23 April 2021
Ukraine will benefit from building wind farms but policy fixes are needed for a quicker expansion
On 20 April WindEurope CEO Giles Dickson participated in the Ukrainian Wind Energy Association’s (UWEA) annual event on Ukraine’s “transition from green tariffs to market conditions”. He discussed how wind energy developments can be beneficial for Ukraine and how the country could design its future financing models.
Ukraine has 1.3 GW of wind energy capacity at the moment. But the build-out and development of new wind farms has slowed down over the last year or two. The Government has delayed the introduction of its promised auctions and has undermined market sentiment with a protracted dispute (now more or less concluded) over tariffs for existing wind farms. Ukraine has a big wind energy potential and could already have up to around 3 GW of installed capacity by 2025 if the right policies are introduced.
Wind energy will not just make Ukraine’s energy supply greener. It can also contribute greatly to economic growth. Each newly constructed wind turbine adds €10m to the economy and the industry already contributes €37bn to Europe’s GDP. With the right planning, Ukraine can have a slice of this pie too.
But for the quicker growth of wind energy in Ukraine it is essential that recent policy developments are turned into reality. The Government needs to start organising auctions. The framework for the implementation of auctions was adopted in 2019 but two years later none have taken place yet.
It is also crucial that the country moves away from the current feed-in tariff system to a market-based initiative such as Contracts for Difference (CfD). The current system has created financial uncertainty for developers. CfDs are the cheapest option and ensure more financial security for both the Government and developers.
With an expanded wind energy fleet, there will also be opportunities for Ukraine to produce renewable hydrogen. It is critical the Government recognises that the only true clean hydrogen is renewable hydrogen and it should therefore aim to stay away from producing hydrogen with nuclear power.
WindEurope CEO Giles Dickson said: “Building more wind farms will bring economic opportunities and new jobs to Ukraine as it has elsewhere in Europe. But Ukraine needs to start holding auctions for new capacity as soon as possible, ideally using CfDs. With a bigger wind fleet it will also be able to tap into new opportunities such as renewable hydrogen production and stay away from using nuclear energy to produce hydrogen.”