Given the evolution of the political situation in Ukraine, culminating with Russia's annexation of the Crimea region in March, IHS Technology is questioning the outlook for existing and planned solar photovoltaic power investments in the country.
According to IHS analysis, at the end of 2013, Ukraine had 747 MW of solar PV capacity in operation and a pipeline of 700 MW. The Crimea region hosts 300 MW of PV systems. The driver for these investments was the generous feed-in tariff (FIT) – up to $0.61/kWh – in place since 2010.Â
IHS expects that PV plants in Crimea will eventually fall out of the Ukraine support scheme. Citing news reports, IHS says Ukraine's interim energy minister, Yuriy Prodan, has stated that the FIT for Crimea's PV plants will be abolished as the government establishes a new legislation regarding occupied territories. On the other hand, the European-Ukrainian Energy Agency has stated there could be continued FIT payments to PV plants in Crimea even after the annexation. Exactly what will happen depends on the evolution of the power and utility structure in Crimea. IHS sees a significant risk for Crimea PV plants to end up with void feed-in tariff contracts.
IHS predicts that the currently ongoing reform of the support scheme is set to scale down, but not abolish, the FIT rates for solar. Ukraine's continued high country risk will limit near-term renewable energy investments outside multilateral funding schemes.
Given that Ukraine represents less than 1% of global PV demand, the direct global impact is limited, IHS says. Suppliers with orders from Ukraine face cancellations and delays, as investors reconsider their plans.
‘IHS has revised down the 2014 PV forecast for Ukraine from 430 MW to 100 MW, with the market likely to be made up solely of plants that are currently under construction,’ says Josefin Berg, senior solar power analyst at IHS Technology. ‘For the period 2015 to 2018, continued political unrest and renewable energy policy revisions cloud the outlook. Ukraine had been the 13th largest market in the world in 2013, but IHS predicts that it will fall outside the top 20 in 2014.’