"IHS has revised down the 2014 PV forecast for Ukraine from 430 MW to 100 MW, with the market likely to be made up solely of plants that are currently under construction. For the period 2015 to 2018, continued political unrest and renewable energy policy revisions cloud the outlook. Ukraine had been the 13th largest market in the world in 2013, but IHS predicts that it fall outside the top-20 in 2014.
The evolution of the political situation in Ukraine, culminating with Russia's annexation of the Crimea region in March 2014, has raised a string of questions regarding the outlook for existing and planned PV investments in the country.
What will happen with the support for PV plants installed in Crimea?
IHS expects that PV plants in Crimea will eventually fall out of the Ukraine support scheme. In the news, contradicting statements have circulated lately. Ukraine's interim energy minister Yuriy Prodan has stated as reported in domestic media that the FIT for the Crimea PV plants will be abolished as the government establishes a new legislation regarding occupied territories.
On the contrary, the European-Ukrainian Energy Agency stated there could be continued FIT payments to PV plants in Crimea even after the annexation. Exactly what will happen depends on the evolution of the power and utility structure in Crimea.
As the local electricity market reshapes to accommodate the new geopolitical situation, IHS sees a significant risk for Crimea PV plants to end up with void feed-in tariff contracts.
How will RES policy support and investments evolve in Ukraine?
IHS predicts that the currently ongoing reform of the support scheme is set to scale down, but not abolish, the FIT rates for solar. Ukraine's 2030 renewable energy target is likely to remain in place as the country seeks closer ties with the EU.
The European Bank for Reconstruction and Development is already a prominent financier of Ukraine renewables projects via the Ukraine Sustainable Energy Lending Facility (USELF). Ukraine's continued high country risk will limit near-term renewable energy investments outside multilateral funding schemes.
How will the events in Ukraine impact the global PV industry?
Given that Ukraine represents less than 1% of global PV demand, the direct global impact is limited. Suppliers with orders from Ukraine face cancellations and delays, as investors reconsider their plans. For investors, the events in Ukraine demonstrate how PV investment attractiveness stretches beyond mere policy support. Investors will certainly need to carefully consider country risk indicators and wider attractiveness measures when considering future investment.
IHS Emerging Solar PV Markets Tracker publishes country risk indicators and attractiveness on a quarterly basis.
