Abstract
This paper elaborates on the theoretical and methodological fundamentals of a tradable green certificates system to foster renewable energy development in Ukraine. It proposes a management mechanism premised on the classical market model of tradable green certificates aiming at increasing the share of electricity from renewable energy sources in the country’s energy mix. Organizational stages of the mechanism formation at the national level and a methodological approach to assess green electricity generation cost are developed. The modeling has shown that the annual increase in the cap for green electricity consumption by 1% will raise the electricity tariff by 3%, which is not a significant financial burden for consumers. The proposed changes in the tradable green certificates system can be an effective management tool to achieve the required amount of electricity from renewable energy sources in the country’s total electricity consumption and to foster the development of the Ukrainian renewable energy sector.
Highlights
The development of a technologically advanced and internationally competitive economy in Ukraine is contingent on the effective management of the country’s energy sector, which at present requires significant improvement. Such improvement can be achieved via increasing energy efficiency and energy independence of the national economy (Sineviciene et al, 2018; Sotnyk, 2016), as well through decreasing the environmental and public health impacts of the energy sector with the help of innovation management focused on renewable energy (RE) deployment (Kubatko & Kubatko, 2017, 2019)
Ukraine Sustainable Energy Lending Facility (USELF) (USELF, 2014) and the International Regulation of the electricity cost based on various Energy Agency (IEA, 2015) were used
Implementing a tradable green certificates system (TGCS) likely faces a number of challenges, some of which are outlined throughout this article
Summary
The development of a technologically advanced and internationally competitive economy in Ukraine is contingent on the effective management of the country’s energy sector, which at present requires significant improvement. A number of legal initiatives were introduced to improve economic incentives, mostly in the part of the feed-in tariff (Law of Ukraine, 1997) Despite these efforts, the share of RES in the total national electricity consumption remains extremely low reaching only 1.9% at the end of 2018 (NCSREPU, 2019). The rest of the electricity demand in the country is met with fossil fuel-fired generation, 50% of which is imported (NCSREPU, 2019) This calls for further government intervention in the energy sector, in optimizing the existing market-based mechanisms, to begin a significant substitution of the conventional electricity generation technologies with RES
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