July 1 (Renewables Now) – The government of Ukraine needs to make improvements to the model power purchase agreement (PPA) that was adopted in April 2019, in order to reassure international investors, an industry expert tells Renewables Now.

Peter Gish, founder and CEO of wind projects developer Ukraine Power Resources, believes that the recently-introduced auction model is not satisfactory for many international investors, who, nevertheless, remain highly interested in the market. Gish is urging Ukraine’s National Energy and Utilities Regulation Commission (NEURC) to bring the PPA “in-line with the common international standards that these investors apply in emerging markets across the globe.” Gish, who was one of the speakers at the Ukrainian Renewables Forum held on June 24 in London, would like to see improvements to the assignment clause, dispute resolution and the change-in-law clauses.

A law adopted in April makes it mandatory for solar projects above 1 MW and wind projects above 5 MW to take part in auctions, which are expected to be held twice a year. The auction system becomes effective today, July 1. The existing feed-in tariff (FiT), meanwhile, is guaranteed until January 1, 2030. FiTs will continue to apply to renewable energy projects of any kind that are commissioned before 2020 and those with pre-PPAs signed by December 31, 2019. Tariffs, though, will be reduced after 2020 for both wind and solar.

“Ukraine must move forward with the auction process in order for international banks to allocate additional financing capacity for Ukraine renewables — not only for projects under auction, but also those currently under development under the 2020 FIT,” he said.

The American entrepreneur co-founded Ukraine Power Resources with Geoff Berlin, who is currently the company’s chief operations officer (COO). Their interest in Ukraine dates back to 2014, when the government introduced the FIT scheme with favourable legislation for renewables. Now they are ready for the auctions.

“The market is already highly competitive and we have seen a lot of interest from investors. The auction process, together with private PPAs, will have tremendous potential to drive down electricity prices. If executed successfully, the auction process could drive the price of renewables down on par with conventional sources of electricity,” Gish added.

At present, Ukraine Power Resources is working on the 100-MW Dnistrovskiy wind project in the Odessa Region of Southwestern Ukraine. This scheme is being financed with equity from Paris-based renewables developer Total Eren and senior debt financing from the European Bank for Reconstruction and Development (EBRD) and a consortium of lenders. Gish expects the project to enter the construction phase by December 2019.

The company’s wind project portfolio in Ukraine currently includes 230 MW in development, all in Odessa.

“Following the adoption of the auction scheme in 2020, we plan to develop, finance and build an additional several hundred megawatts of wind power capacity in Ukraine,” Gish concluded.