small-scale hydro power projects in ukraine - roadmap for investors
TRANSCRIPT
Small-Scale Hydro Power Projects in Ukraine –Roadmap for Investors
June 16, 2016 Kyiv, Ukraine
Arne Jacobsen and Alina Sviderska
NUCC Networking Meeting
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
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
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
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
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
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:
Implementation of presented policy recommendations should facilitate development of SSH projects
Higher level of predictability for an investor and shifted
administrative burden to state authoritiesSINGLE WINDOW APPROACH
Investors’ confidence in project budgeting and financing
in UkraineFINANCIAL 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 UkraineOPEN ACCESS TO HYDROLOGY
STATISTICAL DATA
Avoidance of corruption and uncertainty risksSTREAMLINE 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
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
