Will the Ukrainian household PV market repeat the fate of commercial segment?

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I don’t like conspiracy theories. However, it looks like an almost complete stop of renewable energy growth in Ukraine has been inspired and supported by the interest groups, which are not interested in the shift to a sustainable energy system. As a basis for the arguments previous actions and inaction of the Ukrainian state was successfully used. 

The rhetoric of this wide media campaign to undermine clean energy was supported by the following arguments (although their credibility is quite questionable):

  1. Feed-in tariffs are too high for the Ukrainian energy market. They cause an increase in tariffs for residential and industrial consumers. 
  2. Feed-in tariffs cause financial deficits in state owned companies, leading them to bankruptcies. Although, there have been obvious signs of manipulations by some traders, with continued silence from the Regulator. These schemes take out literally billions from the state companies. Renewables look like a scapegoat here.
  3. A great share of renewable capacities are owned by the oligarchs. Who of course profit from ordinary Ukrainians.
  4. The Ukrainian power grid is unable to accept big volumes of renewable generation without serious modernization. Meanwhile, draft laws regarding “urgently needed” energy storage and flexible capacities have been on the government’s tables for at least two years.

On September 4th The Security Service of Ukraine published a release regarding “exposed misappropriation in production of green power in Cherkasy region”. The SSU reports about an entrepreneur who instead of developing one commercial solar PV plant registered it as 100 separate private households in an empty field. The goal was to avoid all the regulations a developer has to pass in order to receive a commercial feed-in tariff.

Previously in June the Ministry of Energy had presented the analysis of the Ukrainian household PV segment. Their conclusion is that “the owners of private solar stations abuse the market regulation, using the current model of the feed-in tariff for private household PV projects.

“15% of the households with installed PV stations have null energy consumption. Another 11% have a 1 kWh consumption level. In general 41% of the households consume less than 10 kWh monthly even in the winter.”

“As of December 31, 2020, over 23% of the contracts for connection of the household stations are multiple for the owners. Out of them 12.06% are second for an owner, and 11.06% are third, fourth and more. There is a case of one person having 82 such contracts.”

Additionally, the state clearly states that further additions in the household PV stations with no changes to the status quo can cause a substantial rise in TSO’s transmission costs. Which most probably will cause an increase of the consumer prices.

The government offers a solution in developing changes to the support scheme for small generation, in particular introducing net metering scheme.

The situation looks constructive. There is an issue - and we are solving it.

But an example of the commercial solar segment in Ukraine demonstrates that an issue, either real or contrived, can be used for ruining the industry instead of optimizing it. At the moment nobody is able to confirm when the new support schemes will start working. However, one can do nothing and wait for the situation to become critical in order to justify the radical measures. Which can stop growth and investments in the industry.

In some form, all above mentioned arguments have been voiced:

  1. “High tariffs for household PV projects cause an increase in consumer electricity prices”.
  2. “Further additions of the household PV projects will cause the deficits of TSO and other companies”.
  3. “A great share of the projects are owned by a small group of beneficiaries, who use them for generating excess profits”.
  4. “Household PV projects negatively impact the national power grid”.

In no sense do I justify people involved in the multiple “private household” schemes. This is a criminal activity that deserves to be punished by law. But these people do not represent the community of the small PV producers. In contrast, this community consists of tens of thousands of good people, who invested their honestly earned money in the development of clean energy in Ukraine. No doubt they deserve support and protection.

The industry - companies, business associations, experts, NGOs - have to do everything in their power to continue the growth of small private solar projects in Ukraine. To make sure this market segment doesn’t stop like its “bigger brother” because of manipulations and the state’s inaction.