Oschad to finance KNESS Group to build 30 MW of energy storage facilities

Oschadbank has entered into EUR 9.6 mln investment loan agreement with KNESS Group to finance and refinance the costs of one of its projects to build and commission 30 MW of energy storage facilities for ancillary services.

It`s a complex project finance transaction consisting of three phases with a term of almost 6 years, with a grace period in accordance with the financial model. The European Bank for Reconstruction and Development participates in the project risk sharing.

The project envisages the construction and connection of energy storage facilities to the power grid to provide 25 MW frequency support reserve (FSR) and 5 MW automatic load-following and unloading frequency restoration reserve (AFRR) in the ancillary services market in the IPS of Ukraine with a guaranteed purchase of such services by the transmission system operator. The facility is scheduled to be commissioned in October 2025.

The main equipment of the project is energy storage systems manufactured by Hithium, a leading Chinese manufacturer of high-quality energy storage for municipal, commercial and industrial applications, which is among the top five in the world's largest markets.

“The need to build new electricity storage facilities is caused by both massive destruction of shunting generation and the development of alternative energy technologies. Powerful energy storage facilities will make it possible to expand the use of solar energy and reduce price fluctuations. The KNESS project, with a capacity of 25 MW (FSR) / 5 MW (AFRR), in which Oschadbank participates, is one of the first examples of a systematic approach to a new type of business in the energy sector - targeted construction of frequency control capacities alongside Ukrenergo substations to provide ancillary services on contractual terms. The high current demand for the service and the country's economic recovery in the long term are the keys to further multiplication of such projects,” said Yurii Katsion, Deputy Chairman of the Management Board of Oschadbank in charge of corporate business.

Currently, the KNESS Group is simultaneously implementing 7 projects for the construction of EPS facilities in 3 regions of the country with a total certified capacity of 79 MW of FSR and 5 MW of AFRR.

“KNESS develops renewable energy, in particular, by introducing innovations, developing and implementing new business models. Four years ago, we started researching energy storage technologies and actively working on modeling the operation of energy storage facilities (ESF) in the ancillary services market. Moreover, this year, we are activating the accumulated expertise by implementing industrial energy storage projects that are important for the resilience of the country's power system. However, this project turned out to be quite difficult in terms of attracting bank financing because ESF is still a new tool for the market, and there is no economic experience of long-term operation of such systems in the ancillary services’ functionality. And we are grateful that Oschad decided to become a pioneer and saw the potential of implementing a new and promising project for the market, using the deep expertise of its team,” said Serhii Shakalov, CEO of KNESS.

For reference:

KNESS is an international group of companies of Ukrainian origin that develops technologies and implements renewable energy projects in Ukraine and abroad. The group designs and builds renewable energy facilities for electricity supply companies and industrial enterprises, trades, supplies, forecasts electricity, provides comprehensive maintenance of electricity facilities, and has its own production of components.

KNESS develops innovative technologies in the renewable energy sector at its own R&D center. The company is also actively engaged in the development of wind farms, develops a new business model of an aggregator, and has its own balancing group.

In 2023, the company received the first license in Ukraine for the right to carry out energy storage activities.

As of today, the KNESS team has implemented 1.3 GW of solar power plants in Ukraine, Poland and Latvia. 1.48 GW of power generation facilities are under comprehensive maintenance.