The future for the renewable energy sector in Ukraine?

The current challenges within the renewable energy sector in Ukraine was on the agenda when NEFCO met with Ukrainian media representatives today to discuss the financial institution’s activities in Ukraine and how it is supporting the green transition in the country.

Since 2003, NEFCO, the exclusively green international financial institution, has been supporting a sustainable development in Ukraine by financing green projects, which have a positive impact on the climate and environment. Over 200 projects, related to energy efficiency, district heating, renewable energy, and water and wastewater treatment have received financing from NEFCO.

Due to the green tariffs for solar and wind energy NEFCO noticed an increased demand by Nordic investors for renewable energy sector projects.  NEFCO approved financing for several larger projects in 2018 and 2019.

Currently, NEFCO has EUR 46.5 million invested in the renewable energy sector in Ukraine, in projects with a total capacity of 155 MW from solar energy and 266 MW from wind energy. Most of these renewable energy projects are now in operation and producing energy to the national grid. Ukraine had a very promising development in the renewable energy sector and all required supply chain components in place, from development and construction to operation and maintenance. Once the green tariffs were introduced, Ukraine also managed to attract foreign investors. Furthermore, the renewable energy stations are mostly built in remote areas in Ukraine, which contributes  to economic growth and increase of workplaces in these areas.

An increase from renewable energy sources is needed to support a green transition in Ukraine. During a transition period, NEFCO considers that it is necessary to keep higher rates for green tariffs.

“We are deeply worried that the Ukrainian government is cutting the green tariffs retroactively for projects already approved. We also cannot accept payment difficulties and delays by the guaranteed buyer for produced green energy to our clients. These two issues seriously damage Ukraine as a destination for foreign investments. For our part, we have decided to stop investing in new projects in the renewable energy sector in Ukraine until a predictable and sustainable framework is in place and agreements and payment obligations to our clients are being honoured by the Ukrainian government”, commented Trond Moe, Managing Director at NEFCO, when he talked to Ukrainian journalists.

In other areas, NEFCO will continue to develop and finance new projects in Ukraine to support the sustainable development in the country. Special focus is on small-and medium-sized municipal projects and projects with demonstrational effects to respond to technological developments and priorities by Ukraine and NEFCO’s owners, the Nordic governments. During the year, NEFCO has launched new financial programmes related to energy-efficiency, district heating and water and wastewater treatment with contributions from the Nordic governments and EU.

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