The Inzhur Energy Fund, part of the REIT company Inzhur, has raised EUR 12 million from private individuals for the construction of a 34 MW gas generation facility, reported the founder of Inzhur, Andrei Zhuzhiy.
"In just two months, we raised EUR 12 million through retail investments (for the construction of new capacity - ER). A little over 2,600 Ukrainians contributed from 6,000 UAH each. This is a response to the Russians turning off our electricity, while Ukrainians are stepping up to invest in the development of new generation. It also presents a great opportunity to change the market, making it competitive, allowing new players to enter and develop decentralized generation," he said during the online panel discussion "Distributed Generation: Current State, Prospects, and Challenges" hosted by the UN Global Compact in Ukraine and ExPro Consulting, as reported by a correspondent from "EnergoReform."
He explained that the fund was the winner of last year's special auction held by NEC "Ukrenergo" for new balancing capacity (for providing automatic frequency recovery reserves, aRVCh - ER) with the first phase of gas generation at 18 MW.
"We went under the 'Ukrenergo' contract for ancillary services for 10 hours - 4 in the morning and 6 in the evening, while keeping the rest for ourselves to sell on the market," Zhuzhiy stated.
According to him, the second phase of the facility will amount to 16 MW, and the fund plans to participate in a similar special auction by "Ukrenergo," which is scheduled to start in March this year. Thus, the fund is constructing a total of 34 MW of gas generation capacity, including funds from private individuals.
Zhuzhiy added that "the market has proven interesting for us and many Ukrainians," and the calculations for project efficiency were based on projected market gas prices in Europe.
Furthermore, he mentioned that the fund is considering participating in "Ukrenergo's" auction for new generating capacity with a project of 50 MW.
"If there's a competition and we win with 50 MW, we will need an additional EUR 3 million, and accordingly, after reassessing the value of the signed contract, we will enter the market with a proposal for further investment," noted the founder of Inzhur.
According to information on the fund's website, the projected return on the raised funds is 15% per annum in USD, with a fund duration of five years, which may be extended. The generation facility is located in the Kyiv region. Zhuzhiy's personal contribution amounts to EUR 3 million.
Zhuzhiy also added that the company plans to receive EUR 8 million from state banks as "supplement for equipment."
He stated that the simplifications in the design and construction of generation facilities introduced by the government make it easier to enter the market, but there is still work to be done regarding connections to gas and electrical networks.
"Despite the necessity for generation in the country, you often find yourself face-to-face with a monopoly and must resolve connection issues directly, with little hope for support," Zhuzhiy remarked.
As reported, citing "Ukrenergo" head Oleksiy Brekht from the same online discussion, the company is preparing to hold its first auction in 2025 and the fourth overall for new balancing capacity to provide ancillary services - automatic frequency recovery reserves (aRVCh) - in mid-March, with certain changes planned for its conditions. Earlier, in a brief interview with "EnergoReform," he noted that "Ukrenergo" expects to allocate at least 300 MW in the upcoming auctions for new balancing capacity in 2025.
Such auctions were first held in August 2024. In the first one, investors guaranteed the construction of nearly 99 MW of capacities for providing frequency support reserves (RPhCh) and covered almost all of "Ukrenergo's" needs. These capacities are expected to start operating by October 2025. It was anticipated that these would primarily be energy storage installations (UKhE). Recently, the OKKO Group of Companies put its first such installation with a capacity of 20 MW into operation ahead of schedule.
In two more auctions (August and December) - this time for aRVCh services - slightly over 400 MW out of a 1 GW need for "Ukrenergo" was secured. The capacity is to be commissioned by October 2025 and January 2026. The auctions were aimed, in particular, at gas installations and biofuel stations. The essence of these auctions is that "Ukrenergo" commits to purchase balancing market services (load shedding or loading) from such stations at auction prices during specific hours over a five-year period.
Additionally, until February 28 of this year, "Ukrenergo" is accepting applications for an auction for new generating capacity - totaling 700 MW (also being conducted for the first time). The essence of this auction is that the government, through "Ukrenergo's" transmission tariff, will compensate the investor's capital costs for 10 years after the commissioning of the new generating unit, i.e., the funds spent by investors specifically on the construction of the facility. A period of 2.5 years is allocated for this. According to Brekht, "Ukrenergo" senses investor interest in such auctions.
Source: https://www.inzhur.reit/funds/Energy