INVEST Ukraine

Open for U

Yuliya Kovaliv

June 2016

Energy sector: Challenges

0,11 0,13 0,13

0,20

0,32

0,00

0,10

0,20

0,30

0,40

Germany Romania Poland China Ukraine

Energy intensity of GDP, 2014

Extremely high energy intensity of GDP

Poor energy sources diversification

Insignificant part of renewable energy

Only 60% of energy resources produced domestically

Low level of energy efficiency

Inefficient consumption

Obsolete equipment and technology

45,24%

48,15%

5,66%

54,77%

39,43%

Power generation structure by source

Coal & Gas

Nuclear

Hydro

Renewables 7M2015 7M2014

0,73 1,18

3,6

6,8

0

1

2

3

4

5

6

7

8

2010-Apr2014

2014 - 2015 Apr 2015 -May 2016

from May-16

Household gas tariff evolution (UAH/m3) Increased gas production by State-owned company UGV to 20 B m3 per year by 2020

Fighting corruption

Diversification of gas supply

Higher prices will allow UGV to increase CapEx in production facilities, incl. new conventional gas production and first-in-Ukraine fracturing operations

Increased home production will lower dependence on imported gas

Unification of retail commercial and household prices eliminates possibilities for corruption

Market based energy tariffs

Electricity market reform

Privatization of regional power generation plants in 2016 (incl. Centrenergo 7,67 GWt)

Investment in infrastructure Reconstruction of Northern and Dnipro Energy transmission system (€150m KFW loan)

Construction of 6 Dnister hydropower stations with total capacity of 390 MWt

Construction of Kaniv hydropower plant

Market-based tariff schedule till 2017 adopted

New Electricity Market Law

Seeking competition and diversification

Renewable Energy

11% National Action Plan Goal:

of RES in Ukrainian energy mix by 2020

Total amount of investments required – € 16 B: € 8,5 B of which should be directed to the field of electric power production; € 6,9 B – for heating and cooling; € 0.6 B – for transport.

Solar power stations 15,99 €ct/kWh; Cogeneration plants on biomass and biogas 10,45 €ct/kWh;

Geothermal power stations 10,45 €ct/kWh;

Small hydro power stations 10,45 €ct/kWh;

Wind power stations 6,79 €ct/kWh;

Available investment projects on renewable energy. Implemented competitive green tariffs:

Premium for usage of Ukrainian equipment +10%

Energy Efficiency Improvement

12 B m3

annual natural gas savings in 2030 6.5M

individual houses

80K multi-dwelling buildings

Renovation consistent with EU requirements

571 M UAH 111 K loans

700 M m3

annual natural gas savings

100 K public bodies’ buildings are to be renovated € 4.4 B

Investments needed

Residential Sector

Reimbursed 2014-2016:

Goal of the program till 2030:

Public Buildings

Netsavings(≈50%ofinitialvalue)

Ukraineselected“Sharedsavings”ESCOagreementmodel

BeforeESCO DuringESCO(<10y) AfterESCO

Publicbody’senergyspending Netsavings(10-20%ofsavings)

ESCOpayment(80-90%ofsavings)

€ 35 B Investments needed (including € 7,7 B Government support)

State EE Program: reimbursement of private loans for energy saving equipment and materials