Ukrainian bioenergy complex could attract €6 billion of private investments

According to the Analytic centre of EIG Engineering, construction of power plants working on solid biofuels in Ukraine can attract over €6 billion of investments. Calculations are based on the fact that already available amount of unclaimed solid biomass in the form of agricultural waste reaches 10-15 million tonnes of conventional fuel per year, which allows to put into operation 1500-3000 MW of generating capacity, both electric and heat.

The typical cost of solid bioenergy projects is €2-4 thousand per 1 kW of installed capacity, which roughly corresponds to investment volume required in other types of alternative energy projects. Among advantages of bioenergy projects for investors are the short period of construction and fast payback, which usually takes 3-4 years. Moreover, no additional investment is required in biomass preparation and collection technologies.

Along with that, as predicted by the Analytic centre of EIG Engineering, on the background of general growth in the use of agricultural waste, production of pellets and briquettes in Ukraine in the near future will decline (1.43 million tonnes in 2012). The decision of the Polish government on the reduction of subsidies for power plants and growth of logistics costs led to the fall in export demand for Ukrainian pellets and briquettes.

The domestic market of these biofuels remains limited – not more than 300,000 tonnes per year. Further development of the domestic consumption of pellets and briquettes requires increase in the number of individual modern solid-fuel boilers – presently there are 2,000 boilers in Ukraine.

In September, EIG Engineering reported its plans to build two thermal power stations on solid biofuels with total capacity of 40 MW until the end of 2016, in Rivne and Chernihiv regions. Total volume of investments in both projects amounts to €66 million.

The company also noted that Ukrainian and foreign investors in alternative energy are concerned about more attempts to review some provisions of the Energy Strategy of Ukraine till 2030 approved by the Cabinet of Ministers on 24 July 2013.

As stated by the head of the Board of Directors of EIG Engineering Alexey Butenko, “representatives of the oil and gas lobby impose their rules of the game in an effort to introduce privileged conditions for investments into coal-fired thermal power plants. Also, contrary to the global trend of reducing the use of nuclear energy, it is proposed to allocate state funds for repair and construction of nuclear power plants”.

Butenko reminded that joining the European Energy Community, Ukraine has taken a commitment to boost the share of renewable energy up to 11% of total energy consumption by 2030, which among other things is the prerequisite to successful signing of the Association agreement with the EU.