Report of the Event

Venue:

Kyiv, Hospitalna Str., 12, President Hotel,

Conference Hall “Predslava” at the 1st floor

Table of contents

INFORMATION ABOUT THE WORKSHOP .......................................................................................................................... 3

ANNEX I. AGENDA OF THE WORKSHOP .......................................................................................................................... 10

ANNEX II. SELECTED PICTURES OF THE WORKSHOP ........................................................................................................ 12

Information about the Workshop

Workshop “PIB Biobased Ukraine Business Development and Investment. Exchange of expertise to

formulate bankable projects” was held on November 22, 2018 in Kyiv, Ukraine, and was dedicated to

the exchange of expertise to formulate bankable projects for PIB members and their Ukraine

counterparts through a crash course business development for bankable projects together with

examples by PIB members to show the potential of their technologies. Event was organized by Partners

for International Business project: Biobased Energy Ukraine, the Embassy of the Kingdom of the

Netherlands in Ukraine, State Agency for Energy Efficiency and Energy Saving of Ukraine (SAEE),

Bioenergy Association of Ukraine (UABio) and association “Ukrainian agribusiness club”.

The Workshop included the welcome and opening part, the presentation session on market supporting

instruments, including Flash course Business Development Bioenergy, session on financing of biobased

projects, presentation of business cases and interactive session, including matchmaking and discussion

in groups of different types of biobased projects with reporting per group and short discussion,

followed by conclusions of the Workshop. Agenda of the Workshop is presented in Annex I.

The Workshop was planned for 65 participants but actually brought together 98 participants, including

representatives of agricultural companies, academic institutions, municipalities, governments,

financial institutions, consulting organizations, equipment providers and media. Materials of the

Workshop were disseminated among >100 registered participants, as well as published on the website

https://www.biobased-ukraine.nl/.

The Head of the State Agency of Energy Efficiency and Energy Saving of Ukraine Sergii Savchuk opened

the Workshop and expressed the confidence in workshop usefulness, because of wide range of

practical questions that could be discussed, in particular technology practices and project investment

opportunities. Mr. Savchuk mentioned that additional investments in specific bioenergy projects are

important for Ukraine, as it brings new jobs, money inflow and gas replacement (in 2017 Ukraine paid

3.8 billion US dollars for imported natural gas). Sergii Savchuk mentioned that Ukraine has all the

technologies and resources to replace natural gas, noting the significant development of the renewable

energy sector in Ukraine in recent years. The consumption of natural gas by consumers, district heating

companies and companies decreased from 24 billion m3 in 2014 to 18 billion m3 in 2017 in Ukraine

(excluding Anti-Terrorist Operation Zone). Finalizing his speech, Mr. Savchuk mentioned that SAEE

prepared the Draft Law on Amendments to Certain Legislative Acts of Ukraine on the Development of

the field of production of liquid fuels from biomass and the implementation of sustainability criteria

for liquid fuels from biomass and biogas intended for use in the transport sector N 7348 from

29.11.2017 that already passed 2 Committees and was expected for consideration at the Ukrainian

Parliament.

Agricultural Counsellor of the Embassy of the Netherlands in Ukraine Carolien Spaans in her opening

noted that renewable energy is very important for climate conditions, energy security and economic

development (particularly in the regions). Ms. Spaans said that companies from the Netherlands and

Ukraine can share their business cases and in the end come to bankable projects. Ms. Spaans

mentioned the workshop "Agricultural residues for bioenergy. Problems and solutions" that was held

on September 27, 2018 in Kyiv (Ukraine), laying down the conditions for sustainable use of agricultural

residues and stressed that during this workshop participants could make concrete practical steps to

achieve projects' bankability.

International coordinator of Partners for International Business (PIB) project: Biobased Energy Ukraine,

Hans van Klink introduced the PIB project and mentioned the wide range of topics the PIB covers. :

organic wastes for biogas, reed, Miscanthus, and switchgrass as a source for valuable materials, sugar

beet as the perfect source for valuable materials and chemicals and ethanol, wood wastes and

agricultural residues for local energy production. Mr. Klink mentioned that PIB is in cooperation with

Kara, DSD BV, BTG-BTL, HoSt bv, Roof Clix, Saxion University and Wageningen (EU funding projects).

Mr. Klink stressed that PIB sees potential in Ukraine and concluded that PIB was looking for Ukrainian

partners willing to cooperate and work together in investment projects, R&D projects and set up

concrete business projects.

The first speaker was Georgii Geletukha, Head of the Board of Bioenergy association of Ukraine, who

started his presentation with determining the current state of bioenergy development in Ukraine.

Mr. Geletukha mentioned that oil products, natural gas and coal are three main Ukraine’s import

products in 2017 – that cost more than 11 billion of US dollars – and bioenergy can reduce this import

for all three fuel types. Trends of bioenergy development in Ukraine (2010-2016) is positive – 35% of

bioenergy sector growing per year (total supply of primary energy from biofuels and waste) and if the

growth rate remains stable Ukraine will likely achieve the official target of National Renewable Energy

Action Plan till 2020 on heat (namely, 12.4% of renewable heat). Then, Mr. Geletukha named main

drivers for bioenergy development in Ukraine, which are the following:

1) market prices on natural gas for commercial organizations and state financed organizations

(10150 UAH/thousand m3 excl. VAT) make biomass use for heat production competitible in these

sectors;

2) improvement of tariff system for heat energy from Alternative Energy Sources (heat tariff from

biomass is 10% less, than heat tariff from natural gas);

3) first steps in monetization of subsides for population, namely monetization of state subsidies

for housing and communal services at the level of service providers (including for communal heat

supply companies that receive compensation for the accrued benefits and subsidies from the State

Treasury, to be used only for payments for natural gas and other energy resources (like biomass), for

services for transportation of natural gas, for electricity consumed, for tax liabilities and payments to

the state budget (except for VAT).

Among barriers to bioenergy development are the following:

1) non-market prices on natural gas for private consumers and for DH companies heating population

(7124.1 UAH/thousand m3 excl. VAT, which can amount more than 70% in the heat tariff) still prevent

biomass from being competitible for heat production at this sector, as in this case tariff for heat,

produced from biomass will be 10% less, than the correspondent heat tariff on natural gas;

2) lack of solid biofuels market development; insufficient electricity production from biomass and

biogas;

3) monopoly position of DH companies and problems with third party access to heating network.

To solve some of the named barriers Mr. Geletukha mentioned the establishment of solid biofuels

electronic trading system in Ukraine, draft legislation for which was already prepared and agreed by

SAEE and the Ministry of Communal services and was under consideration at other ministries. This solid

biofuels electronic trading system is expected to start in 2019. Sector of electricity production from

biomass and biogas is not as well developing as bioenergy for heating with only 45 MWel installed for

biomass and 45 MWel installed for biogas. There is also a decision not to prolong “green” tariffs after

2030. In 2020 an auction system will enter into force and will be obligatory for sun and wind power

projects and voluntary for biomass and biogas power projects. But, since 2021-2022 the auction system

will become also attractive for bioelectricity projects, offering a little smaller tariff compared to “green”

tariff, but for a longer period (e.g. up to 20 years, compared to ‘green’ tariff acting till 2030).

Mr. Geletukha also presented the results of feasibility studies made in the framework of European

Bank for Reconstruction and Development (EBRD) Project: for crop residues baling; for biomass boiler

and CHP plant running on straw bales, baled maize stalks and sunflower husk pellets in district heating;

for biogas projects; for the production of 2nd generation bioethanol from own cereal straw and maize

stalks.

Frank Stiksma from Saxion University of Applied Sciences presented the Flash course Business

Development with instruction to the potential project developers in the future. Mr. Stiksma mentioned

that the way of making business is changing from money oriented to business impact oriented. Mr.

Stiksma stressed that renewable energy projects are about long-term thinking and then compared

conventional (based on financial, single principles) and new business development (based on multiple,

shared, collective principles) business cases. Mr. Stiksma named possible stakeholders and told about

sustainable business models and how to create them (7 steps). Mr. Stiksma showed how to build a

profitable business case in the example of Bioethanol prices and showed results of example business

case Calculation. And also Mr. Stiksma identified important things in business development, in

particular: identifying interests of the investor and other stakeholders, making clear what your added

value is, clarifying the social, ecological and economic impact of the project, understand the dynamics

of the energy sector, identify strengths and weaknesses etc.

Oleksandr Nikolaienko – Principal of Energy Efficiency and Climate Change Department of European

Bank for Reconstruction and Development (EBRD) presented the bank investment history and future

investment plans for EBRD`s biomass and biogas projects in Ukraine. Mr. Nikolaienko mentioned the

EBRD is the largest international investor in the private sector in Ukraine (сurrent portfolio of

investments in Ukraine - € 4.1 billion) and named the main goals of financing (Expansion, restructuring

or acquisition of existing private enterprises; Increasing competitiveness and product quality;

Innovations; Enhancing corporate governance standards; Increasing energy efficiency and efficient use

of resources). Then, Mr. Nikolaienko also mentioned that the capacity of EBRD financed projects on

biomass and biogas in Ukraine in 2019 would be doubled compared to 2018. EBRD started a FINTECC

grant program, aimed at transfer of climate technologies, that includes Investments and support

program (USD 7,2 million of Global Environmental Facility to attract EUR 70 million of investments) and

Technical support program (EUR 4 million of EU Neighbourhood Investment Facility, including EUR 1

million for support of climate innovations research). Then, Mr. Nikolaienko mentioned the new

program “Innovations in biomass supply chains in Ukraine” with the following main directions: a

partnership among key stakeholders in the dissemination of practice of use of agrarian waste for

energy production, support for the implementation of the best available technologies, support for

project preparation, granting funding, support for legislative and regulatory changes.

Rodion Morozov from Ukrgasbank presented the experience of bank together with IFC in funding 25%

of RES capacities Ukraine. Since 2016 Ukrgasbank has already financed 140 projects with 479 million

Euros for a total capacity 814 MW, mainly solar power plants. Nevertheless, UKRGASBANK has financed

4 biomass projects (TPP/CHP) and 8 biogas projects (utilisation of landfillgas). Mr. Morozov mentioned

the main features the projects had to have to get a loan and that bank was interested in financing real

biogas projects. The speaker also presented the working bio-based plants (power plants, heat plants,

and pellet production plants) that got investment from the Ukrgasbank. Finalizing his speach Mr.

Morozov mentioned that those projects that could secure feedstock supply, for example by growing

own energy crops, would have priority when considering for funding.

On behalf of colleagues from Dutch Trade & Investment Fund (DTIF) the expert of the Netherlands

Enterprise Agency (RVO) Kees Kwant presented the DTIF characteristics, procedures, target group,

countries DTIF applies and conditions for obtaining a loan. Then, Mr. Kwant presented the DTIF track

on co-financing of investment projects of Dutch companies that includes a loan (Max. 49% capped at

15 M EUR) and a guarantee (Max. 60% of the credit risk), showing schemes and explaining mechanizms

of co-financing and guarantees to local banks and EU-financer.

Yevgen Lukashevych from Yuzefo-Mykolayivska Biogas Company LLC presented the experience of a

company along with the experience of a general contractor – Ukrainian Technological Company (UTC),

in implementing bioenergy projects. Mr. Lukashevych told that the company was part of a consortium

of companies from Ukraine, the Netherlands and France, which specialized in construction of

bioethanol plants (about 20 years experience) and biogas complexes (about 10 years experience).

“UTC” company has own machine building factory, design bureau, construction team, assembly

department to implement turnkey projects. Consortium has restriction on using organic materials that

can be used as a feed for animals and human or grown on agricultural land as prime culture, instead

they recommend to use as a feedstock only byproducts, secondary biomass, agro residues, problematic

and unwanted wastes to reach feasibility. Mr. Lukashevych presented a detailed description of Yuzefo-

Mikolaevska biogas facility that was then under construction at the Yuzefo-Mikolaevskyi sugar plant.

He also told about cumulative economical effect of synergy of biogas plant and bioethanol plant, when

CAPEX of the bioethanol plant could be reduced by 25% due to stillage utilization at the biogas plant.

Oleksiy Krivolapov from Astarta presented bioethanol from sugar beet production project in the

conditions of Ukraine: raw material feedstock, BetaProcess technology, by-products. Mr. Krivolapov

presented Astarta company, which is a big agro holding owning 8 sugar plants in Vinnitska,

Khmelnitska, Poltavska and Kharkivska oblasts and a biogas facility at the Globino sugar plant. The

company is interested in construction of a bioethanol plant with conversion of both: molasses and

sugar beets into bioethanol. The existing biogas plant of Astarta is an advantage for the bioethanol

plant construction, but still existing high risks make this construction impossible today. These risks

include saturated bioethanol market in EU; non-transparency and non-predictability of the Ukrainian

market; absence of clear and transparent legislation in Ukraine, as well as absence of infrastructure for

blending and storing of the bioethanol fuel.

Oleg Yovzhenko from Pro-Energy presented Business case of a Biogas complex for power production

from biogas 2.57 MWel. Mr. Yovzhenko mentioned that Pro-Energy company was working in

3 directions: Energy, Pure water and Energy saving and provided a complex approach in all project

stages in cooperation with international companies. Mr. Yovzhenko gave a short overview of the total

biogas theoretical potential in Ukraine, which is enough to substitute all the imported natural gas.

Then, Mr. Yovzhenko presented a biogas plant investment project in village Semypolky, Brovarsky

region, Kyiv oblast, mentioning that project would have a demonstration status and would be

implemented in two stages, biogas plant construction at the first stage and facility for biogas upgrading

till biomethane at the second stage. Then, Mr. Yovzhenko showed the main technical parameters of

the biogas plant, its location, advantages, similar projects (in Bulgaria and England), as well as

investment and operation expenses. Simple payback of the project is 6.2 years.

Borys Rachynsky from UkrTeplo presented Business case of re-equipment of municipal gas boiler

houses with KARA biomass boilers in Rivne oblast. Mr. Rachynsky expressed his pleasure about Ukraine

and the Netherlands cooperation (in particular UkrTeplo cooperates with KARA Energy Systems) and

mentioned that such cooperation was very progressive and helpful for solving problems in bioenergy

sector. Ukrteplo Group is establishing projects on biomass boiler houses, hydro power stations, solar

power plants, biogas, boiler production, energy willow. Mr. Rachynsky presented project

Rivneteploenergo with 35 boiler houses of a district heating network of 868 MW total capacity. Boiler

houses will be re-equipped for use of biomass and some biomass CHPs will be constructed. The

project’s investment plan for 2019-2022 envisages the implementation of 140,7 MW capacities that

requires 40 million EUR of investments. Investment plan includes re-equipment during 2019-2020

years of three boiler houses with installation of Dutch biomass boilers of KARA Energy Systems (one

boiler house with 2,7 MWheat boiler and two boiler houses with 8+8 MWheat boilers in each). Discounted

payback period of the objects will be from 2 years (for the 2.7 MW boiler) to 9-11 years (for 8+8 MW

boilers), which could be reduced due to construction of boilers in Ukraine under KARA license.

Director of the Project Development of Dutch Sustainable Development BV (DSD BV) Hans van Klink

presented Business case for Direct Processing with BetaProcess. Mr. Klink explained a technology

scheme using direct processing with BetaProcess technology, where advanteges are in higher yield of

ethanol (100-150 liters of ethanol from 1 t of sugar beet, compared to 90 liters of ethanol with the

existing technology). Then, Mr. Klink presented BetaProcess pilot plant in Acrres Lelystad, the

Netherlands and gave concrete numbers of ethanol production (1 ha sugar beet = 8.500 liters of

ethanol). Hans van Klink concluded that direct processing was a starting point for using sugar beet as

a raw material for the chemical industry and as a crop for the most attractive circular economy model

and that DSD BV was also looking for a partner in Ukraine for market implementation.

The section of presentations was followed by an evaluation of business cases of previous speakers by

Frank Stiksma. Mr. Stiksma gave a feedback to the presented business cases and general

recommendations from Saxion, based on the approach presented at the start and asked some

questions. Mr. Stiksma had public discussion with Borys Rachynsky (UkrTeplo) asking about what was

the company’s need to scale up the current business and about economic calculation results veracity,

and expected risks. Mr. Rachinsky answered that UkrTeplo was interested in additional investments,

for example a loan from Ukrgasbank to implement the project, and that economic calculations that he

showed were conservative and could be reduced (from 9-11 years to 6-7 years) due to collaboration

with KARA in construction of boilers (8 MW) under their license in Ukraine. Stable supply of big

quantities of biomass was mentioned as a main risk, which was expected to be overcome due to

introduction of the electronic biomass exchange in Ukraine. Then, Mr. Stiksma had a public discussion

with Oleksiy Krivolapov (Astarta) asking about what the company needed from the government; what

were the main problems that stopped business case development and whether the business case was

profitable and what were the main investment risks of the bioethanol project. Mr. Krivolapov answered

according to economic calculations of Astarta the business case is profitable (4-5 years payback), and

that they do evrything from their side to implement legislation, favourable to bioethanol production

(development of a draft law, support and lobby from Agrarian party), but because of the active lobby

of pro-government forces, including oil traders that were against this draft law. Assessment of riscs

was implemented together with IFC, who identified existing risks (already mentioned) that prevent the

business case from implementation. The situation is not likely to change in a short perspective (up to

6 month due to upcoming president elections), but Mr Krivolapov doesn’t lose hope that situation

could be changed in the future.

Then, participants were split up into three groups to discuss questions/projects connected with biogas,

biomass heating and ethanol production from sugar. Then the leader of each group (Kees Kwant, Hans

van Klink, Georgii Geletukha) presented the main topics that were discussed in the group, the main

problems discussed and the group's suggestions for their solution.

1. Heating with biomass through grids, industrial and domestic

Energy crops production

o Increase awareness: information campaigns, company visits and business tours to

existing projects

o Legislation: extend a minimum land lease term to 25 years (from standard period of 7

years)

o Investments: introduce subsidies (or some other form of state support) for starting

plantations (i.e. 1st year of operations when investments are the highest)

Logistics

o Establish regional hubs/warehouses to aggregate and store biomass

Trade

o Establish the Biomass Exchange

2. Biogas production and utilisation

There is a need for a skilled labor force

o introduce educational and training programs on how to run/operate the biogas

installations

Feedstock

o Expand range of resources taken for biogas production (more landfill projects)

Investments

o Ease access to bank finance: presently bank require all permits to be available already

prior applying to them and own funds of project developers to co-finance the project

o Signing power purchase agreements (PPAs): presently PPAs are signed after the

project is in place, prior that only pre-PPAs are available

3. Ethanol and biofuels

Harmonize legislation with best global practices and EU directive

o Adopt a mandatory blend of bioethanol

o Introduce a sustainable certification and control system

Infrastructure

o Update existing infrastructure, develop blending facilities

Vehicles

o Make sure cars are capable to run on fuel with a certain content of bioethanol

The presentations are available on the Internet: https://www.biobased-ukraine.nl/next-event-in-kyiv-

workshop-on-formulating-bankable-biobased-energy-projects-2/

Selected photo of the Workshop are in Annex II and by the link: https://flic.kr/s/aHsmrrUGbQ.

Overall the Workshop went off very successfully and was also attended by media. Press

announcement and post release were sent to 15 media resources.

Annex I. Agenda of the Workshop

Workshop “PIB Biobased Ukraine Business Development and Investment.

Exchange of expertise to formulate bankable projects”

Date: 22 November 2018 (Thursday), 9:00 – 17:00 (registration starts at 8:30)

Organizers: Partners for International Business project: Biobased Energy Ukraine, the Embassy of the

Kingdom of the Netherlands in Ukraine, State Agency for Energy Efficiency and Energy Saving of Ukraine

(SAEE), Bioenergy Association of Ukraine (UABio) and association “Ukrainian agribusiness club”.

Venue: Kyiv, Hospitalna Str., 12, President Hotel, Conference Hall “Predslava” at the 1st floor.

Goal: Exchange of expertise to formulate bankable projects for PIB members and their Ukraine

counterparts through a crash course business development for bankable projects together with

examples by PIB members to show the potential of their technologies.

The Dutch Partners for International Business project on Biobased Energy in Ukraine work with a set

of partners from industry and research to highlight the potential of technologies and knowledge from

the Netherlands to support the energy independence of Ukraine. Feasibility studies have been carried

out and ideas about potential projects have been exchanged and developed into plans, proposals and

first contracts. See: www.biobased-ukraine.nl

The conversion technologies require bankable projects for implementation in Ukraine. This essentially

means that projects need to guarantee feedstock availability, quality and price, the offtake of the

products (heat, electricity, fuels, etc) and last but not least reliable cost effective conversion

technologies.

The development of such bankable projects requires skill, creativity and perseverance from project

developers. In the Workshop, we will include a crash course business development for bankable

projects together with examples by PIB members to show the potential of their technologies.

AGENDA

Time Topic Speaker

8:30 - 9:00 Registration and welcome coffee

9:00 - 9:30 Opening of the Workshop

Head of State Agency of Energy

Efficiency and Energy Saving of Ukraine,

Sergii Savchuk

Agricultural Counselor, Embassy

of the Netherlands in Ukraine, Carolien

Spaans

9:30 - 9:45

Introduction of Partners for

International Business project:

Biobased Energy Ukraine

Coordinator of Partners for International

Business project: Biobased Energy

Ukraine, Hans van Klink

Market supporting instruments

9:45 – 10:15 Current State and Prospects of

Bioenergy Development in Ukraine

Georgii Geletukha, Bioenergy association

of Ukraine

10:15 – 11:00 Flash course Business Development

Bioenergy

Frank Stiksma, Saxion University of

Applied Sciences

Time Topic Speaker

11:00 – 11:30 Coffee break

Financing a biobased project

11:30 – 11:50 Financing bioenergy projects – EBRD

experience Oleksandr Nikolaienko, EBRD

11:50 – 12:10 Financing eco-projects on biofuels Rodion Morozov, UKRGASBANK

12:10 – 12:30 Dutch Trade and Investment Fund Kees Kwant, DTIF

12:30 – 12:50

Synergy concept for deep biomass and

biowastes processing into value added

products and energy

Yevgen Lukashevych, Yuzefo-

Mykolayivska Biogas Company LLC

12:50 – 14:00 Lunch

The projects

14:00 – 14:15 Bioethanol from sugar beet

in the conditions of Ukraine Oleksiy Krivolapov, ASTARTA

14:15 – 14:30

Business case of a Biogas complex for

power production from biogas 2.57

MWel

Oleg Yovzhenko, Pro-Energy

14:30– 14:45

The investment project for re-

equipment of municipal gas boiler

houses of Rivne city for biomass

Borys Rachynsky, UkrTeplo

14:45– 15:00 Business case Direct Processing

with Betaprocess Hans van Klink, DSD BV

15:00 – 15:30 Coffee break

Proposal development and review – Interactive session

15:30 – 15:45

Feedback from theory to practice:

general recommendations from

Saxion, based on the approach

presented at the start

Frank Stiksma, Saxion University of

Applied Sciences

15:45 – 16:45 Matchmaking and Discussion in groups

of different types of biobased projects

1. Short matchmaking

2. Discussion in groups of different types

of biobased projects (Biogas; Biomass for

Heating; Bioethanol from sugar beets)

16:45 – 17:00 Presentation of results of group

discussions

1. Biogas

2. Biomass for Heat production

3. Bioethanol from sugar beets

17:00 Final Conclusions and Closure of Workshop

Annex II. Selected pictures of the Workshop