Ripple effects of the Russian-Ukrainian crisis on renewable energies – pv magazine International

Excerpt from pv magazine 05/2022

As the invasion of Ukraine continues, governments across Europe are seeking to sever ties with Russian energy. New renewable energy capacities are needed more than ever.

A survey by US-based renewable energy transaction infrastructure provider LevelTen showed that more than 30% of developers in Europe are stepping up their efforts in the countries where they already have a presence, while less than 9% are reducing their investments in the light of the Russian-Ukrainian agreement. war. However, the proximity of the conflict has a chilling effect on some.

“What we find is that some developers are a bit shy to invest in countries bordering Ukraine and Russia,” says Frederico Carita, Head of Developer Services at LevelTen. “But some developers say business is business as usual – it depends on the risk profile of the company and the country itself.” The key is whether the developers are new to a region or not.

According to LevelTen, the war caused European PPA prices to skyrocket. The Polish market was particularly interesting to watch due to its auction system, which allows developers to bid based on volume and expose themselves to very high merchant and/or PPA prices. The last auction in December allocated 870 MW of solar energy and the new year has started well.

“Now the photovoltaic sector in Poland is facing new challenges,” says Ewa Mageira, President of the Polish Photovoltaic Association. “We are receiving signals that suggest problems with the timely implementation of projects. Many Ukrainians employed in the photovoltaic sector return to their country of origin to take up arms.

According to Mageira, many auction winners risk missing the deadline for the first generation of energy from new installations. Fortunately, amendments are being negotiated to allow an extension of 24 to 33 months, putting solar on par with wind installations. Renewables will be boosted by Russian sanctions, but Poland and Hungary are looking at ways to increase domestic coal-fired power generation.

Hungary restarts

Hungary broke with the EU and rejected energy sanctions against Moscow. Good news, however, came in March: the national energy regulator was looking to procure around 864 GWh of renewable energy.

However, according to Hungarian renewable energy specialist Ferenc Kis, the response has been lukewarm with only 20 projects submitted, compared to more than 200 bids in 2020 and 2021 and oversubscribed capacities quintupled. The steady downward price trend has reversed.

“There are many reasons behind this, and I would be hesitant to link them to the Ukrainian war,” Kis says. Instead, he points out that this is the first auction in Hungary to require a battery storage component with a capacity of 10% of the planned power generation unit. “At the same time, a more regulated and likely more transparent bid bond system was introduced by DSOs, and early announcements of MW-wide corporate PPA contracts signaled that the next chapter of the solar market was beginning.”

In Hungary, the first merchant power plant was recently commissioned by the Dutch company Photon Energy. The developer already has plans for new merchant projects in its main European markets – Romania, Hungary and Poland, and despite the war, business is continuing.

“So far we don’t see any direct impact on our work, however we can see that the recent increase in raw material prices is reflected in our investment cost, but this was already observed before the war”, explains Martin Kysly, spokesperson for the company. .

Romanian optimism

In Romania, the war in Ukraine seems to have had little impact on the solar sector. “On the contrary, I would say that investor confidence has been slightly boosted because everyone has understood that Romania needs to invest in renewable energy as soon as possible,” says Mihai Balan, executive director of the Romanian Association of Energy. photovoltaic industry.

Balan notes that previous expectations of at least 3 GW of renewables to be added by 2026, with solar power accounting for around 2 GW, now appear cautious. The reason for this optimism is a combination of recent positive developments, including the lifting of the ban on PPAs after almost 10 years, a 1:1 quantitative compensation for prosumers with installations up to 200 kW and the first call of offers from the country for the deployment of 950 MW of capacity.

“We believe that more than 65% of this capacity will come from solar, due to its shorter time to deployment and given the requirement to connect these projects to the grid by 2024,” says Balan.

In the meantime, nothing has changed in the field according to Balan, and the industry is on track to bring in the first 100 MW of solar energy this year, which will include the first large-scale photovoltaic projects in Romania in seven or eight years old.

At the beginning of April, the American power electronics manufacturer Enphase confirmed its intention to start producing microinverters in Timisoara from the first quarter of 2023.

Supply issues

Meanwhile, in neighboring Moldova, the appetite for solar continues to grow. In early April, the energy regulator launched an auction to deploy 230 MW of large-scale renewable energy projects, including 70 MW of solar.

“This time we saw huge interest, especially for ground PV which was allocated within hours,” says Vitali Zveaghintev, the founder of Zaw Energy Srl. However, most developers in Moldova are looking to build solar power outside of any support program.

According to Moldovan energy policy analyst Sergiu Tofilat, many entrepreneurs in the country are ready to invest in renewable energy, but their main concerns are not related to the war in Ukraine.

“Developers are more concerned about some legislative loopholes than we have here. For example, our TSO issued authorizations for more than 1 GW, which is more than Moldova’s peak consumption. Most of those who have received approvals do not plan to build projects, but simply want to resell them. Zveaghintev confirms that interest in renewable energy has increased due to rising electricity and gas prices. But it also explains the problems the developers are facing, including the disruption of the supply of metal support structures and high-voltage equipment from Ukraine.

“The fact that no cargo arrives in the Black Sea is a big problem and all the deliveries that we received via the port of Odessa are now directed to Greece, Holland or Turkey by trucks. This has an impact not only on us as an EPC, but also on potential investors,” says Zveaghintev.

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Christi C. Elwood