Free Energy focuses on selective development and construction/ reconstruction of small size (micro, mini and small) grid-connected hydro power plants, ranging between 150 kW – 10 MW installed capacity each. Our territory of operation is Ukraine. Our investment strategy is long-term therefore the business cycle we employ comprises: development, construction and long-term operation or short-term operation with exit if we consider feasible selling a certain project.

Development and construction of hydro power plants can take two forms: construction of a new power plant or reconstruction of existing operating or non-operating plant. Reconstruction is a better option due to lower investment amount, absence of development costs and usually going concern while reconstruction. But those options obviously are limited. We explore the potential of small rivers and existing hydro communications. Generally we tend to develop our projects in areas with lack of generation capacities. Proximity to inhabited areas is crucial as well in terms of energy saving due to avoidance of transmitting electricity at long distances.

Typical hydro power plant project we would consider will have installed capacity ranging between 350 kW and 1,5 MW and would require EUR 1,4 – 6,0 million investment. The development and construction usually takes two years, but it can be substantially shorter or longer depending on project particularities. Mainly we employ own capital but occasionally we would consider engaging debt financing from local banks or international financial institutions to fund the construction of the project.

In 2009 the Law of Ukraine on Electric Energy Industry was adopted establishing feed-in tariffs for power plants which generate electricity from renewable sources. The tariffs are in force till the end of 2029. Acting from 2015 “green” tariffs for small hydro are the following:

Micro HPP	Mini HPP	Small HPP
< 200 kW	< 1 MW	< 10 MW
174,3 EUR/ MW*h	139,4 EUR/ MW*h	104,6 EUR/ MW*h

This level of tariffs is feasible for this type of industry and allows a payback period ranging from 5 to 9 years depending on the project.

We do not necessarily tend to be industry leaders, but we definitely have clear goals in terms of enterprise value, capacities installed, turnover, return on investment, etc. due on a certain dates. In our activity we follow certain principles: promotion of hydro energy as a renewable energy source, energy diversification and independence, optimal use and exploitation of renewable resources.