19:17 16.04.2024

Business could build 500-1000 MW of distributed generation for winter if conditions for this created – head of UABIO

3 min read

When the government creates conditions for the development of distributed generation, including the maneuverable generation critically scarce due to Russian shelling, businesses could potentially construct 500-1000 MW of such capacity by the end of the year, according to Heorhiy Heletukha, the Chairman of the Board of the Bioenergy Association of Ukraine (UABIO).

"I believe that it would still be possible to build up to 1000 MW of capacity by winter if we start doing this today. Looking more realistically, perhaps we can achieve half of this in the current year," he said at a press conference at Interfax-Ukraine in Kyiv on Tuesday, discussing distributed generation development.

Heletukha emphasized the need to initiate this process so that these thousands of megawatts can begin to materialize.

"If we don't start this now, we will face a shortage next year as well," he said.

The head of the Bioenergy Association mentioned that the association sent a letter yesterday to Ukrainian President Volodymyr Zelenskyy, Prime Minister Denys Shmyhal, Minister of Energy Herman Haluschenko, and heads of several other ministries and agencies. In the letter, they proposed adopting a program for distributed generation development in Ukraine, which would incorporate accumulated suggestions from businesses.

Among these suggestions are removing price caps in the electricity market; ensuring access to the 5-7-9 credit program for energy projects; significantly simplifying grid connection for distributed facilities; extending the provisions of the law supporting projects with significant investments to distributed objects and creating the position of a First Deputy Prime Minister responsible for energy, who would coordinate this development, as the ministry level alone is insufficient.

"Business is ready to do this, but before investing, it will calculate everything. Currently, there are no clear payback terms, even within a five-year horizon, which discourages both domestic and foreign investors from allocating funds," said Heletukha. He further emphasized that Ukraine faces a critical shortage of maneuverable capacities, which could be addressed by small-scale generation facilities, primarily using gas, including renewable sources and energy storage.

Among the advantages of distributed generation, which, in his opinion, should be a current priority for the state compared to constructing centralized nuclear blocks and restoring severely damaged thermal and hydroelectric power units, he highlighted the relatively short construction timelines and availability of financing.

"If we invest in gas generation now, it can be operational in about a year. Massively within two years. Then we can set up distributed generation capacity sufficient to offset the shortage. It's one thing to gather investments for a 1 GW nuclear block, which takes about $10 billion, and another to secure investments for a 5 MW gas piston engine, which costs approximately $5 million," said the head of the Bioenergy Association. He also noted that technical assistance from Western partners is much easier to obtain for smaller projects.