FEATURES SYVASH – FIRST WIND PF IN UKRAINE THE SYVASH PROJECT REPRESENTS A €380m INVESTMENT AND, ONCE COMMISSIONED, WILL BE ONE OF THE LARGEST RENEWABLE ENERGY PROJECTS IN UKRAINE. BY ALEX BLOMFIELD , PARTNER, AND FRANCIS IYAYI , ASSOCIATE, K&L GATES LLP , AND OLEKSIY FELIV , PARTNER, INTEGRITES . Syvash, an area of shallow lagoons straddling connection codes passed in early 2018, providing the Sea of Azov in Ukrainian waters on the Black for transparent and fair access to the grid. Sea, known as the Rotten Sea or Putrid Sea, is the Under Ukrainian law, wind farms typically fall location for a wind farm project of up to 250MW under a category that requires a construction situated on approximately 1,300 hectares of land permit. However, permitting procedures in in the Chaplynka district of the Kherson region in Ukraine are easier than in some jurisdictions, southern Ukraine. with the construction contractor required to A subsidiary of Oslo-based utility-scale wind provide a notifjcation of the commencement of power developer NBT AS, and Total Eren SA, construction works once the project has fjnalised a leading renewable energy independent its design documentation and secured relevant power producer (IPP) based in Paris (together environmental permits. the sponsors), and Al Gihaz Holding, a Saudi From an environmental perspective, the Arabian conglomerate, reached fjnancial close environmental impact assessment (EIA OVD) on Segment 2 of the up to 250MW Syvash Wind required locally in Ukraine has been revised by Power Project in mid-April, following fjnancial the Ukrainian government to adopt the European close on Segment 1 at the end of January. assessment model. Once the entire 250MW wind farm is The government’s aim was to raise standards completed, it will send 850GWh of clean and reduce red tape in relation to the execution electricity a year into the grid and can supply of such studies. In the context of the Syvash the electricity needs of approximately 100,000 project, NBT completed an environmental and households. social impact assessment (ESIA) conforming The Syvash project represents a €380m to EBRD Performance Standards and Equator investment and, once commissioned, will be Principles. one of the largest renewable energy projects in On completion of the ESIA, the EIA OVD was Ukraine, proof that it is not at all true to say that prepared with the content from the ESIA to “something is rotten” in the state of Ukraine ensure compliance with international standards. when it comes to renewable energy. All requirements related to ornithology, ecology, Although Ukraine’s feed-in tariff for renewable shadow fmicker, noise, cumulative impacts, layout energy was introduced as far back as 2009, for and approach to local communities were upheld geopolitical and other reasons the market only in the EIA OVD. started to meaningfully develop in 2016. Going forward, to minimise the environmental Today, it is fair to characterise the market impact of the Syvash project, the project as booming, with the caveat that foreign company has engaged a full-time ornithologist involvement is still limited due to issues in on site for the fjrst three years of operation, has obtaining fjnancing. Reaching fjnancial close on moved some of the turbines further away from Segments 1 and 2 of the Syvash project with eight settlements to reduce the effects of noise, and international lenders and three foreign equity has an agreed social responsibility programme to sponsors can only act as a catalyst for further help develop the local communities surrounding development of the market. the site. The customs and tax issues involved in Project development the Syvash project were complex. In a new There have been major reforms in Ukraine over approach for wind farms in Ukraine, the the last four years in the area of power project project agreements for the Syvash project development, namely in relation to securing provided for delivery duty paid (DDP) terms of land, grid connection, obtaining construction delivery under Incoterms 2010, which, with permits and completing environmental impact specifjc wording and careful drafting, made the assessments in accordance with Ukrainian relevant contractor in each case responsible for regulations. arranging carriage and delivery of the goods at The regulatory framework for electricity the named place, cleared for import and with has also been re-shaped and a new law on all applicable taxes and customs duties paid liberalisation of the electricity market was and wrapped up in an all-inclusive EPC contract introduced in 2017. It was followed by new grid price for the goods. 50 Project Finance International April 25 2019
Recommend
More recommend
