DThe German economy never tires of praising Ukraine as a country of opportunity for green energy. Even green hydrogen will soon come from there in large quantities. The Ukrainian government did not think of hydrogen energy in 2009, but recognized the potential of biomass, photovoltaic, and wind power—especially to make itself more independent of Russia. The on-grid tariff for renewable energy determined in 2009 was correspondingly higher.
Wind power is 11 Euro cents per kWh and 46 Euro cents per kWh. The on-grid electricity price is higher than German tariffs. By linking to the euro, exchange rate risks are avoided. This is why investors like to come to Ukraine. They just overlooked a risk: Kiev did not pay the promised fees. Since the beginning of last year, outstanding debts have continued to accumulate, and according to the latest statistics of the law firm involved, there are still 520 million euros. But now, the remedy may be in sight.
Because Ukrenergo, the Ukrainian national grid operator, issued the first green bond. This is also the country’s first discharge of such products. The trading volume of $825 million is almost three times that of oversubscription. The demand may not only be due to the 5-year interest rate of 6.875%. Osteuropabank’s (EBRD) commitment may also support the trust of market participants. She subscribed for a bond of 75 million US dollars. Volodymyr Kudrytskyi, CEO of Ukrenergo, talked about a historic day and set an example for other issuers.
He made a somewhat puzzling promise: “More importantly, this transaction is an important step in resolving the imbalances in the Ukrainian electricity market, which is related to Ukraine’s obligations in favor of renewable energy producers.” European Bank for Reconstruction and Development Write. More clearly: “Mit proceeds will cover all debts owed by renewable energy producers.” The investment will help “restore” the credibility of Ukraine’s renewable energy sector and increase the confidence of private investors and financiers. This should pave the way for much-needed investment to support the green transformation.
Less than half of the debt has been paid
The financing system will also change: competition will be through bidding instead of a fixed feed-in tariff. Grzegorz Zielinski, head of European energy policy at the European Bank for Reconstruction and Development, said the bond “paved the way for the development of more renewable energy through competitive auctions or other innovative commercial structures.” In the future, this will provide Ukraine with “cheaper and cleaner electricity.”
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However, most importantly, after the payment collapse in 2020, investors’ broken confidence in Ukraine as a location will be restored. Some wind energy and photovoltaic park operators turned to Ukrainian courts in despair because they knew that it is more difficult and difficult to do right in Ukraine than anywhere else. Modus Energy of the Netherlands sued Kiev in the Stockholm Arbitration Court in April. Diplomacy has also become active: in November a year ago, 17 ambassadors, including the German ambassador, wrote to the Prime Minister of Ukraine asking for the settlement of outstanding bills.
