion barrels annually. On the other hand, the renewable energy sector showed its largest annual growth. Today the world annually increases the power of renewable energy several times more than adds capacity from all kinds of fossil fuel sources in combination. By the end of 2015, the capacity of renewable sources has already allowed to provide 23,7% of the world’s electricity needs. According to IEA forecasts, this index will be 37% by 2040.

Significant changes have taken place in the structure of electricity sources over the past 10 years. The percentage of combustible and atomic sources is gradually decreasing now, and renewable one is constantly rising.

TOGETHER IS MORE EFFECTIVE 

Technical, economic and market transformations in the electricity sector continue to accelerate all over the world and many countries There are large-scale transformational shifts on the way to a complete transition to renewable energy in Europe. For the sake of it, companies and states even go for temporary losses abandoning old sources for the transition to new ones, which are more efficient and more environmentally friendly.

In 2011, Ukraine joined the Energy Community of Southwest Europe by acquiring the status of Contracting Party. Within the framework of its membership, Ukraine will continue to improve the efficiency of functioning of internal energy markets through the implementation of relevant EU legislation.

In 2015 within the UNO Framework Convention on Climate Change, the replacement of the Kyoto Protocol was followed by adoption of a new agreement- the Paris Treaty. It will start operating from 2020. It has to be fatified by at least 55 states, with greenhouse gas emissions of at least 55% of the world’s total.  Unlike the Kyoto Protocol, the Paris Climatic Agreement provides that commitments of reducing harmful emissions into the atmosphere have to be assumed by all states, regardless of the degree of their economic development. The Paris treaty imposes new obligations on Ukraine to reduce greenhouse gas emissions. The foregoing cannot but influence on the development of the energy sector as a whole, since it is the largest source of emissions. The energy efficiency and renewable energy sources will play a crucial role in this.

UKRAINIAN CHOISE AND THE “GREEN” TARIFF

In light of course on comprehensive European integration, Ukraine is joining the world community by the actual actions of encouraging legal and natural persons to produce and consume energy from “green” sources. Over the past two years, electricity generation from such sources has substantially increased. In 2016, 120 MW of new facilities for “green” energy objects were put into operation. In general, as for the beginning of 2017 in Ukraine, the capacity of renewable energy facilities is 1.1 GW (According to the State Agency for Energy Efficiency and Energy Conservation of Ukraine). Last year such objects produced more than 1.7 billion kWh.

Companies that produce energy from renewable sources are stimulated by the state as much as possible. The “green” tariff is not only one of the largest in Europe but also has a legislative binding to the euro. In fact, the essence of the “green” tariff is reduced to the next: the state guarantees the purchase of electricity from alternative sources at the “green” tariff until January 1st, 2030. The tariff is calculated for each object by the coefficient and, in general, for objects that will be put into operation by the end of 2019, it is

For the first time the idea of preferential tariffs had been implemented in the Unated States in the distant 1978 as a reaction to the energy crisis and in order to combat large-scale air pollution. The first law to promote energy conservation and the development of renewable energy sources has appeared there. In the 1990s Germany joined adopting a law obliging suppliers to buy electricity from renewable sources for a fixed fee.

In 2008 the Law “On Amendments to some Laws of Ukraine on Establishing a Green Tariff” was adopted in Ukraine. It is this time that serves as a benchmark for the deployment of companies producing so-called “clean” energy in the country. Small sources of hydroelectric power (with installed capacity up to 10 MW), wind, solar and power plants that use biomass as fuel were equated with such sources.

In 2015, another incentive Law was adopted, which abolished the requirement for a local component, introduced an increase of 5% and 10% to the tariff for the use of Ukrainian production equipment, increased tariff for biomass and biogas electricity generation.

The percentage of electricity generated from renewable sources in the structure of all sources in Ukraine is gradually increasing and is about 3%. Not much, but it is a good start.

According to the Ukrainian Association of Renewable Energy, the map of the location of renewable energy objects of the Association’s members is as follows:

The alternative energy in practice is one of the few industries in which investors continue to invest. The cost of equipment for solar power stations is gradually decreasing and new technologies in this area continue their implementation. For example, in 2016 in Dnipropetrovsk region the first tracker solar power station in Eastern Europe was launched. There are modules with a motion functions, which follow the movement of the sun on its panels. The movement of batteries allows to produce 50% more energy than conventional stationary installations. The solar power station “Solar Park Pidgorodne” is completely built at the expense of domestic investments. Businessmen spent almost UAH 20 million on the third turn. This station serves about 27 thousand households during the year. Not in last turn it was due to the support of the local authorities, which helped businesses to overcome the difficulties and as a result, investors continue to invest.

FUTURE BEGINS TODAY

It is undoubtedly that “green” energy, like any other has its advantages and disadvantages, but compared to other sources, the benefits are significantly higher. The renewable sources are getting cheaper and gain momentum even faster than it was predicted by reputable global analytical agencies. Their indicators are breaking records every year. The energy future of the planet is in renewable energy.

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