Ukrainian employees return to Ukraine to fight, Eastern European solar EPC labor or shortage

The Eastern European solar market faces a familiar enemy of grid constraints, especially high-voltage grid capacity constraints. However, high electricity prices are building up the potential for commercial projects in the area.

Speaking at the European Solar Financing and Investment Conference, Chris Gill, director of projects and investment at Kajima, said that the EU's efforts this week are expected to accelerate the development of renewable energy projects in Eastern European markets, but familiar constraints such as the grid will continue to affect project progress. 

In particular, Gill noted that solar PV projects intended to be integrated into Poland's high-voltage grid "cannot obtain grid-connection agreements." He pointed to recent market speculation that the national grid operator is reserving high-voltage capacity for wind power projects.

Conversely, developers like Kajima prefer smaller medium and low-voltage projects, and they have accumulated more of these projects to create economies of scale.

Poland is one of the most popular PV markets in recent times, attracting more and more new entrants. Now, as Gill says, as interest in PPAs grows, banks are also opening their doors to more Polish business ventures.

This sentiment is echoed by Wolf Dietrich of developer Econergy Renewable Energy, who said his company is considering converting some of its projects into a commercial model, or at least diverting more revenue to commercialization for higher expected electricity prices.

The problem is looming with rising inflation across Europe. Filinto Martins of NextEnergy Capital points out that transactions in Poland are generally in euros or dollars, not zloty.

If energy costs soar across Europe, causing inflation to continue, investors could panic over the risk that project benefits won't offset the growth.

Martins highlighted that while it is too early to conclude that the crisis will have long-term effects, as other discussions at this week's conference have pointed out, Russia's invasion of Ukraine will only "exacerbate" such problems.

Panelists said there will be at least a short-term workforce problem in the solar EPC sector in Eastern Europe as employees of Ukrainian origin return to Ukraine to fight the war.

More worryingly, however, is that more mature European solar markets such as Germany and France could see a decline in interest in Eastern Europe if financial headwinds and risks on the continent escalate further.