Ukraine makes into Ernst & Young renewables index

Unless you are somebody who really follows energy and in particular renewable energy, you probably are not aware that since 2003 Ernst & Young have been creating a quarterly country attractiveness index for renewable energy investors to contemplate.

This month’s quarterly report contains 5 new entrants in the top 40 and Ukraine is one of them, coming in at No32.

The Ukrainian potential is of course less than it could be due to the bureaucracy that also drags it down the WB Ease of Doing Business Report and the more bureaucracy you face in Ukraine, the more “financial incentives” you may wish to pay to expedite your way through the said bureaucracy rather than wait 4 times longer than a competitor by not doing so. (A reminder to Brits that the Bribery Act 2011 covers any such activities even in Ukraine.)

However, the Ukrainian report, whilst not being ideal does indeed show the potential and also that fact the others have indeed succeeded and also intend to enter the Ukrainian market by the year end.

What is particularly interesting to note is that Ernst & Young not only see evidence of the government’s commitment to reach the 19% of Ukrainian energy generated from renewable by 2030 but also believes it could very well achieve it.

Also of note is the law provides for Green Tariffs, obliges the State to buy green energy by law until 2030 and also obliges the State to insure connection to the grid for renewable energy schemes.

Hardly surprising that Ukraine has come from nowhere and entered the Ernst & Young list despite the bureaucratic hurdles. Everybody likes a guaranteed buyer when entering a market don’t they?

Also included in the law, and reminding me very much of the principle of “considerate construction” when I worked for Mowlem PLC, is the binding fact that 30% of works, materials and services must be domestically sourced. This rises to 50% in 2014. When I worked for Mowlem we also had a policy of 30% minimum local labour, suppliers and services.

The thought behind it was to keep the locals happy despite any inconvenience caused by the work, by providing revenue directly into the local economy.

The thought process behind this part of the law relates to a policy I completely understand and agree with. Simply parachuting in, doing the job and leaving, without any involvement with the local community, suppliers and available local workforce makes you rather unpopular and can lead to problems.

Whether it needs to be written into the law or could simply be contractually obliged is a matter for debate or judgement, however the principle is sound and for once, as it is written into the law, it is at least transparent and no surprises are install in this regard.

Anyway, for those interested in renewable energy, it will now be interesting to follow the Ernst & Young quarterly report to see if Ukraine climbs or drops out of it.

Time will tell, but for now, a step in the right direction for Ukraine as far as long term planning and political will are concerned. It would still be far better off concerning itself with energy efficiency in the immediate term as in that regard it must be one of the world’s biggest sinners.