Development of solar projects under 1 MW in Ukraine


As you know, after the latest amendments to the Law "On the Electricity Market", all solar projects over 1 MW in Ukraine must participate in auctions for the distribution of the state support quota.

So today development of commercial solar projects up to 1 MW allows "killing two birds with one stone": investors have the opportunity to invest in a project with a guaranteed "green" tariff, and developers have no problem - what to do with unrealized 5-10 MW projects with land and technical conditions.

Based on our experience in dividing one 5-megawatt project into 5 separate ones, we made the following conclusions:

  1. The best choice is to allocate a separate legal entity (SPV) for each project. In our opinion, this greatly simplifies portfolio management.
  2. Each project should not exceed 1000 kW of peak capacity (DC). We often face a situation where the limit "up to 1 MW" is interpreted for inverter power, or for capacity mentioned in the technical conditions. In this case peak capacity exceeds 1000 kW, and at the moment of obtaining a license for electricity generation from the Regulator, the project can be sent to auctions!
  3. Of course, each legal entity must independently have confirmation of the right to use the land plot. This can be done by obtaining ownership rights, by separate lease agreements, or by sublease of land plots from the "original" legal entity.
  4. For each project (respectively, for each legal entity), separate technical conditions for grid connection are obtained. Any technical conditions previously obtained for a capacity of more than 1 MW should be canceled.
  5. Since each project will have its own technical conditions, both the power distribution schemes and the system of commercial metering of electricity in each case will be separate and independent. In practice, this requires designing a more complex system for connecting a group of SPPs to the grid, which must be approved by the Oblenergo (DSO).

The most complex and expensive scheme is when each project has a separate switchgear (distribution unit), from which a separate power transmission line (cable or air) departs to a separate cell at the Oblenergo substation (connection point). The weak points of this scheme, in addition to increasing CAPEX, are obvious: land acquisition for several parallel power lines with security zones; the need for a large free area on the territory of the Oblenergo substation to accommodate the required number of cells.

Logic suggests that the solution may be the construction of a common distribution point for the entire group of projects. One transmission line can go from it to the Oblenergo substation. In general, the distribution point should have separate cells with a metering system for each project. However, there is an important nuance in such a scheme: the legislation prohibits connection of renewable energy facilities over 1 MW to the substations not owned by the DSO. Respectively, this joint distribution point cannot be on the balance sheet of any of the legal entities. Thus, the developer finds himself in a situation where the distribution point located on the territory of one of the legal entities, must be transferred to the Oblenergo. The connection point should be located only in this distribution point, and the entire scheme "distribution point - transmission line - cells at Oblenergo substation" becomes part of the linear component of the grid connection costs. 

Our company IKNET is consulting a foreign investor in a similar project, where we provide the service of development and integrated design for a group of solar power plants on a turnkey basis. We will be happy to share our experience and help developers and investors to "reformat" projects to maintain a "green" tariff.