Ukraine wants to focus on green energy exports, but this will put it in competition with Southern Europe
Ukraine is banking on its vast renewable energy resources to join the European Union, but will have to displace other nations to gain market space. In particular, the Southern European states that wanted to focus on offshore wind, Portugal and Spain, and which are just now discovering new green gold in their wind and solar resources. However, Ukrainian politicians are pushing ahead with plans for a green future, and their persistence could pay off in more ways than one, not least because costs are currently lower than in oceanic areas. This will cause a strong competitive problem in the EU.
Lighting a fire under Europe's renewable energy revolution
The war in Ukraine has put a brake on the development of natural gas in Europe and on attempts to replace it with renewable energy, especially wind energy on the North Sea.
The 2022 invasion also laid bare the geopolitical risks weighing on global energy markets and centralized energy production facilities, including nuclear power.
As part of its bid for EU membership, Ukraine has worked to portray itself as key to reducing Europe's dependence on Russian gas and transitioning to a low-carbon economy. This is a difficult argument to make unless the country can recover from Russian attacks on its energy infrastructure.
Further complicating matters for Ukraine, Mediterranean nations are seeking new markets for renewable energy in Northern Europe, as recently highlighted by offshore wind activity in Spain and Portugal.
Ukraine builds a better market for renewable energy
Ukraine had a head start on wind and solar energy adoption long before Russia's annexation of Crimea. For example, Vestas had purchased a large number of turbines, 90, for installation in the Black Sea already in 2012.
Until recently, however, the country did not have a market plan to accelerate the renewable energy industry. A key structural obstacle has been the state-run Guaranteed Buyer brokerage organization, which locks renewable energy producers into rigid contracts.
The situation is changing. Earlier this year the Ukrainian Parliament passed Law No. 3220-IX, aimed at stimulating the country's renewable energy industry.
Ukrainian energy and climate expert Maryna Denysiuk, who holds the role of Senior Project Manager at the Office for the Implementation of Reforms of the country's Cabinet of Ministers, explains how the new law provides alternatives to the Guaranteed Buyer system.
“The law allows the producer to leave the GB [Guaranteed Buyer] balancing group and choose an alternative way of selling its electricity on the market, increasing competition, instead of guaranteeing the purchase of the entire volume of electricity to a fixed price,” Denysiuk wrote in an article published on Ukrinform.net on November 26.
“In the face of continuous bombing, the resilience of the electricity system can be strengthened by the availability of reserve, autonomous and decentralized energy, including from renewable sources. We need energy from the sun, wind, water, biomass and biogas,” he added.
Decentralize to resist now, and relaunch later
Among the other provisions of law no. 3220-IX, Denysiuk emphasized the creation of a system to guarantee the origin of electricity produced by Ukraine for export, with the aim of satisfying buyers of renewable energy in Europe . The mechanism is expected to be operational in Ukraine by September 2024, with regional coordination to follow as an essential element for Ukraine's integration into the EU.
Denysiuk also stressed that Law No. 3220-IX is just the beginning. Other supporting laws and parliamentary actions are needed. In particular, he underlined the need to prioritize the decentralization of energy assets. This includes the reuse of old energy production sites.
The long-decommissioned Chernobyl nuclear site near Kiev has already become a showcase for the reuse of renewable energy. Ironically, the historic disaster that shut down the plant in 1986 is credited with aiding the breakup of the Soviet Union and the independence of Ukraine.
In 2018, Ukrainian company Rodina and German Enerparc AG built a 1-megawatt solar power plant at the site, aiming to demonstrate the feasibility of building renewable energy plants on the site of a nuclear disaster. Apparently, someone got the message, because plans are now underway to build a renewable energy plant on the site of the nuclear disaster.
Among other things, the Ukrainian grid will have to be rebuilt and this will happen, obviously, with European money and with generation standards different from the old coal-fired power plants. Furthermore, Ukraine focuses heavily on the export of energy produced internally and which now no longer has any use.
And green hydrogen, of course
Reading between the lines, “modern peaking power plants” could include natural gas with carbon capture, i.e. power plants that burn only the hydrogen component of natural gas. The same can happen for biomass production. Ukraine has already started laying out plans to position itself as a green hydrogen resource for the EU. Meanwhile, Mitsubishi and other engineering firms have begun introducing gas turbines designed to run on green hydrogen, thus directly generating power on site for export.
The Ukrainian organization Razom has also supported the creation of a green hydrogen industry in Ukraine, as part of its support for the country's renewable energy transition.
Reporting on a renewable energy collaboration initiative between Ukraine and Germany on October 25, Razom communications specialist Maksym Gardus noted that participants agreed on the “importance of rapidly introducing decentralized alternative energy sources to ensure operational reliable and stable energy system".
Green hydrogen production can then be sent via renovated pipelines to the West, and this can be produced from various sources, from wind, but also from nuclear, which has recently been labeled “Green”. Obviously this places Ukraine in direct competition with Portugal and Spain which are also aiming to exploit oceanic offshore wind. If the Ukrainian reconstruction attracts EU resources, these, obviously, will not be available to Madrid or Lisbon.
Money is not generated out of thin air in the EU, we are not China, so someone will pay for the green energy reconstruction of Ukraine. Who knows who it will be.
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The article Ukraine wants to focus on green energy exports, but this will put it in competition with Southern Europe comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/lucraina-vuole-puntare-sullexport-di-energia-verde-ma-questo-la-mettera-in-concorrenza-con-leuropa-del-sud/ on Mon, 04 Dec 2023 16:31:52 +0000.