Solar energy, while only dreaming to become the real alternative in Ukraine, demonstrates serious development rates. Predictability and transparency help this sector foremost, other industries can hardly boast that. Such, it would seem, paradoxical opinion was delivered during energy-related debates about whether rule of "local component" is needed or not, organized by Institute of Power Research. Alexander Yudenko, director of solar energy department at Kwasar PJSC, and Dmytro Lukomskyi, co-founder and business development director at Rentechno LLC speak about problems and prospects, and also about the economic mechanisms of operational stimulation of enterprises, making component parts for solar electric stations.
Nowadays solar energy in the whole world is an industry, that is regulated rather by state authority, than by market environment. Therefore it should be examined exactly in this context.
I consider that state authorities have a right to implement measures, intended to support certain industries, consequently, can lay on some limitations. It’s about cases, where these limitations are focused on public policy implementation in power generation sector. For domestic solar energy sector such aims currently or prospectively are following: providing of energy security of the state in a long-term prospect; bringing in investments into the whole country or into separate regions; creation of additional job vacancies and increased demand on highly skilled labour force; increase of withholdings in local and state budget; influence on development of such contiguous industries as metallurgy, engineering, instrument-making, information technologies; stimulation of development of science and industry-specific education.
But obviously, that the question of state regulations always needs to be examined with some carefulness, because with wrong planning and realization it can give a negative effect, that annihilates all expected profits. There already were examples in global experience, when preferences to local companies on emerging markets of alternative energy resulted in "fading" of these markets even with relatively high and attractive "green" tariff rate. It seems for me, that it is possible to avoid problems only if government control leaves some space for functioning of open market mechanisms. So any operating limitations must keep a possibility to exist for plenty of companies that will freely compete and offer quality products or services for a reasonable cost.
Moreover, predictability and transparency of existent measures on industry stimulation are very important factors. It is not a secret that businesses are very sensible to frequent changes of legislative acts, and these changes work as enhanceable risk factors for any business. Talking about market of solar energy, there are two important limitations present in Ukraine today, that directly relates to the rule of "local component". Firstly, for "green" tariff receipt in any project of alternative energy there must be some legally prescribed percent of raw materials, components, fixed assets, works and services of Ukrainian origin. Secondly, another additional condition works for solar power-stations, namely using only solar modules with specified share of components and raw materials of domestic production. And the question here is already not about works or services, but exceptionally about raw materials and components.
In case of firstmentioned limitation I can’t see anything fundamentally bad there. There is already plenty enough companies in Ukraine now, making various products and providing different services that fully comply with this limitation. Yes, the state lays on certain limitations on the industry, but the market remains relatively free however. As for the second limitation, I consider it as absolutely ill-timed. This limitation did not inure yet and is not finally formalized. Nowadays there are several companies in Ukraine, whose products would correspond to this limitation. And this already looks like some relative "monopolization" of the market.
Summarizing the talk above, I want to underline once again, that in general the rule of "local component" has full right to exist, but only in case if industry of solar energy continues to work on the whole in accordance with market mechanisms, and legislative field remains clear, relatively stable and predictable.
Ukraine has closed production cycle in solar energy, starting from production of polysilicone (ActiveSolar), mono- and multicrystalline silicone production (Pillar, Svitlovodsk Pure Metals Plant, Kwasar), lastly production of photo-electric modules (Kwasar).
Kwasar company is absolutely not embarrassed by the rule of "local component". On the contary, we consider that it needs to be entered, not from point of view of market monopolization, but because photo-electric industry in Ukraine has ten-year-period of development. 99,9% of Kwasar plant production amounts for this period were sold abroad, and, figuratively speaking, Europe taught us to make quality products and to understand market relations.
The question about rule of "local component" is rised by companies that are currently trying to enter markets of Ukraine. Ukraine now has the highest green tariff rate in Europe on electric power, produced via solar modules. And in European countries we can see overproduce crisis at solar energy market. Therefore European and other foreign companies try to sell their own products in Ukraine.
I’d like to mention, that construction terms of a plant on solar modules production amounts one year. Then production capacity is virtually unlimited. However foreign companies while prefer to import the equipment, but not to produce it in Ukraine.
In the meantime European countries protect their markets. In case if an equipment of solar power-station is fully produced in EU countries, then operator company gets 10% raise to tariff rate on electric power. In fact, what’s how the rule of "local component" is realized in EU.
The state at the present time does not make any investments into solar energy projects in Ukraine. However, if domestic businessmen will understand, that a Ukrainian-assembled module would have priority, then they will invest money into purchase of equipment and it will develop industry. In my opinion, it must be exactly the philosophy and approach to the rule of "local component" in Ukraine.
Legislative norm, introducted in 2013, says that specific gravity of raw materials, fabrics, fixed assets, works and services of Ukrainian origin must be no less than 30% of building costs of a solar energy object, it will provide motivation to invest money in Ukraine, but not to move themout to foreign countries.
"Energy debates" is joint project of Institute of power research and Glavkom agency.