By Noah Fulton Beale

KYIV – In a big vote of confidence in Ukraine’s renewable energy potential and in Kyiv’s control of its territory, the Overseas Private Investment Corporation has approved $400 million in loans and insurance for a massive wind farm for the shore of the Sea of Azov, midway between Russia-controlled Crimea and the Russian-controlled portion of Donetsk.

The U.S. government agency’s board of directors voted Thursday to approve the money for a 500 MW, $560 million wind farm to be developed by EuroCape Ukraine in collaboration with General Electric, supplier of the project’s 62 wind turbines. Designed to be one of the largest wind farms in Europe, EuroCape will increase Ukraine’s wind energy capacity by 40 percent.

A Decade of Delays

Almost a decade on the drawing boards, the project was put on hold after Russia’s 2014 takeover of Crimea and military action in Donetsk. Located on the coast of Zaporizhia region, the wind farm was seen as on the path of a potential Russian ‘land bridge’ linking Donetsk and Crimea.

DTEK's Botievo Wind Farm opened five years ago in Zaporizhie, on the Sea of Azov (UNIAN/Aleksandr Prilepa)

“You need to openly and transparently talk about the location risk,” said Peter O’Brien, an American who is country manager for EuroCape Ukraine.

As Ukraine’s army held the line in Mariupol, the military threat eased. Then, concerns shifted the ‘bankability’ of Ukraine’s ‘green tariff’ for wind energy. These Ukraine’s feed-in tariff are among the highest in the world.

Two weeks ago, tariffs for EuroCape were in doubt, when Ukraine’s electricity regulation commission, the NERC, lost its quorum. Last week, President Poroshenko intervened, winning new legislation from the Rada to break the impasse.

US Plants Investment Flag on Sea of Azov

OPIC financing represents a clear commitment to Ukraine by Ray W. Washburne, OPIC’s President. Last August, of the 160 countries where OPIC operates, he chose to make his first overseas trip to Ukraine.

“This project will mobilize private capital to advance development in a region that is critical to American foreign policy,” Mr. Washburne, a Texas entrepreneur and major Republican fundraiser.

Ukraine: Future Magnet for Foreign Energy Investment?

In Kyiv, the OPIC decision is a major boost for Prime Minister Groysman who seeks energy independence Ukraine through foreign investment in gas and renewables.

“I welcome OPIC’s decision to finance this landmark renewable energy project in Ukraine -- this is another major step towards Ukraine’s energy independence,” Groysman said after the vote in Washington. “We anticipate that OPIC’s decision will demonstrate to the market that Ukraine’s energy sector can develop according to established international financing standards.”

UkraineInvest, the Prime Minister’s investment promotion agency, welcomed the decision, posting on Facebook: “OPIC’s approval is a watershed decision for Ukraine’s energy sector…it marks the first significant project in Ukraine’s renewable sector funded through project financing.”

OPIC Green Light for Private Support

OPIC’s stamp of approval on the project – loans and insurance cover – will unlock additional loans from Apollo Global Management LLC and LongWing Energy SCA and additional insurance from Liberty Mutual Insurance Europe Ltd. and the Indian Harbor Insurance Company.

“You need to find the right partners to go forward,” O’Brien said in an interview. With the Ukraine risk, investors look for returns greater than 20 percent.

With strong government support today and years of planning behind them, EuroCape hopes to break ground in Zaporizhie in the spring.

UBJ Editor in Chief James Brooke contributed to this report

For comments and story tips, please contact UBJ Energy Reporter
Noah Fulton Beale at: fultonbeale@gmail.com

Slider photo: DTEK's Botievo Wind Farm opened five years ago in Zaporizhie, on the Sea of Azov (UNIAN/Aleksandr Prilepa)

Posted Dec. 18, 2017