Improving the Feed-in Tariff Policy for Renewable Energy Promotion in Ukraine’s Households

Abstract

This paper deals with improving the feed-in tariff policy for green energy advancement in Ukraine’s households based on assessing the economic efficiency of investment project implementation under the current state support mechanisms. This study was conducted for solar and wind power plants with different installed capacities. The Levelized Cost of Electricity and the payback period for such power plants were calculated considering the ongoing feed-in tariffs and discount rates determined by various equity and debt capital ratios. The results showed that the state support provides attractive payback periods for solar and wind power plants with an installed capacity of ≥30 kW. In comparison, 5 kW solar power plants and wind power plants with a capacity of up to 10 kW are not paid off during the power plants’ lifecycle. It confirmed that the ongoing energy policy in Ukraine’s residential sector is still designed to obtain profits by the owners of generating facilities by selling the excess electricity. In the meantime, its main goal—providing households energy independence—has been levelled. To resolve the issues caused by such a state support model, a methodical approach to improve the feed-in tariff calculation is proposed. In addition, recommendations for reconsidering other policy measures to ensure effective renewable energy development in the residential sector have been made.