Ukraine

Country Profile

(.pdf file -  435 kB)

1. Overview

2. Policy and Incentives

3. Wind

4. Biomass

5. Solar

6. Geothermal

7. Hydroelectric

8. Links

9. References

10. Country Contacts

Ukraine is an emerging market economy at the crossroads of Eastern Europe, Russia, Central Asia, and the Middle East and holds great potential as a new market for trade and investment. Ukraine’s resources and economic strengths include very rich agricultural land, a strong scientific establishment, an educated and skilled workforce, and significant coal and moderate oil and gas reserves. Ukraine has achieved significant progress in opening its market to exports and investment, particularly in the last few years. However, prerequisites for sustained economic growth, such as improvements in rule of law and corporate governance, remain incomplete. Until these basic weaknesses are corrected, and an independent judiciary is established to support and protect them, Ukraine’s economic development is likely to lag behind its eastern European neighbors and be unable to attract the volume of foreign or domestic investment that the country needs to raise living standards.

Two overarching themes in the Ukrainian energy sector are obsolete infrastructure and systemic debts. Aging, Soviet-designed power plants and corroding pipelines contribute to inefficiencies throughout the energy system, as well as increased production and transportation costs. Even all this considered, there is considerable overcapacity in the Ukrainian electricity sector, meaning that no investment in new plants is necessary to ensure demand is met. While power shortages do occur during periods of peak demand, this is not due to lack of generating capacity, but rather fuel shortages, mismanagement, and poor maintenance of existing equipment.

Foreign investors have been actively courted and supporting legislation has been upgraded several times. Registered foreign investors are, in principle, guaranteed equal treatment with local companies. However, the Ukrainian courts' lack of true independence makes investors vulnerable to being ousted if they are investing in a strategic sector or company in which someone else more powerful is interested. This is especially true of the energy sector and other areas dependent on government relations or in which well-connected Ukrainian or Russian investors have a strong interest. Investors setting up in greenfield or niche areas are much less likely to have problems in this respect. There have been numerous examples of successful investment projects in Ukraine, but the uncertain political environment is likely to deter many others unless there are clear signs of a change.

The use of renewable energy in Ukraine was one of the principal goals of the 1996 National Power Energy Program. In 1999, however, renewable energy sources represented only 8.6 percent of electricity generation, a figure that includes hydropower, solar, wind, tide, geothermal, solid biomass and animal products, biomass gas and liquids, and industrial and municipal wastes. This figure appears low, but it can partially be explained by the fact that the development of renewable resources in Eastern Europe and the former Soviet Union remains limited primarily to expansion or refurbishment of existing hydroelectric units. Indeed, the National Power Energy Program called for completion of new hydropower utilities—such as the Dnistrovska hydro pumping storage station—to reduce dependence on imported energy sources. At present the use of renewable energy in Ukraine (excluding large hydropower) is less than 0.5 percent of the total primary energy demand.

The Ukrainian parliament passed a bill in July 2001 that aims to develop alternative energy sources such as solar and geothermal. Additionally, through the Wind Power Development Project, Ukraine seeks to establish wind power as a significant source of electricity generation by 2020.

Ukraine
Country Summary Table

Ukraine Electricity Balance (1992-2004)

Electricity Market in Ukraine

Source: Centrenergo

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The Ukrainian energy policy features several programs and laws which aim to stimulate the utilization and development of renewable energy. In 1997 the State Committee of Ukraine for Energy Conservation and National Academy of Sciences of Ukraine elaborated “The program of state support for the development of non-traditional and renewable energy and small hydro- and heat-power engineering as a component part of national energy program of Ukraine” which calls for non-traditional and renewable energy to cover 10 percent of the total Ukrainian energy demand by 2010. The program consists of three stages and is currently in its second stage with the main objective to start production of the equipment for the use of non-traditional and renewable energy and its implementation in Ukrainian regions.

Some Laws on renewable energy systems have been recently developed and accepted in Ukraine:

·          Law of Ukraine "On power energy" (October 10, 1997) amended in 2000: It envisages government subsidies for the construction of wind power plants. Further preferential tariffs for electricity generated at WPP are set.

·          Law of Ukraine "On alternative sources of energy" was accepted by Verkhovna Rada on 20 February 2003: It is a framework Law which defines the legislative, economic, ecological and organizational basis for the utilization and promotion of alternative sources of energy In the context of this Law the term “alternative sources of energy” is equalized to “renewable energy sources”. However no financial stimuli or other support mechanisms for the utilization of RES are mentioned.

·          Law of Ukraine "On combined heat and power production (co-generation) and utilization of dump energy potential" was accepted as a whole by Verkhovna Rada on 05.04..2005. This Law regulates relations between State, producers of power, which use co-generation technologies, dump energy potential of technological processes, and energy supply companies. This Law acts for qualified CHP plants. According to the Law, owners of CHP plants (independently of plant capacity) have unhampered access to local power grids and can sell produced power to individual consumers by contracts. Owners of qualified CHP plants have right to sell produced power to Wholesale Power Market of Ukraine and to consumers over all territory of Ukraine by direct contracts. Tariffs are set by the National Commission for Regulation of Power Industry of Ukraine. Till 2015 tariffs on heat and power produced by qualified CHP plants do not include target additions set by the Law of Ukraine “On power energy” (article 17), by the Law of Ukraine “On tax system” (article 14, item 26) and other normative and legal documents. In fact all concrete supporting instruments proposed in draft law were excluded from the final version of the Law. Nevertheless the Law on cogeneration is progressive as it gives owners of CHP plants access to power market of Ukraine.

The "Energy Strategy of Ukraine till 2030" is under development by a group of Ukrainian energy experts on the decree of the president of Ukraine and is supposed to feature a section on renewable energy systems. According to the draft version the targeted utilization of renewable energy systems is 4.7 percent of primary energy consumption in 2010 and 17 percent in 2030.

Further there is a decree of the former President of Ukraine L. D. Kuchma "On measures for the development of production of fuel from organic raw material" of 26 September 2003, which envisages stimuli for the production of fuel ethanol, biodiesel and biogas.

Additionally, President Yushchenko’s government's strategic task includes the modernization of the power industry, diversification of Ukraine's sources for fuels, and reliance on renewable energy sources and energy-saving technologies.

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The total installed capacity of Ukrainian wind farms is approximately 86 MW. Ukraine is a leader in wind power development amongst former Soviet Union countries and in Eastern Europe. Additionally, the country has the only sizable national wind energy program in the region.

A great number of areas offering good wind power potential exist in Ukraine. The greatest wind energy potential is located in the vast areas adjacent to the Black Sea and the Azov Sea, as well as the Carpathian, Transcarpathian and Lower Carpathian areas. Additionally, there are areas with elevated wind potentials in the Donbass terrain and Dnepropetrovsk Region. If brought on-line in all of these areas, wind farms can account for 20 percent to 30 percent of Ukraine’s demand for electric power.

Wind Map of Ukraine

On March 2, 1996 the Ukraine President, Leonid Kuchma, issued a decree calling for the development of wind power plants. It was the first such decree in any former Soviet country and formed the basis for a national program of wind plant construction to 2010 and beyond.

The "Master Plan of Wind Power Development of the USSR till 2010” published in 1989 included a country-level wind map. The wind regime in the territory of the Ukraine is determined by the presence of mountains (the Carpathians, the Crimea) and the effect of the Black Sea and the Sea of Azov. The wind conditions are generally assessed as favorable for wind power development in nearly 40 percent of the territory.

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The biomass potential available for energy production in Ukraine was carried out recently on the basis of statistic data. Ukraine has very fertile soils and could cultivate energy crops or use the waste from agricultural activities as an energy source. The main source of biomass in Ukraine is agricultural residues and straw cereals. Another potential source of biomass in Ukraine is cattle manure.

There are a few modern wood-fired boilers in operation in Ukraine. There are also a number of boilers originally designed for coal and oil combustion there were later converted for wood combustion which are now in operation at timber and woodworking enterprises. As a rule these boilers have fixed grates, batch fuel loading, low efficiency, and high emission. There is also one 980 kW straw-fired boiler in operation.

There are no combined heat and power (CHP) plants based on biomass, large anaerobic digesters for the processing of manure and food industry waste, or gasifiers for conversion of biomass in Ukraine.

An assessment of Ukraine reveals that even with modest assumptions, the Ukrainian agricultural sector could supply 500 to 800 billion kWh of primary biomass per year on medium term (i.e. 2010-2015).  Cost levels of liquid fuels produced from biomass could end up around 6 Euro/GJ, which is about competitive with production costs of diesel and gasoline from mineral oil.

Such amounts surpass the national demand for transport fuels and would allow for signification exports. Given the growing demand for biofuels in particular in the EU, biofuels could prove an extremely valuable export commodity for the Ukraine. The presence of large land surfaces of productive land that are hardly utilized and low costs of land and labor. In the longer term, after 2015-20, introduction of state-of the- art agricultural techniques could increase this potential further. Specific opportunities may emerge from the Chernobyl Exlusion Zone, covering over 4 million hectares of land, which may be restored again by introducing short rotation coppice crops to remove radioactive elements from the soil.

In addition, Ukrainian industry is capable of producing many of the required components for advanced conversion technology such as biomass gasification-Fischer-Tropsch plants (pretreatment, gas cleaning equipment, combined cycle technology, etc.) which may allow for lower capital costs than observed in Western European countries.

Ukraine Biomass Resource Data

Biomass resource type	Total production	Production density
Percent of total land area covered by
Forests	6%
Shrublands, savanna, and grasslands	1%
Cropland and crop/natural vegetation mosaic	88%
Urban and built-up areas	3%
Sparse or barren vegetation; snow and ice	0%
Wetlands and water bodies	2%
Primary crop production, tonne	(avg. 1999-2001, tonne)	(tonne /1000 Ha)
Total primary crops (rank among COO)	218,671,693  (2)	3,774  (2)
Top 10 primary crops
Mixed Grasses, Legumes	78,900,000	1,362
Maize for Forage & Silage	52,583,333	908
Vegetables and Roots, Fodder	16,000,000	276
Potatoes	15,353,667	265
Wheat	15,026,100	259
Sugar Beets	14,250,667	246
Barley	7,817,867	135
Maize	2,961,633	51
Sunflower Seed	2,832,000	49
Forage Products (misc)	1,400,000	24
Animal units, number	(number)	(number / 1000 Ha)
Cattle	11,174,050	193
Poultry	113,500,000	1,959
Pigs	10,078,150	174
Equivalent animal units	16,340,310	282
Annual roundwood production	(1996-98, 000 m3)	(m3 / Ha)
Total	10176	175.6
Fuel	1832	31.6
Industrial	8344	144.0
Wood-based panels	289	5.0
	(1996-98, 000 metric tons)	(metric tons / Ha)
Paper and paperboard	336	5.8
Recovered paper	150	2.6

The introduction of mini-electric power stations and mini-CHP plants burning solid biomass (wood, straw, hull) would be profitable if there was an increase in the electricity price or if there was an adequate subsidy. The ability to obtain heat from biomass is currently economically profitable, even when using imported equipment. Ukraine has sufficient technical potential for beginning production of combustion wood and straw boilers.

The technology of straw combustion is also very strong opportunity in Ukraine. However, increased use of the technology requires a solution to a series of problems such as the organization of collection, baling, transportation and storage of straw. First and foremost, the best prospect for implementing at agricultural enterprises has been farm boilers and the boilers for small district heating systems with power 0.1-1 MW. After the demonstration of advantages of these boilers, large district heating stations also have opportunities for commercialization.

The large biogas plants play an important role in this concept. There introduction is possible at pig farms (with amount more than 5 thousand pigs), poultry plants and enterprises of food industry. It is possible to construct in Ukraine about 3,000 biogas plants with the average volume of methane tank 1,000 m³ including 300 biogas plants at hog raising plants, 130 biogas plants at poultry plants and 2,500 biogas plants at cattle-raising farms and enterprises of food industry.

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Solar radiation in Ukraine is of middling intensity. The average amount of solar energy received annually in Ukraine is about 1200 kWh/m² (4300 MJ/m²). Even so, the current use of solar energy in Ukraine is minimal.

The solar energy resource potential for Ukraine is characterized by the maps of annual incidence of solar radiation on horizontal surface and direct solar radiation on a surface normal to beams, which are presented in figures below. The incidence of solar radiation is lowest in the northwester region of the country and highest in the southeast.

Annual incidence of total solar radiation on horizontal surface, MJ/m²

The monthly and total yearly solar radiation is shown in tables below for three locations: Borispol (near Kiev), Odessa, and Yalta

Monthly and annual total solar radiation incident on horizontal surface, MJ/m²