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Small-Scale Hydro Power Projects in Ukraine - Roadmap for Investors

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Small-Scale Hydro Power
Projects in Ukraine –
Roadmap for Investors
June 16, 2016
Kyiv, Ukraine
Arne Jacobsen and Alina Sv...

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Project’s aims: to inventory regulatory field for small hydro projects
in Ukraine; use best Norwegian experiences in polic...

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Ukraine has great potential to develop SSH projects
SHARE OF SSH IN ELECTRICITY GENERATION
 0,12% (compare: wind – 0,68%,...

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Small-Scale Hydro Power Projects in Ukraine - Roadmap for Investors

  1. 1. Small-Scale Hydro Power Projects in Ukraine – Roadmap for Investors June 16, 2016 Kyiv, Ukraine Arne Jacobsen and Alina Sviderska NUCC Networking Meeting
  2. 2. Project’s aims: to inventory regulatory field for small hydro projects in Ukraine; use best Norwegian experiences in policy making Source: EasyBusiness, NUCC SMALL-SCALE HYDRO POWER PROJECTS IN UKRAINE FUNDED BY SUPPORTED BY PARTNERS ACKNOWLEDGEMENTS
  3. 3. Ukraine has great potential to develop SSH projects SHARE OF SSH IN ELECTRICITY GENERATION  0,12% (compare: wind – 0,68%, sun – 0,33%, biomass – 0,05%) MARKET OPPORTUNITIES IN UKRAINE  64 small hydro power plants are in operation  100 - can be restored LOCAL COMPONENT  Not obligatory, premium to the “green” tariff for the use of equipment of Ukrainian origin KEY BODIES  Ministry of Energy, Ministry of Ecology, NEURC, bodies of local self-government NATIONAL PLAN FOR DEVELOPMENT OF ALTERNATIVE ENERGY SOURCES TILL 2020  Market share by 2020 – 11% Source: EasyBusiness, NUCC CURRENT SITUATION SMALL-SCALE HYDRO POWER PROJECTS IN UKRAINE GREEN TARIFF (EUR/kW)  2016-2019 – 0.1045; 2020-2024 – 0.0942; 2025-2029 – 0.0835
  4. 4. Norway is a great example of stimulating energy production from green sources (specifically small hydro) Electricity generated from renewables 98.4% Small hydropower capacity 1,989 MW Number of small hydropower plants 1,500 Source: EasyBusiness, NUCC INTERNATIONAL EXPERIENCE ELECTRICITY MARKET REGULATION  Norway aims to increase electricity production based on the renewables by 26.4 TWh by 2020. SMALL HYDRO OVERVIEW AND POTENTIAL • Large potential for small-scale hydro power plants – around 20-30 TWh per year. GUARANTEES OR INCENTIVES FOR INVESTORS  State driven and partly subsidized initiatives;  The green certificate scheme will be effective until 2035. SMALL-SCALE HYDRO POWER PROJECTS IN UKRAINE
  5. 5. Most problematic issues for the investors in Ukraine Source: EasyBusiness, NUCC RISK FOR INVESTORS DOZENS OF PERMITS AND REGULATORY BODIES UNSTABLE POLITICAL SITUATION LOCAL POLITICS GREEN TARIFF IMPLEMENTATION LAND ISSUES SMALL-SCALE HYDRO POWER PROJECTS IN UKRAINE
  6. 6. Permits roadmap: it can take around 2 years to get all necessary documents Source: EasyBusiness, NUCC Number of Permits Period Number of State Bodies 22 11m 12 LAND 3 5m 3 CONSTRUCTION ENVIRONMENT 5 3m 20d 4 MARKETING 9 8m 5 45 ~27m 24 REGULATORY ENVIRONMENT SMALL-SCALE HYDRO POWER PROJECTS IN UKRAINE
  7. 7. Structure of the permits roadmap: step-by-step guide on receiving permits in Ukraine SMALL-SCALE HYDRO POWER PROJECTS IN UKRAINE REGULATORY ENVIRONMENT Source: EasyBusiness, NUCC Type of the permit Issuer Timing (submission, consideration and validity periods) Fee for issuance of the permit List of permit application documents Form of official approval Investor will be able to find the following information related to land, construction, environment permits and marketing:
  8. 8. Implementation of presented policy recommendations should facilitate development of SSH projects Higher level of predictability for an investor and shifted administrative burden to state authorities SINGLE WINDOW APPROACH Investors’ confidence in project budgeting and financing in Ukraine FINANCIAL GUARANTEES ENSURED AT EARLY STAGES Transparent pricing and tariff policy for electricity. INDEPENDENCE OF THE ENERGY REGULATOR Enhanced evaluation of the possibility to start a new project in Ukraine OPEN ACCESS TO HYDROLOGY STATISTICAL DATA Avoidance of corruption and uncertainty risks STREAMLINE ACCESS TO LAND INFORMATION Policy recommendation Expected outcome Source: EasyBusiness, NUCC POLICY RECOMMENDATIONS SMALL-SCALE HYDRO POWER PROJECTS IN UKRAINE Elimination of misconceptions about an adverse effect of small hydro plants on the environment. NEW ENVIRONMENTAL STUDIES
  9. 9. SSH projects in Ukraine have a strong potential to generate revenues at 22-25 mln EUR over 35 years Source: EasyBusiness, NUCC ECONOMIC ANALYSIS SMALL-SCALE HYDRO POWER PROJECTS IN UKRAINE COST/BENEFIT ANALYSIS  A typical small hydropower plant will have initial capital costs at circa EUR 3.5 mln  O&M costs amounts to circa EUR 90k per  Annual energy generation – 10.5 GWh per year  Annual revenues amounted at EUR 0.6-1mln RESULTS OF ECONOMIC VALUATION  Over the course of 35 years, the project is expected to generate NPV of 14.6 mln EUR.  Project’s internal rate of return is 21%.  For the considered project, return on investment is about 2.7 times.  For the considered project 6.3 years is needed. COUNTRIES FOR BENCHMARK: NORWAY, GERMANY, USA, CEE COUNTRIES 3.5 22.9 Initial capital costs Total costs of O&M 14.4 Total revenues Cumulated cash flow 5.0 NET PRESENT VALUE CALCULATION, 2016- 2050, $ MLN 14,6 NPV
  10. 10. WWW.EASYBUSINESS.IN.UA FB.COM/EASYBUSINESS.IN.UA LINKEDIN.COM/COMPANY/4792478 INFO.EASYBUSINESS@GMAIL.COM

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