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					ESIF - Solar thermal strategy study - SUN IN ACTION                       UKRAINE - Page 1



 THE SOLAR THERMAL MARKET IN UKRAINE
1. Present market situation and future prospects

The main features of the Ukrainian energy economy are the wide range and the
significance of domestic production, especially of coal, gas and nuclear power. Despite
Ukraine’s relatively high levels of production and reserves of oil and gas, and despite
significant exports, the level of energy imports is still very high. The energy prices for
the consumer, especially in the domestic sector, have historically been far below world
prices of the equivalent energy products, as a result of the political characteristics of
the command economy.

The above issues and the economic situation of the country have important
implications for renewable energy, that in many respects discourage the development
of policies that would promote the use of renewable resources. Despite the Chernobyl
accident and the nuclear moratorium, there is no shortage of power generation or heat
production capacity, and therefore, no immediate pressure for renewables. The very
low levels of energy efficiency in all energy using sectors mean that the financial
returns from investments in energy saving are likely to be greater than those from
investments in renewables. However, there are several factors in favour of renewables,
like public awareness of the environmental and related health problems afflicting
Ukraine, the reliance on imported energy and others.

The renewable energy sources have not received much attention within the Ukrainian
energy economy until recently. Their potential, with the exception of large scale hydro,
is hardly recognised. In general, the renewable energy systems that have been
employed in Ukraine have been pilot and experimental projects, mainly on solar and
wind.

Solar data is available from the 200 meteorological stations and figures show that there
is a significant and potentially viable solar resource, which is limited to the Black Sea
and its hinterland, and the Crimea.

There are about 40 solar thermal installations with a total installed solar collector
surface of 10.000 m2. Most are flat plate collectors for demonstration projects,
providing hot water for a wide range of multi-storeyed buildings, but also for
kindergartens, cattle breeding farms, experimental houses, and pre-heat for power
stations, where it is thought that they would save 8-12% of the fuel. The end use is
split about equally between space heating and domestic hot water.

A 5 MW steam based power station is already operating with an output of only 2
Mwe; another one of 2 MWe of solar tower type is also operating. Ukraine was the
centre of the former Soviet Union’s programme on solar thermal water heating
developments, with Kiev’s Zonal Scientific Research Institute of Typical and
Experimental Design of Residential and Public Buildings co-ordinating the activities of
over 50 organisations (starting in the early 1960s). The total production by the time of
independence was about 100.000 m2, most of which has been used in Khazakstan.



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Over the last few years, there has been a shift away from active solar towards passive
solar. In general, it was found that active solar thermal is not financially viable,
although the search for cheaper and higher quality systems continues, with greater
emphasis on cost and quality than was the case before independence.

During the present transition period, the high rates of inflation and the instability of the
local currency are major constraints on renewable energy, coupled with poor
production quality and lack of experience in consumer products.

The organisations involved in renewables are still state-controlled. However, this
situation is expected to change in the future. Concerning the commercial development
of domestic hot water solar systems, it should be noted that a very large proportion of
dwellings is supplied by central hot water systems (thermal or CHP plants). Regarding
solar thermal systems in particular, the poor technical quality due to the use of non-
corrosion-resistant materials should be mentioned. The high cost of solar equipment,
its present poor quality and the high proportion of dwellings supplied by central
systems mean that the market at present is very limited. Referring to solar thermal
power, feasibility studies for 5 solar power stations in the range of 5 to 20 MWe are
being undertaken.

The main official renewable energy group in the country is the Ukrainian Academy of
Sciences in charge of R+D activities in renewables and technologies.

2. Solar system costs and energy prices

The cost of Ukrainian solar collectors in 1990 was in the range of 65 to 100 ECU/m2.
The estimated cost under mass production conditions at that same time was about 33
ECU/m2. The cost under present conditions is not known.

The energy prices in Ukraine by the end of 1992 were:

Energy source                    Producer price                 Consumer price
and units                                                 Industry        Household
Gas ECU/toe                         1,83                   5,62              0,23
Heating oil ECU/toe                57,34                  58,07              0,29
Heat ECU/Gcal                       2,10                   3,87              0,05
Electricity ECU/kWh                 0,0052                 0,0065            0,0005

An important characteristic of the Ukrainian energy economy is that the prices for the
consumer, especially for households, are only a small fraction of the energy production
costs.




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3. National energy policy

At present, the energy policy priorities of the Ukrainian Government are:
• to secure sufficient supplies of gas, oil and enriched nuclear fuels from Russia, and
• to obtain the financial and technical assistance needed for a major energy
   rehabilitation and conservation campaign.
Within this context, renewable energy is a relatively low priority. There is no evidence
that the Utilities have ever seriously considered the use of renewables other than large
scale hydro. However, there has been a major and often highly original research effort
in certain renewables, particularly solar and some stages of biomass conversion. The
result is a considerable body of research experience, but little ability to exploit this
experience in the development of reliable systems.

Despite the above factors, the present political conditions and the pressures on
Ukrainian energy supplies have given new urgency to the search for energy resources
alternative to those imported. Low technical quality is a major problem, and clear
standards are badly needed. In response to this need, the State Production and Energy
Association has been created by the Ministry of Energy and Electrification to organise
production and installation of plant using non-conventional and renewable energy
sources.

As a result of early studies on the state-of-the-art of non-conventional and renewable
energy resources, the following priorities have been set:
     wind, low head hydro, solar PV, solar thermal hot water, updating solar
     insolation measurements, geothermal power and heat, and some others.

In parallel, a Draft National Programme for Renewable Energy is now under
preparation. Although there is no firm target, the general feeling is that 10-15% of
Ukraine’s total energy supply should be covered by renewables by the year 2010. At
present, about 90 projects on renewables are under development. Collaboration with
foreign partners is encouraged, with 3-year tax breaks being available.

The environment is an issue in law 48 of the Constitution, with privileges provided for
clean and renewable energy technologies, but this law has not yet been put into effect.
VAT will be eliminated for some renewable energy equipment but the list of equipment
categories that might be eligible has not yet been prepared.

Prospects for market development

In the short and medium term, activities on energy conservation in all sectors of the
energy economy will be developed. In the long term, Ukraine will introduce renewable
energies in order to increase its energy self-sufficiency. Energy prices will continue to
move towards international levels, but this may take time in the commercial and
domestic sectors. The historically centralised and low cost nature of energy supply has
resulted in a lack of recognition of the real cost of energy. This reduces awareness of
the scope for renewable energy and will continue to do so in the short term at least.
The environmental issues have rapidly increased awareness of renewables but, at




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present, the political and economic crises mean that environmental issues are given low
priority.

However, once the present position is stabilised and reform of the economy as a whole
has progressed, it is likely that pressure for a much greater role for renewables will
increase rapidly, for environmental and to a certain extent for energy security reasons.
It seems that in the medium term, rural areas and the agricultural sector could be a
segment for solar collector market development.




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posted:7/28/2010
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