Baku 21° C
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Ukraine is one of the key trade partners of Azerbaijan, and the trade between the two countries mainly focuses on oil and oil production. Moreover, the transportation of Azerbaijan's liquefied gas to Ukraine found its solution in 2011. Azerbaijan, as a producer of energy sources, and Ukraine, as a consumer and transit country, together play an essential role in ensuring the energy security of several countries.
In this connection, the and Environmental Protection of Ukraine, which was established in August of 2019, answered the questions of Azerbaijan's information agency Report.
Azerbaijan and Ukraine are old partners and they cooperate in numerous directions. What are the prospects of developing relations between our countries in the energy sector?
The prospects of the Ukrainian-Azerbaijani cooperation led to the development of the draft memo of collaboration between the Ministry of Energy and Environmental Protection of Ukraine and the Ministry of Energy of Azerbaijan.
All the same, there is a plan to hold the session of the Ukraine-Azerbaijan working group on cooperation in the energy sector. In particular, we are interested in expanding cooperation on the organization of crude supplies. We are ready to view the possibility of supplying the Liquefied Natural Gas (LNG) from Azerbaijan to Ukraine.
Investments in oil transportation and oil refining infrastructure, as well as the participation of Azerbaijani companies in auctions on balancing capacities, may be among the promising directions of cooperation.
During the official visit of Ukraine President Volodymyr Zelensky to Baku late last year, the two countries voiced readiness for a joint exploration of possibilities of expanding the Southern gas corridor. Would it be possible to use Ukraine's transit potential to supply Azerbaijani gas to the European market?
Ukraine is interested in diversifying routes and sources of natural gas supplies.
In this regard, if connected to the Southern Gas Corridor, Ukraine may buy gas from Azerbaijan in the second and third stages of the project.
The country also plans to cooperate closely with the State Oil Company (SOCAR) and to increase the supply of petrochemical products.
Does Ukraine eye cooperation with Azerbaijani companies in alternative energy sources, considering its plans to develop this direction?
The Ukrainian law 'On alternative energy sources' sets the legal, economic, ecological, and organizational grounds for the use of renewable energy sources and assistance in their broader use in fuel and energy complex.
Thus, Section 93 of the Law provides for the introduction in 2020 of a new competitive mechanism to stimulate the production of electric power from alternative energy sources through holding auctions to distribute support quotas. The relevant business entities, seeking support in the form of the purchase of the entire amount of electricity produced from renewable energy sources at a fixed price for 20 years, the relevant business entities must win the auctions by offering a lower sale price of 1 kW/h of generated electricity. The following projects may participate in such auctions:
- electric power facilities with an installed capacity of more than 5 MW, making electrical energy from wind power (except for facilities with three wind turbines, regardless of the design capacity)
- electric power facilities with an installed capacity of more than 1 MW, which produce electrical power from solar energy.
Business entities that plan to produce electric power from other types of alternative sources can also participate in auctions for the distribution of support quotas voluntarily.
At the same time, Section 91 of the Law provides for the preservation of the existing support system for "green" tariffs for electrical facilities - the manufacturers of small capacities (up to 1 MW and up to 5 MW of solar and wind electrical installations, respectively), as well as for electrical installations of consumers, including households.
The Ministry of Energy and Environmental Protection of Ukraine is interested in the future auction system to be efficient, transparent, ensuring competition, and taking into account the technical capabilities of the energy system. Now several organizational and technical measures are needed to conduct auctions, including software development, and critical regulatory and legal acts have been developed to organize and conduct auctions. The first auctions are scheduled before April 1, 2020.
The introduction of auctions will likely lead to several positive changes for electricity consumers, energy generating companies, using renewable energy sources, executive authorities, and government agencies. In particular, they will lead to:
- reduction in the price of "clean" electricity produced from alternative sources, compared with the support system at a fixed "green" tariff;
- coordination of the volume of technology input and new generating capacities of renewable energy with the development of the electric power complex as a whole, which will help ensure the balance reliability of the electrical power system of Ukraine, operational safety and economy;
- attracting additional investment in infrastructure development and revenue growth of local budgets;
- creating favorable conditions for the sustainable development of renewable energy, as investors will receive information on quotas and a schedule for conducting auctions for the medium term, and auction winners will receive long-term guaranteed support for a period of 20 years.
Given the preceding, the participation of Azerbaijani companies in future auctions is the promising and possible direction for further Ukrainian-Azerbaijani cooperation.
The solar panel producing plant AZGUNTEX has been in operation in Azerbaijan since 2012. Therefore, Ukraine and Azerbaijan may focus on the creation of industrial capacities for the production of equipment for renewable energy. The use of such equipment is additionally stimulated by a special surcharge to the 'green' tariff and/or future auction price under Section 92 of the Law.
All the same, to ensure the balanced reliability of the power grid in conditions of the significant growth of share of the renewable energy sources, the Cabinet of Ministers of Ukraine, on July 10, 2019, entrusted to the Ministry of Energy and Environmental Protection to work out the Guidelines for holding a tender for construction of generating capacity and implementing measures to manage demand. The decision is based on Section 29 of the Law of Ukraine "On electric energy market'. This contest will help stimulate the construction of new generating facilities, including the high-maneuver facilities, and to develop means of managing demand and system of electric power accumulation that will be involved in the intraday market, balancing electricity market or ancillary services market.
Meanwhile, a bill to introduce stimulating mechanisms of installing energy storage capacities at power stations is expected to be adopted soon.
In this respect, Ukraine is interested in attracting investments and technologies into the sector of high-maneuver generation, creating systems of power demand management and industrial accumulators.
