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Report on crisis management within biogas industry

03-17-2010 11:10 AM CET | Energy & Environment

Press release from: ZORG UKRAINE Ltd.

/ PR Agency: Stolnitsky Ideas
Igor Aksiutov, commercial director and co-founder of ZORG Ukraine Ltd. shares about changes and what to expect from alternative energy market in the future.

Overall trends in development of biogas industry (both in Ukraine and CIS) demonstrate what can be called a “delayed demand.” Biogas market is rapidly expanding, yet not due to an increase in the amount of completed construction projects, but due to new deals that are being made. Companies, wishing to buy a biogas plant, are currently developing engineering plans and issuing all legal permits necessary for the start of construction works, waiting for financial markets to improve.

For instance, the total amount of deals ZORG Ukraine made in 2009 in financial equivalent equals company’s profit in 2008. Meanwhile, the actual amount of deals changed from 4 to 9. In 2008, 75% of company’s projects reached the stage of construction, while in 2009 they formed only 20% of the general amount. First months of 2010 demonstrate a forecoming improvement since ZORG Ukraine’s customers are more eager to proceed with signing of new contracts. Company expects to make twice or three times higher amount of deals and 100% increase in the amount of construction works carried out by the company in comparison to 2009.

The scale of new biogas plants’ projects have also expanded in about 10 times. The capacity of the average plant before the crisis was around 200-300 kilowatts, while the maximum capacity reached 1 megawatt. Currently, the average capacity of the plants to be built is 1-2 megawatts, and the average cost is 2-4 mln. Euro. The maximum capacity – 16 megawatts, 25-30 mln. Euro, respectively.

Company’s competitors have also undergone radical changes. Foreign companies cut down budgets on their offices abroad and focused on national markets instead. Around 30% of the foreign biogas companies went through a bankruptcy. Companies that survived the crises moved out of Ukrainian and CIS markets. The companies, that proceeded with construction works during the crises and managed to finish their projects, have become the market’s leaders.

Apparently, governments of Ukraine and CIS are not willing to provide a substantial support for the biogas market. New laws on green tariff, adopted in Ukraine and CIS, led to an increase of the interest in biogas. Yet the absence of actual cases of usage of the following benefits speaks for itself.

Animal complexes were company’s major customers before the crisis: they needed biogas plants in order to recycle the waste, converting them into gas and electricity. At this point, representatives of the food industry and agriculture took their place. Plants that produce alcohol and sugar are eager to build biogas plants. Companies that grow energy crops for the production of biogas have been recently founded in Ukraine as well.

Ukrainian biogas market has the potential of 25-30 milliards Euro or a few thousands of biogas plants. Currently, the sales turnover of Ukrainian biogas companies is relatively limited – around 3-4 mln. Euro. One could state, that 2009 and 2010 form the foundation of the future prospects. Once the financial institutions start functioning in 2011, total cost of biogas plants in the process of construction will be 50-70 mln. Euro per annum.

About ZORG:

ZORG executes full range of engineering services within biogas industry. The company designs and builds biogas plants under German state-of-art technology and know-how license.

ZORG works on a global scale: company’s projects have been successfully implemented in Kazakhstan, Ukraine, Latvia, and Turkey.

Adress: 172, Gorkogo str., Kiev, 03680, Ukraine
Tel/fax +38 (044) 5212951
Tel/fax +38 (044) 5212952
Tel/fax +38 (044) 5212953

Aleksandra Kharchyshyna
Stolnitsky Ideas
Phone: +38 066 28 56 941

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