This document summarizes information about developing small-scale hydro power (SSH) projects in Ukraine. It finds that Ukraine has potential for SSH development but currently SSH makes up a small portion of electricity generation. It also outlines key regulatory bodies, the green tariff structure, permitting challenges including the lengthy process requiring about 2 years to obtain all necessary documents. Finally, it recommends policy changes like a single window approach to make SSH projects more attractive for investors.

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. 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. 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. 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. 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. 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. 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. 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. 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

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