July 18, 2016

Roadmap for small-scale hydropower projects in Ukraine

Roadmap for small-scale hydropower projects in Ukraine
In December 2015, the Ukrainian Ministry of Energy and Coal Industry and its minister at that time, Mr. Volodymyr Demchyshyn, asked for Norwegian and NUCC´s support on optimising the regulatory environment for small-scale hydro projects in Ukraine.
Ukraine is turning greener

The Ukrainian government has committed to increase the share of power from renewable resources to 11 percent by 2020.Ukraine hasgreat potential for developing hydropower with many suitable rivers, particularly in the Western parts. During Soviet times, there were about 1.000 hydro power plants in operation. Today, the number is less than 60. Investing in hydropower can help Ukraine to achieve the goal of alternative energy production.

However, when entering the Ukrainian hydropower sector (and others), project developers and investors encounter dozens of permits (related to land use rights, construction, health and safety e.g.) and face with several regulatory bodies. As of today, there is no systemised information in this regard and that is when the idea of a so-called roadmap was born.

Improvement of business climate and investment guide
The roadmap provides a guide for investors with interest in green-field projects, building the power plants from the very beginning. Further, it consists of concrete recommendation for policy makers on how to improve the business climate. The project team points out four key barriers to investments. The two first are political and regulatory risk. Ukraine has today 24 regulatory bodies. A consequence is that it takes time to receive all permits. Moreover, projects are only granted access to green tariffs after the investments are being made. The two latter are land issues and local politics. Therefore, a good dialog with local politicians and communities in this matter is crucial.

 

One of the key recommendations is to create an online single window with geological information and the possibility to apply for all permits. Such a portal was set up with support from Norwegian Water Resources and Energy Directorate (NVE) in Georgia and a similar project might arise in Ukraine shortly. Another recommendation is to improve financial predictability. This involves, among others, having clear criteria for access to green tariffs. In addition, the roadmap illuminates the practice within small-scale sector in Germany, Norway and USA in order to define how different issues can be solved.

The roadmap has been developed by “EasyBusiness”, a Ukrainian NGO, in collaboration with the Ukrainian law firm “EverLegal” and Mr Arne Jakobsen, founder and former CEO of one of Norway´s largest small-scale hydro development companies. Other contributors have been the Ministry itself and the Ukrainian Association of Renewable Energy to mention some.

The way forward

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The roadmap was handed over to Mr. Oleh Zhyshko, deputy head of strategy development in Fuel and Energy Sector and Investment Policy Department in the Ukrainian Ministry of Energy and Coal Industry during NUCC´snetworking meetingin Kyiv June 16th. The Ministry secured its support and replicated the wish of an increased cooperation within the energy sector. NUCC with its partners on the other side, will now use the roadmap to attract potential investors to Ukraine.
The processing of the roadmap was funded by the Royal Norwegian Embassy in Kyiv.
The roadmap can be read and downloaded here.

 

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