Europe needs to invest in Ukraine’s green energy sector, and the time is now
Sustainable economic growth and cutting greenhouse gas emissions are but a few reasons that make countries worldwide shift to renewable energy sources. The EU has even more reasons to do so, exactly because it treated russia – its gas and oil supplier – as a reliable partner. The war in Ukraine made Europe finally see the obvious reasons why and speed up its energy transition process. As the necessity to get rid of the dependency on russia has finally become apparent, the EU needs to push even harder to secure its energy supply. And Ukraine might become just a perfect solution for that.
Global renewables boost
Governments worldwide strive to make the leap to a cleaner economy as quickly as possible. And some of them have already achieved tangible results. The share of wind and solar electricity production in the U.S. is steadily growing. Last November, the U.S. Energy Information Administration said that the wind and solar output rose 18% YoY, and the growth compared to 2019 amounted to 58%. The recent outlook of the agency predicts that government energy renewables will produce 22% of the U.S. electricity by the end of 2022.
While the U.S. investments in green energy are huge, China is the real leading investor in the new energy sector. The country invested 1.36 trillion dollars in expanding the sustainable energy sector, the CINNO Research data states. In 2021, half of all offshore wind turbines worldwide were constructed off the coast of China. China’s renewable energy share is expected to reach 36% by 2025, which is even higher than that country’s generation target of 33%. According to experts, green energy development in China will continue over the following years and become an important driver for the country’s economic growth.
Another excellent example is Australia. The country’s renewables sector has already reached a 32.5% share of the total electricity generation, double the amount compared to just five years before. By 2030, Australia wants to increase this number to an ambitious 80%.
So what about Europe?
Going green like never before
A study by Ember and Agora Energiewende states that renewables became the EU’s key source of electricity for the first time in 2020. As reported, the renewable energy sector accounted for 38% of Europe’s electricity in 2020, surpassing the fossil fuels that generated 37% of the electricity that year.
russia’s invasion of Ukraine made EU countries accelerate their renewable energy capacity. In March, the EU presented a new energy plan that aims to finally end the reliance on russian gas supplies. According to the latest report, since the beginning of the full-scale invasion, the EU has produced more electricity from wind and sun than ever before. Between March and September 2022, almost a quarter of the electricity in the European Union came from solar and wind power generation systems.
The EU will have to prioritize renewable energies in the future even more. If the climate crisis didn’t create enough pressure to advance the energy transition, then russia’s war against Ukraine leaves no choice but to speed up the pace. And Ukraine can become a good partner for the EU in that process.
Better prospects, tougher times
In recent years, Ukraine has achieved tangible success in renewable energy development. According to industry experts, the total installed capacity of renewable energy sources from 2018 to 2021 grew more than fourfold, from 2.3 GW to 9.6 GW.
In 2021 the share of renewables reached 8.1% or 12.8 TWh, 60% of which was generated by solar energy, 30% by wind, almost 8% by biomass and biogas, and 2% by small hydropower plants.
So it is no coincidence that at some point Ukraine has become one of the most attractive countries for investments in green energy. In 2019, the country was named one of the top 10 counties in terms of energy security in the World Energy Trilemma Index and 8th in the annual Climatescope ranking by Bloomberg.
The European Bank for Reconstruction and Development, the Black Sea Bank for Trade and Development, and the American International Development Finance Corporation are just a few established organizations that invested money in the Ukrainian green economy. As of the end of 2021, the share of foreign investors in the installed renewable energy system systems capacity accounted for more than 35%.
russia’s invasion had a terrible impact on the Ukrainian energy system, including the green energy sector. Ukraine’s renewable industry lost significant capacity due to the war.
The Ukrainian wind power plants are located mainly in the southern and southeastern regions of the country, where for a year now, fighting has been ongoing. Solar generation in Ukraine is even more widespread. However, about 60% of industrial solar power plants are located in Ukraine’s southern and southeastern regions and are also highly affected.
According to the Ukrainian Wind Energy Association, the “green” generation amount has decreased significantly as more than 80% of wind turbine capacities, and 30% of solar power plants have been damaged or occupied. Some wind turbines, particularly those in the Kherson region, were destroyed entirely.
Some experts emphasize that, at the moment, it is hard to estimate the losses for the sector since parts of Ukraine remain occupied and the war continues. The estimations are also complicated because the final figures will include not only the direct losses, but the lost profits and opportunities.
What is clear is that the aggressor should compensate for the losses and that Ukraine will need help with the restoration of the energy industry, particularly green energy.
Why invest in Ukraine’s green energy?
The European Union is unlikely to have the capacity to produce the amount of energy it needs. This especially applies to the production of green hydrogen that is used in many industries and has great potential for the transition to a climate-neutral energy supply (most hydrogen in Europe is still produced from fossil fuels, specifically gas). So the partnership with Ukraine can be crucial if the European Union is to succeed in its l transition.
As Executive Vice-President for the European Green Deal, European Commission, Frans Timmerman said in his interview with suspilne.media, Ukraine, thanks to its “super-powerful agricultural potential,” has significant prospects in the production of bio-methane. He mentioned that Ukraine has enormous solar and wind energy potential, which can be developed into green hydrogen energy generation.
Industry analysts predict that the global hydrogen generation market will reach 263.5 billion dollars by 2027. Ukraine has perfect conditions to enter the hydrogen market, particularly because the gas storage facilities and pipelines used for russian gas transit can be repurposed for hydrogen.
The prospects in this area are enormous: according to Euronews, just one region of Ukraine, the Odesa region, can generate up to 3 GW of green hydrogen. The Bureau of Investment Programs (BIP) estimates that Ukraine has the potential to generate about 100 GW per year. The installation of 8 GW until 2030, as outlined by Hydrogen Europe in the 2×40 GW initiative, will allow Ukraine to produce about 21 TWh of green hydrogen annually. This, according to the German Energy Agency’s study, is enough to cover 12% of the total hydrogen demand of the European Union in 2030.
Ukraine plans to install 30GW of renewable capacity by 2030. Half of that, either in electricity or green hydrogen, according to the chief executive of Kyiv-headquartered energy company DTEK Maxym Tymchenko, would be available for export to the EU. Of course, all that becomes possible only if Ukraine receives stable financial assistance. Because currently, at least 40% of Ukraine’s energy system is damaged due to constant russian strikes, and the country is in great need of investments.