UBBC at the Ukrainian energy transition forum

The Strategy council’s forum at Clyde and Co, covered the energy transition in Ukraine, with a significant group of Ukrainian delegates and investors convening in London to discuss the burgeoning growth of renewable energy projects and investment into Ukraine.

UK energy minister Michael Shanks MP, outlined what the UK is doing to support this initiative, including investing £573m in Ukraine’s energy system and a £33m grant for energy innovation. Areas for attention include decarbonisation, clean energy to reduce imported fuels, modernising the grid, energy efficiency measures, battery storage and reform of the energy market. The next phase is to unlock capital investment from the markets, which was a recurring theme for the day. Eduard Fesko, Ukrainian deputy Ambassador talked of decentralising the energy system to withstand shocks to ensure energy, the essence of modern life, can be energy efficient and built back better. Other countries will also benefit from Ukraine’s response, insights and resilience in protecting energy assets, while Ukraine is also transitioning to new forms of energy, the country can be a model to the world.

Victoria Hyrb MP encouraged countries to be prepared for conflict and learn from Ukraine’s experience, as they also figure out adaptive legislation. Andrii Zhupanyn MP explained how the grid is being reconfigured and decentralised as a network for energy independence, export and storage capacity of gas and electricity, to help balance the grid in the short and longer term while increasing income for producers.

The speed of wind and solar installation is rapid with companies like DTEK investing $2.4bn, Naftogaz (80% gas) investing in underground storage capacity (enough to include EU needs) and balance the grid.

Anthony Pollack of US DFC fund is open for investing in energy, with an accent on gas and its infrastructure, while offering insurance guarantees to companies, while lending to banks so they can lend and expand the economy.

There was much discussion from all including Alllianz and Marsh on War risk insurance, which is partially covered by ECA’s, banks, like EBRD, EIB, IFC and some countries, for strategic projects, but it’s not widely available. The argument was made for blended approach to risk insurance, from private, companies like DTEK, public, government and IFI’s, and Funds to aggregate more, and engage with the Ukrainian insurance industry to boost private investment into renewables and energy. In general, it is now a great time to enter the renewables sector as there is 8 GW of energy to be created to make up the grid that has been destroyed, and to contribute to the future industry and demand in Ukraine. Elleanor Robins of IFC said some issues need to be achieved: price stability, government regulatory easing, to help crowd in more investors (but these issues are being addressed) and IFC are investing in renewables and debit in the commercial sector.

Overall, the renewables sector in Ukraine is set for significant growth and provided investor insurance is available, there are mechanisms for this, good opportunities exist for private investors to own future phases in the transition.