Ukraine is trumpeting offers of breaks on tax and duties to lure
foreign investors in renewable energy as it pushes to reduce dependence
on Russian gas.
The government in Kiev wants 11 percent of Ukraine’s power to come from renewable resources, mainly biomass,
by 2020, Deputy Economic Development Minister Yuliya Kovaliv said in a
speech in Berlin on Oct. 23. Ukraine needs foreign investors to help it
reach its target in a market worth about 16 billion euros ($18 billion),
she said.
Foreign direct investment in the country is recovering, rising to
$904 million in the second quarter from $352 million in the first,
according to the National Bank of Ukraine. That compares with a net
outflow in the first half of 2014 as the conflict with Russia escalated.
Ukraine’s ambitious target for renewable energy reflects the need to
cut Ukraine’s dependency on Russian gas for heat and power, Kovaliv said
in an interview.
“We must press forward, developing those resources is essential to
energy independence,” she said. “Incentives for foreign investment in
renewable power are attractive in this process.”
Ukraine’s earliest onshore wind and solar
projects counted on loans from development banks including the European
Bank for Reconstruction and Development. Kovaliv said Ukraine is
offering added inducements for clean energy investors alongside feed-in
tariffs, including exemptions on VAT and import duties that expire in
2019.
Ukraine is focusing its clean energy policy on bioenergy, including
pellet-fired thermal power, in a drive to reduce 10 billion cubic meters
of gas in power generation by 2020, according to a February statement
of the State Agency for Energy Efficiency. The gas-saving target,
outlined in a National Renewable Energy Action Plan, is equal to a
quarter of the nation’s total gas consumption of 42 billion cubic meters
in 2014. Reaching the target rests on a significant expansion of
foreign investment.
The nation has about 3,650 MW in thermal power capacity from biomass,
according to the state agency. Ukraine can set aside about 4 million
hectares of agricultural land for energy crops without any risk to
agriculture for biomass, the agency said.