How Can 4th EU Energy Package Be Used for Development of Small-Scale Generation in Ukraine?


What exactly is the 4th EU Energy Package and what tools can be effectively used in Ukraine. Summary of online presentations and discussions.

Wind power plants in the field

-          How does the new European approach, proposed in the 4th EU Energy Package, stimulate the development of small actors on the RES market?

-          What tools of the 4th EU Energy Package can be effectively used in Ukraine?

-          Supporting small generation and RES communities — what best practices to Europeans propose?

Representatives of civil society, the State Agency on Energy Efficiency and Energy Saving of Ukraine, business and renewable energy market participants discussed all these issues on September 30 during the discussion How Can 4th EU Energy Package Be Used for Development of Small-Scale Generation in Ukraine?, organized by the Energy Transition Coalition and Heinrich Boell Foundation, Kyiv Office — Ukraine with the support of the Active Users and Prosumers Community (AUPC) and the State Agency on Energy Efficiency.

You can watch the full video here. Presentation of the 4th Energy Package can be found here.

In July this year, research was conducted to find out the share of power plants with a capacity under 1 MW on the RES generation market. The results showed that the cumulative capacity of these plants constitutes just 2.48% of the total capacity of RES power plants in Ukraine (as of June 17, 2020). Here is how Oksana Aliieva, Climate Change and Energy Policy program coordinator with Heinrich Boell Foundation, Kyiv Office — Ukraine: “Such a small share of producers with a capacity under 1 MW attests to the unfavorable legislative and regulatory environment for small market participants. At the same time, the development of small RES generation offers a number of advantages, such as less impact on the network, competitiveness and transparency in the electricity market due to more players, citizens’ access to ownership of infrastructure. That is why many countries across the world, including those of the EU, focus their development effort on this very sector.

With great opportunities provided by the distributed small-scale generation come challenges — financial, technical, and regulatory ones. Outdated grids and inflexible regulatory systems inherited from the era of monopoly complicate the development of small-scale generation — however, more and more strategies are being developed worldwide to facilitate integration of small players into energy markets and make the best use of their potential. In particular, the EU offers a comprehensive approach to solving these problems in the 4th Energy Package “Clean Energy for All Europeans.”

Natalia Lytvyn, coordinator of the Energy Transition coalition, pointed out: “EU’s 4th Energy Package collected world’s best practices and codified them, that is, systematized them and transformed them into certain work principles, set out in Directives. Its value lies in the “ecosystem” approach, a comprehensive approach, which is different from the highly fragmented Ukrainian one.”

Another important feature of the 4th Energy Package is that the principles and provisions set forth in it are not meant to be invariably transposed into national law. It is only required that the national legislation should contain provisions that correspond to the ones proposed by the EU. These provisions can be phrased in a different way or spread out across various laws, the important thing is that they should be approved and function. This flexibility allows us to adapt EU requirements to our needs and conditions as much as possible.

Member States must implement the provisions of the 4th Energy Package in 2021. The document reflects the vision of the EU’s transition scenario to the new energy future. “The 4th Energy Package says that citizens must become co-owners of the energy transition. This is a pronounced social component. The transition cannot be about the transfer of generation from some big companies to others; citizens have to play their role, like they do in advanced European countries,” says Andrii Zinchenko, head and cofounder of the energy cooperative Solar City, cofounder of the CSO Active Users and Prosumers Community. We see the trend of decentralization recognized here, as well as the role of consumers as direct energy market participants. Andrii Zinchenko explains that the document focuses especially on the importance of small-scale generation development. As stated in Paragraph (17) of the Preamble to the RES Directive: “Small-scale installations can be of great benefit to increase public acceptance and to ensure the rollout of renewable energy projects, in particular at local level.”

Indeed, the transition to energy saving and renewable energy is key not only to tackling climate change, but also driving positive economic and social change for communities. And it is important that Ukrainian cities and local communities receive incentives and mechanisms to make the energy transition.

How does the 4th Energy Package support small-scale generation?

-          Countries can make small-scale installations exempt from tender/auction procedures.

-          Administrative / approval procedures for small-scale installations should be simplified compared to large installations.

-          The duration of licensing procedures for installations under 150 kW should not exceed 1 year.

Yurii Shafarenko, Deputy Head of the State Agency on Energy Efficiency, reaffirms the need to support small-scale RES generation: “In my opinion, the development and wealth of a country is defined not by the number of facilities built by foreign or local big investors, but by the number of small households instead. The more of them we have, the richer the country will become. This is demonstrated by Germany, where about a million households have installed solar power plants today.

In his presentation, Yurii Shafarenko indicated that in Ukraine, 25,660 households have solar installations as of now (the total number of households, according to the Agency’s information, is 6,000,000). These households produce electricity, which they sell to the grid (without consuming it) at 757 million kWh/year, and they can provide about 252,000 similar households with electricity.

Various points were presented during the discussion, including those of investors. Stepan Kushnir, Project Manager of Indian Solar Company, Chairman of the Board of the Khmelnytsky Energy Cluster CSO, spoke about how difficult it is for companies and investors to work now. “In the situation when the government cannot ensure a stable situation in the sector, we are forced to give up large-scale renewable energy projects (in particular, those with solar energy), so the interest in small-scale projects is growing. Communication with electricity suppliers (oblenergo) complicates this work further. There are often difficulties in issuing technical conditions, getting project documentation approved, etc.”

At the end of the discussion, the participants and the speakers went back to the subject of community engagement in energy transition. Stepan Kushnir, for instance, pointed out that investors are interested in communities making a full inventory of land that can be used for installation of small-scale RES objects. He recommends that communities make investors aware of themselves, because now we have a “window of opportunity” when stations under 1 MW are more interesting to investors than large ones.

All this contributes to community development, since provided the economic regulation is correct, this leads to the development of economy, an inflow of investments, taxes, and creation of new jobs. In addition, distributed generation makes it possible to attract private investment in a fair energy transition from medium-income people.