Tetiana Mylenka Spoke at the Expert Discussion on the Electricity Market in Ukraine
On 13 August 2020, Energy Talk Show Electricity Market #2, a professional event in the energy sector, was held in Kyiv. The event was organized by the Energy Club business community. MPs, representatives from government bodies, energy companies and investors gathered for an expert discussion of the main achievements, challenges and problems of the electricity market in Ukraine following the first year of market operation.
Tetiana Mylenka, Counsel at Hillmont Partners and head of our Energy Practice, took part in a panel discussion entitled “Will there be a “green” light at the end of the energy tunnel?“. Tetiana expressed the opinion that despite its imperfections, the law on feed-in tariff (FiT) restructuring is the first real step by policymakers to resolve the current stalemate in the sector. One positive is that the state has made some concessions for solar energy projects. A number of international and Ukrainian investors, banks and representatives of the business community, as well as the EBRD, appealed to extend the feed-in tariff for 1-2 years, but such proposals were not taken into account. What actually occurred were FiT cuts, not FiT restructuring as was planned initially.
Tetiana made predictions on the next steps of lawmakers with regard to eliminating the obvious contradictions of the law. In particular, it is necessary to bring into compliance the stabilization clause for tax regulation in the RES sector.
According to Tetiana, we should not expect the launch of “green” auctions in the near future. It is far more likely that they will be announced in 2-3 years. Among other promising investment instruments in the sector, Tetiana pointed to corporate PPAs and re-profiling of projects to involve RES generation for the production of “green” hydrogen in accordance with the “Green” strategy of the EU (European Green Deal).
Tetiana noted that in 2019, corporate PPAs were concluded globally for a total capacity of 19.5 GW, of which about 70% is accounted for by the USA. Corporate PPAs can play an important role in enabling industrial consumers to move towards decarbonization. Corporate PPAs can also foster implementation of corporate commitments towards the use of “green” technologies by industrial consumers of electricity.
The possibility of introducing technologies for the use of “green” hydrogen is being actively discussed in the EU. On 15 April 2020, the European Association “Hydrogen Europe” presented a document entitled “Green Hydrogen for the 2×40 GW initiative of the European Green Deal”, which envisages the development of hydrogen technologies not only in EU countries, but also in Ukraine.
By 2024, an estimated 50 MW of electricity will be required for hydrogen production via electrolysis in Ukraine. Furthermore, the required capacity is predicted to increase to 1,800 MW by 2030. In order to export “green” hydrogen by 2025, Ukraine needs to commission 500 MW of capacity for hydrogen production. By 2030, plants for the production of hydrogen via electrolysis should reach a capacity of 8,000 MW.
“Green” hydrogen is produced exclusively from renewable energy sources. In order to achieve this objective, Ukraine would therefore need significant RES capacity.
Watch a recording of the discussion at https://youtu.be/tO8GOcsJ7qM