On-Grid Hybrid Wind–Solar Power Plants in Ukraine’s Residential Sector: Economic Justification of Installation Under Different Support Schemes

Abstract

On-grid hybrid wind–solar systems are one of the best sustainable solutions for developing distributed generation, as they can provide a stable and reliable electricity supply, effectively using the potential of the two most common renewable energy resources. In Ukraine, promoting the development of on-grid hybrid wind–solar power plants takes on particular importance under conditions of electricity shortages caused by the large-scale destruction of the energy infrastructure due to the ongoing hostilities. This article examines the economic efficiency of installing such power plants in the residential sector of Ukraine under different state support schemes. This study was conducted for on-grid hybrid wind–solar systems of various configurations and installed capacities with different equity and debt capital proportions involved in implementing investment projects. This study’s results highlight the economic efficiency of the feed-in tariff compared to the net billing for households investing in such facilities and emphasize the need to improve policy measures to increase their investment attractiveness.

1. Introduction

Nowadays, renewable energy is considered one of the main components of the strategy for meeting growing global energy needs, ensuring energy security, and mitigating the effects of climate change [1,2,3]. To accelerate the green energy transition, the governments of countries are developing and implementing support policy measures aimed at attracting renewable energy sources in various sectors of the economy [4,5,6]. Special attention, both in the world and in Ukraine, is paid to the household sector, which, along with industry, is one of the largest consumers of energy services [7,8,9].

The deployment of renewable energy facilities in Ukraine’s residential sector gained particular importance due to the ongoing hostilities that caused the destruction of energy facilities, which led to a significant shortage of electricity in Ukraine’s power system [10]. As a result, the government is forced to introduce emergency and schedule stabilization restrictions on electricity consumption. Under conditions of constant shelling of the energy infrastructure, the generating capacity of renewable energy can guarantee a reliable electricity supply to households. Another reason in favor of renewable energy facilities is the significant increase in electricity tariffs for household consumers planned by the government to accumulate financial resources for the restoration of the destroyed energy infrastructure [11]. Given this, installing renewable energy facilities is the optimal solution for minimizing households’ vulnerability to price fluctuations. In the long term, the development of renewable energy capacities in households will also not lose its relevance since the post-war reconstruction of the energy sector will be mostly based on renewable energy technologies, and the transition from a centralized to a distributed energy system will play a key role [12,13].

It is worth noting that Ukraine has already achieved some success in the development of renewable energy in the household sector thanks to the state support initiatives introduced in 2014 (feed-in tariff, financial mechanisms, tax and customs benefits) [14]. However, their implementation led to the large-scale construction of only solar power plants. In 2022, while the total installed capacity of solar power plants in households was 1411 MW, the capacity of commissioned wind and hybrid wind–solar power plants was only 0.06 MW and 0.25 MW, respectively [15]. The main reason for such trends was the application of a significantly higher feed-in tariff for solar power plants compared to wind power plants, which for a long time guaranteed a payback period of investment projects of 3.3–5 years [16,17]. It is worth noting that the application of high feed-in tariff rates stimulated households to sell surplus electricity not consumed for their needs to the grid. As a result, the main goal of households under such an energy policy model is not to ensure their energy independence but to obtain significant profits from the sale of surplus electricity.

One of the disadvantages of the large-scale deployment of solar power plants was a significant burden on the state budget in terms of compensation for the difference between the feed-in tariff and the market price for electricity [18]. Another drawback concerns the problem of the dependence of electricity generation by solar power plants on the season and time of day, which led to problems in balancing Ukraine’s power system when adding a significant amount of such electricity to the grid [10]. The mentioned shortcomings of solar power plants, when the maximum amount of electricity generation occurs in the summer and the impossibility of generating electricity at night, make it impossible to use solar panels as the only source for uninterrupted electricity supply. Another problem that cannot be ignored is the need to recycle spent batteries and lead-containing batteries [19].

Given this, the question arises regarding more efficient use of renewable energy resources, which can be achieved by combining wind and solar generation under one power plant. Hybrid wind–solar systems can provide more consistent and reliable electricity generation because wind power plants are more powerful at night and in winter, while solar ones are during the day and summer. Thus, complementing each other under hybrid wind–solar plants, they can provide a more balanced profile of annual electricity generation. In addition, hybrid wind–solar systems are more suitable for providing autonomous electricity supply. They can be considered as an alternative to the costly or impossible connection of the generating facility to the grid.

It is worth noting that in Ukraine, for a long time, there was no feed-in tariff for hybrid wind–solar plants. As a result, the installation of such systems was possible only under conditions of registration of two electricity generation metering points, which was impractical from an economic point of view. Although this problem was solved by introducing the feed-in tariff for such power plants in 2019 [14], it did not become an impetus for the large-scale deployment of such facilities [15]. It should be noted that in 2023, the government revised the state policy for renewable energy development in the household sector. The Verkhovna Rada of Ukraine approved the Law “On Amendments to Certain Laws of Ukraine Regarding Restoration and Green Transformation of the Energy System of Ukraine” [20], which lays the foundations for households’ transition to the new net billing support scheme. Net billing is an analog of net metering and works on a similar principle. The difference is that the excess electricity supplied to the grid is counted not in kWh but in monetary units, according to the price of electricity at the time of supply. Thus, under net billing, the consumer receives a cash deposit for the excess electricity supplied to the grid, which can then be used to pay for the consumed electricity in subsequent periods (provided that the need for electricity exceeds the amount of its generation by the household’s renewable energy power plant). The net billing is self-balancing, as it does not require additional subsidies from the state. How economically attractive it will be for households depends on several factors, including the market electricity price, which will directly affect the payback period of investment projects.

Although the economic efficiency of implementing separate solar and wind power plants under state support schemes in Ukraine’s residential sector is fairly well-researched, similar studies on implementing hybrid wind–solar plants are currently absent in the scientific literature. Given the above, the focus of this study will be aimed at evaluating the economic efficiency of installing on-grid hybrid wind–solar systems in Ukraine’s households under the feed-in tariff and the net billing mechanisms based on estimating the cost of electricity generation and the payback periods of investment projects, along with providing recommendations for improving energy policy measures. This study’s results can be used to determine the most effective approaches to support deploying on-grid hybrid wind–solar systems in Ukraine’s households.

The structure of this article is built as follows: Section 2 analyzes the literature review on the technical characteristics, economic efficiency, environmental benefits, and social impact of hybrid wind–solar systems. Section 3 examines state policy measures aimed at promoting renewable energy in Ukraine’s residential sector and the results of their implementation. Section 4 represents methods used for research. Section 5 discusses the main findings and provides recommendations for improving energy policies to promote on-grid hybrid wind–solar systems in Ukraine’s households. Section 6 comprises conclusions obtained based on the results of the conducted research.

2. Literature Review

Renewable energy is a key element of global energy policy and plays a crucial role in shaping a sustainable future by promoting environmentally clean, economically viable, and socially just energy development [21,22,23,24,25,26,27]. Despite a number of advantages of renewable energy technologies, the main challenge for their large-scale integration into power systems remains the instability of electricity generation due to dependence on weather conditions and time of day. To overcome this problem, their hybridization by combining different renewable energy sources is becoming increasingly popular [28]. The latest scientific research devoted to hybrid wind–solar systems concerns their technical characteristics [29,30,31,32], economic efficiency [33,34,35,36,37], environmental benefits [38,39,40,41], and social impact [42,43,44].

One of the most popular combinations in hybrid power plants is the integration of wind turbines and solar panels into one system, which can significantly increase the stability of the electricity supply throughout the year. Hybrid wind–solar systems can be both on-grid and off-grid. The main advantage of the installation of on-grid hybrid wind–solar power plants is the ability to sell surplus electricity, often receiving economic benefits from the feed-in tariff, net metering, or other support schemes. At the same time, off-grid hybrid wind–solar power plants are used exclusively to cover electricity consumption. On-grid systems are well suited for urban and suburban areas with reliable grid connectivity. In contrast, off-grid systems are mostly used in remote or rural areas where grid connectivity is unavailable or unreliable.

Hybrid wind–solar energy systems can be configured with and without energy storage systems. In the study [29], among the most significant advantages of using energy storage systems in hybrid wind–solar plants are the possibility of storing surplus electricity during peak generation periods, a positive effect on the stability of the power grid, the possibility of using such systems without connecting to the grid, etc. At the same time, the authors include the high cost of energy storage systems, the need for maintenance, and the loss of their overall efficiency over time as the main disadvantages.

The study [29] emphasizes that hybrid renewable energy systems contribute to the stability of the power system by acting as stabilizers during peak loads, reducing the need for expensive balancing capacities based on fossil fuels. The authors of the article [32] highlight that hybrid wind–solar systems are the optimal solution to reduce output power intermittency, as they contribute to its relative smoothing. In stand-alone hybrid wind–solar systems, energy storage systems and standby generators increase the reliability and quality of electricity.

Combining solar panels and wind generators in a hybrid system reduces the costs of investment projects compared to installing separate wind and solar power plants. Thus, the research results [33,34] testify that the hybridization of solar and wind power plants reduces the costs of implementing investment projects by 5–16%, depending on the total installed capacity of the generating facility. Cost savings occur due to using common components and infrastructure, more efficient use of space, development of joint project documentation, grid connection, etc.

Increasing the economic efficiency of hybrid wind–solar systems is possible through a detailed study of their optimal configuration and identifying areas with the best potential for their placement. Thus, in the research [26], the authors conducted a technical and economic analysis of three combinations of off-grid renewable energy plants with energy storage systems: solar, wind, and hybrid wind–solar for installation in rural areas in India. The study’s results showed that the most economically efficient configuration of the generating facility consists of solar panels, a wind turbine, and a lead-acid battery, which confirms the economic advantages of hybrid wind–solar systems compared with a separate installation of solar or wind power plants. This statement is also supported by research [36], where the authors consider economically optimal configurations of hybrid wind–solar systems, considering weather conditions, population density, and technical specifications for sparsely populated areas of Germany and the Czech Republic. The study’s results prove that adding wind generators reduces the required installed capacity of the photovoltaic system and the total costs of the investment project. The authors of the study [37] used fuzzy logic modeling to determine the optimal locations for installing hybrid wind–solar power plants, considering climatological, topographical, human factors, and proximity to the grid on the example of small island states with limited land areas. The study’s results demonstrate that this approach allows investors to provide higher economic income with optimal use of land resources.

Developing hybrid wind–solar energy systems has significant environmental benefits, helping to reduce the negative impact on the environment. Research results [38] testify that using hybrid wind–solar systems helps to balance the demand and supply of electricity, thereby gradually reducing dependence on fossil fuels. In the study [39], the authors conducted an environmental sustainability assessment of small-scale stand-alone energy systems for remote rural communities in the Philippines. The results showed that stand-alone hybrid wind–solar plants with energy storage systems have a 17–40% lower environmental impact per kWh generated electricity than the equivalent stand-alone renewable power plants. Research results [40,41] emphasize that using hybrid wind–solar systems contributes to reducing greenhouse gas emissions, so it is an effective solution for mitigating the effects of global warming and climate change.

Several scientific studies are devoted to the social impact of hybrid renewable energy systems. The authors of the article [42] highlight that installing hybrid wind–solar energy systems facilitates the acceleration of rural electrification, as they can meet the demand for electricity in remote and hard-to-reach areas without the need to connect to the centralized power grid. Installing hybrid wind–solar systems can reduce electricity bills, positively affecting household budgets. Thus, the authors of the article [43] investigated the feasibility of using a hybrid wind–solar system by households in Northern Cyprus. The results showed a reduction in the households’ monthly electricity bills; in particular, the cost of electricity generated was lower than the current price of electricity supplied from the national grid. The study [44] highlighted the high potential efficiency of using hybrid wind–solar systems in microgrids, particularly in large-scale residential areas of Beijing. The study demonstrated that such systems significantly reduce dependence on the centralized power grid, ensure the reliability of electricity supply, and stimulate the creation of new jobs, positively impacting local communities’ development.

Research results [28] prove the need to implement hybrid renewable energy systems in Ukraine since using separate renewable power plants is not an optimal solution for a stable electricity supply. The authors emphasize that developing hybrid renewable energy systems can significantly contribute to realizing the potential of local renewable energy sources, strengthening energy security, and reducing the negative impact on the environment. Accelerating these processes requires improving energy policy measures aimed at developing such power plants in Ukraine.

The contribution of this study to the scientific literature will be to deepen the understanding of the influence of various state support mechanisms, in particular the feed-in tariff and the net billing, on the economic efficiency of implementing investment projects of on-grid hybrid wind–solar power plants in Ukraine’s households, taking into account their specific technical parameters (total installed capacity, capacity ratio of wind and solar components, availability of energy storage systems), level of financial and credit support, etc.

3. Policy Initiatives to Foster Renewable Energy in Ukraine’s Residential Sector

Forming the legal framework was the first step in managing the development of renewable energy capacities in Ukraine. Nowadays, the key regulatory documents in this field include the Energy Strategy of Ukraine for the period until 2035 [45], the National action plan for the development of renewable energy for the period until 2030 [46], the Laws of Ukraine “On Alternative Energy Sources” [47], “On the Electricity Market” [14], “On Amendments to Certain Laws of Ukraine Regarding Restoration and Green Transformation of the Energy System of Ukraine” [20], “On Amendments to Certain Laws of Ukraine Regarding Ensuring Competitive Conditions for Electricity Generation from Alternative Energy Sources” [48].

The regulatory framework became the basis for the introduction in 2014 of state support schemes to promote renewable energy development, which were further improved according to state policy goals and challenges in Ukraine’s energy sector [49].

The feed-in tariff is the primary motivational mechanism to foster the installation of renewable power plants in Ukraine’s households [14]. Today, owners of households that install solar and wind power plants with a total capacity of ≤30 kW and hybrid wind–solar plants with a capacity of up to 50 kW can use feed-in tariff benefits [14].

In addition to the feed-in tariff, households can take advantage of tax and customs benefits. Thus, equipment used for the construction of renewable power plants, which has no Ukrainian analogs, is exempt from paying value-added tax and customs duties [50,51].

The term of validity of the support scheme based on the feed-in tariff in Ukraine is set until 31 December 2029. The state undertakes to purchase the entire amount of electricity not consumed by the households for their needs until then.

The implementation of the above policy initiatives became the trigger for the development of renewable energy. However, only solar power plants demonstrate significant growth (

Table 1. Trends in the development of renewable power plants in the residential sector in Ukraine in 2018–2022 [15,18].

Renewable Power Plants	2018	2019	2020	2021	2022
	Number of renewable power plants, units
Solar power plants	7450	21,968	29,931	44,888	52,205
Wind power plants	3	4	4	4	5
Hybrid wind–solar power plants	0	0	0	6	8
	Installed capacity of renewable power plants, MW
Solar power plants	157	553	779	1205	1411
Wind power plants	0.029	0.027	0.041	0.057	0.061
Hybrid wind–solar power plants	0	0	0.164	0.264	0.245
	Amount of electricity generated, million kWh
Solar power plants	92	303	756	1151	1530
Wind power plants	2.5	0.2	0.6	1.9	2.4
Hybrid wind–solar power plants	0	0	0.098	0.188	0.152

).

The data presented in the table show a significant predominance of solar power plants in the structure of renewable power generation in Ukraine’s residential sector. By the end of 2022, 52,205 solar power plants with a total installed capacity of 1411 MW were installed in households, making generating 1530 GWh of electricity possible. Despite significant progress in deploying solar power plants, wind and hybrid wind–solar power plants have yet to become widespread. As of the end of 2022, only five wind power plants and eight hybrid wind–solar power plants were installed, with a total installed capacity of 61 and 24.5 kW, respectively [15].

The main reason for such trends was the more attractive feed-in tariff for solar power plants. Along with the fact that the feed-in tariff played a vital role in the decision-making of households regarding investment, other advantages of solar panels that make them a more suitable technology for installation in the residential sector (convenience of location on the roofs of houses, greater flexibility in the choice of capacity, etc.) probably also influenced the adoption of such decisions. In the absence of demand for installing wind power plants in the residential sector, the government introduced the feed-in tariff for hybrid wind–solar power plants to attract wind energy to household electricity generation. However, despite the legislative changes, households still prefer investing in solar power plants.

The challenges associated with the intensive deployment of solar power plants in terms of the need to balance Ukraine’s power system when adding significant amounts of such electricity to the grid, financial support for payments under the feed-in tariff, and the large-scale destruction of the energy infrastructure due to military actions caused the need to review the state policy on promoting the development of renewable energy in households. The main focus of legislative changes was on the further development of renewable energy facilities in the residential sector without financial support from the state, moving from the feed-in tariff to the net billing, the regulatory framework for the implementation of which has already been developed in Ukraine [20].

Given the above, the study of how effective the development of on-grid hybrid wind–solar power plants will be under the current feed-in tariff before the actual implementation of the net billing in Ukraine and whether the introduction of the net billing will be an impetus for their large-scale development is highly relevant and requires detailed research.

4. Methods

In this study, the estimation of the cost of electricity generation by on-grid hybrid wind–solar systems in Ukraine’s households will be carried out based on the levelized cost of electricity method, which reflects the cost of electricity generation during the life cycle of the power plant, taking into account investment, operating and decommissioning costs, and the discount rate [52]. Given the above, the formula for calculating the levelized cost of electricity looks like this:

$$LCOE={\displaystyle \frac{\sum _{t=0}^n({(I}_t+Q_t+D_t)·{\left(1+r\right)}^{-t})}{\sum _{t=0}^n{(E}_t·{\left(1+r\right)}^{-t})}},$$

(1)

where LCOE is the cost of electricity generation during the life cycle of a hybrid wind–solar power plant, UAH/kWh; E_t is the amount of electricity generated by a hybrid wind–solar power plant in the t-th year, kWh; I_t is the investment cost in the t-th year, UAH; Q_t is the operating cost in the t-th year, UAH; D_t is the decommissioning cost in the t-th year, UAH; n is the life cycle of a hybrid wind–solar power plant, years; r is the discount rate; t is the year of the implementation of an investment project.

The discount rate will be calculated using the weighted average cost of capital (WACC) method. It is the average rate a household must pay to finance a hybrid wind–solar power plant investment project. WACC is calculated by averaging all financial sources attracted by a household, weighted by the share of each component [53]:

$$WACC=K_s·W_s+K_d·W_d,$$

(2)

where K_s is the equity cost for the implementation of a hybrid wind–solar power plant project, unit share; W_s is the share of equity capital on the balance sheet, unit share; K_d is the debt cost for or the implementation of a hybrid wind–solar power project, unit share; W_d is the share of debt capital on the balance sheet, unit share.

The assessment of the economic justification of the feed-in tariff rate for hybrid wind–solar power plants will be carried out based on the calculation of their current rates according to the algorithms specified in the Resolution of The National Commission for State Regulation of Energy and Public Utilities No. 1817 dated 30.08.2019 [54] and the Law of Ukraine “On Amendments to Certain Laws of Ukraine Regarding Ensuring Competitive Conditions for Electricity Generation from Alternative Energy Sources” [48].

Under the feed-in tariff and the net billing, the discounted income for the investment project will be determined based on the average amount of electricity consumed by a household, current electricity tariffs, and market electricity prices in the household sector.

Calculated discounted incomes will be used to determine the payback period of investment projects according to the following formula [55]:

$$DPP=m+{\displaystyle \frac{I_{\sum }-S_m}{{Inc}_{m+1}}}·{(1+r)}^{m+1},$$

(3)

where DРР is the discounted payback period of a hybrid wind–solar power plant project, years; I_Σ is the total amount of discounted investment costs for the investment project, given at the time of the start of the investment, UAH; S_m is the total discounted income calculated as a cumulative total until the inequality is satisfied: S_m < ІΣ < S_m + 1, where m is the number of full years in which the discounted income amount calculated by the cumulative total is less than the amount of discounted investment costs; (m + 1) is the year in which the amount of discounted income, calculated as a cumulative total, will exceed the amount of discounted investment costs; and Incт + 1 is the project’s income in the (m + 1)-th year, UAH.

5. Result and Discussion

Calculations of the levelized cost of electricity will be carried out for on-grid hybrid wind–solar power plants with a total installed capacity of 5, 10, 20, and 30 kW with and without energy storage systems. Notably, the most common types of on-grid hybrid wind–solar power plants in the residential sector are power plants with a predominance of solar panels. It is due to the fact that although small household wind turbines are quite mature technology [56,57,58], large-capacity wind household turbines are impractical to install in households, as they require a lot of space, their operation is accompanied by noise, and they may not meet the aesthetic requirements of residential areas. Usually, wind generators with a capacity of up to 1.5 kW are installed on the roofs of buildings, while 1.5 kW and more are installed on special masts on the ground [59], which entails additional costs depending on the number of separately installed wind generators. Given the above, the following capacity ratio of wind and solar components will be used for on-grid hybrid wind–solar power plants in this study: 20:80, 30:70, and 40:60.

Technical and economic data of the projects of on-grid hybrid wind–solar power plants were collected from the following sources: [18,60,61,62,63,64,65,66]; their average values for different types of systems are given in

Table 2. Technical and economic data of on-grid hybrid wind–solar power plants without energy storage systems.

Indicator	Indicators’ Data
	The Total Installed Capacity—5 kW
	Capacity ratio of wind and solar components, %
	20:80	30:70	40:60
Electricity generation, kWh/year	6957	7962	8968
Investment costs, UAH (EUR)	238,795 (5214)	263,911 (5762)	289,026 (6311)
Operating costs, UAH/year (EUR/year)	4775 (104)	5278 (115)	5781 (126)
Decommissioning cost, UAH (EUR)	11,159 (244)	13,196 (288)	14,451 (316)
	The total installed capacity—10 kW
	Capacity ratio of wind and solar components, %
	20:80	30:70	40:60
Electricity generation, kWh/year	14,416	16,364	18,312
Investment costs, UAH (EUR)	416,752 (9,099)	458,850 (10,019)	500,948 (10,938)
Operating costs, UAH/year (EUR/year)	8335 (182)	9177 (200)	10,018 (219)
Decommissioning cost, UAH (EUR)	20,837 (455)	22,942 (501)	25,047 (547)
	The total installed capacity—20 kW
	Capacity ratio of wind and solar components, %
	20:80	30:70	40:60
Electricity generation, kWh/year	29,310	33,046	39,046
Investment costs, UAH (EUR)	788,940 (17,226)	853,134 (18,627)	990,717 (21,631)
Operating costs, UAH/year (EUR/year)	15,778 (344)	17,063 (373)	19,814 (433)
Decommissioning cost, UAH (EUR)	39,447 (861)	42,657 (931)	49,536 (1082)
	The total installed capacity—30 kW
	Capacity ratio of wind and solar components, %
	20:80	30:70	40:60
Electricity generation, kWh/year	44,362	49,967	55,585
Investment costs, UAH (EUR)	1,157,284 (25,268)	1,253,935 (27,378)	1,378,635 (30,101)
Operating costs, UAH/year (EUR/year)	23,146 (505)	25,079 (548)	27,573 (602)
Decommissioning cost, UAH (EUR)	57,864 (1263)	62,696 (1369)	68,932 (1505)

and

Table 3. Technical and economic data of on-grid hybrid wind–solar power plants with energy storage systems.

Indicator	Indicators’ Data
	The Total Installed Capacity—5 kW
	Capacity ratio of wind and solar components, %
	20:80	30:70	40:60
Electricity generation, kWh/year	6957	7962	8968
Investment costs, UAH (EUR)	438,795 (9581)	463,911 (10,129)	489,026 (10,677)
Operating costs, UAH/year (EUR/year)	8776 (191)	9278 (203)	9781 (214)
Decommissioning cost, UAH (EUR)	21,940 (479)	23,196 (506)	24,451 (534)
	The total installed capacity—10 kW
	Capacity ratio of wind and solar components, %
	20:80	30:70	40:60
Electricity generation, kWh/year	14,416	16,364	18,312
Investment costs, UAH (EUR)	656,752 (14,340)	698,850 (15,259)	740,948 (16,178)
Operating costs, UAH/year (EUR/year)	13,135 (287)	13,977 (305)	14,819 (324)
Decommissioning cost, UAH (EUR)	32,837 (717)	34,943 (763)	37,047 (809)
	The total installed capacity—20 kW
	Capacity ratio of wind and solar components, %
	20:80	30:70	40:60
Electricity generation, kWh/year	29,310	33,046	39,046
Investment costs, UAH (EUR)	1,028,940 (22,466)	1,093,134 (23,868)	1,249,914 (27,291)
Operating costs, UAH/year (EUR/year)	20,579 (449)	21,863 (477)	24,998 (546)
Decommissioning cost, UAH (EUR)	51,447 (1123)	54,657 (1193)	62,496 (1365)
	The total installed capacity—30 kW
	Capacity ratio of wind and solar components, %
	20:80	30:70	40:60
Electricity generation, kWh/year	44,362	49,967	55,585
Investment costs, UAH (EUR)	1,375,754 (30,038)	1,489,135 (32,514)	1,622,035 (35,416)
Operating costs, UAH/year (EUR/year)	27,515 (601)	29,783 (650)	32,441 (708)
Decommissioning cost, UAH (EUR)	68,788 (1502)	74,457 (1626)	81,102 (1771)

.

Operating costs for on-grid hybrid wind–solar power plants were calculated as 2% of investment costs [34], decommissioning costs are at the level of 5% of investment costs [67], and the life cycle of power plants was determined at the level of 25 years [68,69]. Commissioning of on-grid hybrid wind–solar power plants—1 July 2024; the end of the project life cycle—30 June 2024. The exchange rate of the EUR to the UAH was calculated as of 20 July 2024 and amounted to EUR 45.8 for UAH 1 [70].

To calculate the discount rate, the value of equity was determined based on the annual rate on deposits in national currency for individuals in PrivatBank, which, as of 20 July 2024, was 11% [71]. Attracting credit resources will be calculated based on the government program of interest-free lending for the purchase of energy equipment for households introduced in July 2024 [72]. According to the program, households can obtain financing from partner banks at 0% to purchase equipment and install solar, wind, hybrid wind–solar power plants, etc. The state undertakes to compensate the interest rate on such loans fully. The maximum loan amount is UAH 480,000 (EUR 10,480). In this study, the calculation will be carried out according to the conditions of the partner bank of PrivatBank under the “Energy Sources” program, where the minimum down payment to obtain a loan is 10% of the total cost of the investment project and the maximum loan term is 5 years [73].

The discount rate will be calculated based on the optimal ratio of equity and debt for on-grid hybrid wind–solar systems of different installed capacities, considering that for each of the projects being implemented, it is only possible to attract UAH 480,000 (EUR 10,480) at 0% per annum; the rest of the costs will be covered by the own expense of households. Thus, for on-grid hybrid wind–solar systems with the following total installed capacity, the ratio of equity and debt is (1) 5 kW—10:90; (2) 10 kW—40:60; (3) 20 kW—70:30; and (4) 30 kW—80:20.

Thus, the discount rate calculated by Formula (2) is for the following:

(1)

Investment projects implemented for the households’ funds—11%. This option is used for household owners who do not meet the requirements for receiving interest-free loans. Thus, according to the government program, the loan is not granted to households if (a) the amount of the average monthly total income of the household for the last six months preceding the receipt of the loan exceeds ten times the amount of the average monthly salary in Ukraine; (b) the total area of the real estate of a household exceeds 250 m², excluding land plots; and (c) the age of a household’s owner exceeds 70 years [73];

(2)

On-grid hybrid wind–solar power plants with a total installed capacity of 5 kW with a ratio of equity and debt of 10:90—1.1%.

(3)

On-grid hybrid wind–solar power plants with a total installed capacity of 10 kW with a ratio of equity and debt of 40:60—4.4%.

(4)

On-grid hybrid wind–solar power plants with a total installed capacity of 20 kW with a ratio of equity and debt of 70:30—7.7%.

(5)

On-grid hybrid wind–solar power plants with a total installed capacity of 30 kW with a ratio of equity and debt of 80:20—8.8%.

The calculated values of the levelized cost of electricity for various on-grid hybrid wind–solar power plants at the above discount rates are given in

Table 4. Levelized cost of electricity for on-grid hybrid wind–solar power plants without energy storage systems, UAH/kWh (EUR/kWh) (calculated by the authors).

		Levelized Cost of Electricity, UAH/kWh (EUR/kWh)
		The total installed capacity—5 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	4.56 (0.099)	4.41 (0.096)	4.29 (0.094)
	1.1	2.32 (0.051)	2.24 (0.049)	2.17 (0.047)
		The total installed capacity—10 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	3.84 (0.084)	3.73 (0.081)	3.64 (0.079)
	4.4	2.50 (0.055)	2.42 (0.053)	2.36 (0.051)
		The total installed capacity—20 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	3.58 (0.078)	3.43 (0.075)	3.37 (0.074)
	7.7	2.92 (0.065)	2.80 (0.061)	2.76 (0.060)
		The total installed capacity—30 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	3.47 (0.076)	3.34 (0.073)	3.30 (0.072)
	8.8	3.04 (0.066)	2.92 (0.064)	2.89 (0.063)

and

Table 5. Levelized cost of electricity for on-grid hybrid wind–solar power plants with energy storage systems, UAH/kWh (EUR/kWh) (calculated by the authors).

		Levelized Cost of Electricity, UAH/kWh (EUR/kWh)
		The total installed capacity—5 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	8.39 (0.183)	7.75 (0.169)	7.25 (0.158)
	1.1	4.25 (0.093)	3.93 (0.086)	3.68 (0.080)
		The total installed capacity—10 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	6.06 (0.132)	5.68 (0.124)	5.38 (0.117)
	4.4	3.94 (0.086)	3.69 (0.081)	3.50 (0.076)
		The total installed capacity—20 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	4.67 (0.102)	4.40 (0.096)	4.26 (0.093)
	7.7	3.81 (0.083)	3.59 (0.078)	3.48 (0.076)
		The total installed capacity—30 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	4.12 (0.089)	3.96 (0.086)	3.88 (0.085)
	8.8	3.61 (0.079)	3.47 (0.076)	3.40 (0.074)

.

Next, based on the calculation of the payback period, we will analyze how appropriate it is from an economic point of view to implement investment projects of on-grid hybrid wind–solar power plants in Ukraine’s households under the current feed-in tariff and the net billing support scheme, which Ukraine’s government plans to implement shortly.

Following Ukrainian legislation, households can sell surplus electricity not consumed at the feed-in tariff. The feed-in tariff rates in Ukraine are calculated according to coefficients indicated in the Law of Ukraine [14]. The value of the coefficients is the same for all hybrid wind–solar power plants with a capacity of ≤50 kW. For this study, the calculation will be carried out taking into account the coefficient of 2.28—for on-grid hybrid wind–solar power put into operation from 1 January 2024 to 31 November 2024, all other indicators that are necessary for the calculation of the feed-in tariff according to [14] will be taken into account as of July 2024. Given the above, the calculated rate of the feed-in tariff for power plants put into operation from 1 January 2024 to 31 November 2024 is 5.36 UAH/kWh (0.117 EUR/kWh).

The payback period of investment projects of on-grid hybrid wind–solar power plants will be calculated for a household with an electricity consumption of 200 kWh/month. That amount was determined based on the average electricity consumption in Ukraine’s households [74]. Thus, under the feed-in tariff, a household will cover the specified amount of electricity by its own electricity generation, and the rest will be sold at the feed-in tariff until the end of 2029—the year of the expiration of the support scheme based on it. Starting from 2030, a household will sell excess electricity at the tariff for household consumers. In this study, for the calculation, the current electricity tariff will be used—4.32 UAH/kWh (0.094 EUR/kWh) [75]. It is worth noting that household income from the sale of electricity at the feed-in tariff is subject to taxation; the amount of the tax is 19.5% [51], which will be considered when calculating the investment projects’ payback period. Due to the half-year terms of putting power plants into operation (from 1 July 2024) and the completion of projects (until 30 June 2049), the amount of electricity consumption by the household was adopted for 2024 and 2049 in the amount of half-yearly consumption, i.e., 1200 kWh. Operating expenses in 2024 and 2049 are taken in half-yearly amounts.

According to the Law [50], the new net billing support scheme will apply to hybrid wind–solar installations with a total installed capacity of ≤30 kW. As part of the net billing mechanism, households will sell surplus electricity not consumed for their needs at the price established on the day-ahead market. For the calculation in this study, the weighted average price on the day-ahead market as of 07.20.2024 will be used—5.59 UAH/kWh (0.122 EUR/kWh) [76]. According to the terms of operation of the net billing, if during the billing period (month) the cost of electricity consumed from the grid exceeds the cost of released electricity, then the difference between the cost of consumed and released electricity is subject to payment by the household. If the cost of released electricity exceeds that of consumed electricity, the difference between the cost of released and consumed electricity is credited to a household’s account. Households can use funds accumulated in a personal account within 12 months to pay for electricity taken from the grid in months when the amount of their generation is insufficient to cover electricity consumption. Accumulated and unused funds after the end of 12 months are debited from households’ accounts and credited to the special accounts of the electricity supplier without compensation to households’ owners [77]. Thus, the net billing, unlike the feed-in tariff, is exclusively aimed at covering households’ electricity costs and does not provide for the possibility of receiving income from its sale.

The results of the payback periods of investment projects of on-grid hybrid wind–solar power plants at different discount rates under the feed-in tariff and the net billing are shown in

Table 6. Payback periods of investment projects of on-grid hybrid wind–solar power plants without energy storage systems under the feed-in tariff, years (calculated by the authors).

		Payback Period, Years
		The total installed capacity—5 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	19.30	24.34	24.21
	1.1	11.28	10.81	10.44
		The total installed capacity—10 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	21.57	19.00	17.36
	4.4	10.65	10.16	9.77
		The total installed capacity—20 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	16.67	14.56	13.87
	7.7	11.79	10.83	10.47
		The total installed capacity—30 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	15.14	13.47	13.05
	8.8	12.08	11.08	10.81

,

Table 7. Payback periods of investment projects of on-grid hybrid wind–solar power plants with energy storage systems under the feed-in tariff, years (calculated by the authors).

		Payback Period, Years
		The total installed capacity—5 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	>25	>25	>25
	1.1	>25	>25	23.10
		The total installed capacity—10 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	>25	>25	>25
	4.4	>25	22.83	20.27
		The total installed capacity—20 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	>25	>25	>25
	7.7	24.01	19.73	17.99
		The total installed capacity—30 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	>25	>25	24,50
	8.8	19.35	17.10	16.10

and

Table 8. Payback periods of investment projects of on-grid hybrid wind–solar power plants with and without energy storage systems under the net billing, years (calculated by the authors).

		Payback Period, Years
		The total installed capacity—5 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	>25	>25	>25
	1.1	>25	>25	>25
		The total installed capacity—10 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	>25	>25	>25
	4.4	>25	>25	>25
		The total installed capacity—20 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	>25	>25	>25
	7.7	>25	>25	>25
		The total installed capacity—30 kW
		Capacity ratio of wind and solar components, %
		20:80	30:70	40:60
Discount rate, %	11	>25	>25	>25
	8.8	>25	>25	>25

.

Based on the obtained results, we will analyze the general patterns found regarding implementing on-grid hybrid wind–solar power plants in Ukraine’s households and specific features depending on their types and compare the economic efficiency of their installation under the feed-in tariff and the net billing.

This study’s results proved that the payback periods of investment projects under both support schemes at the same discount rate decrease as the capacity of on-grid hybrid wind–solar systems increases. The economic effect is achieved due to the reduction in investment, operating, and decommissioning costs when expanding the capacity of power plants. Increasing the capacity of wind components in the structure of on-grid hybrid wind–solar systems has a minor effect on reducing the payback periods of investment projects, which can be explained by the larger capacity factor of wind generators compared to solar panels. In turn, the difference between the payback periods of power plants decreases with the growth of the capacity of on-grid hybrid wind–solar power plants. Thus, the difference between the payback periods of power plants with a capacity of 20 kW and 30 kW is smaller than those with a smaller installed capacity. This can be explained by the peculiarities of placing wind generators in on-grid hybrid wind–solar systems, notably the feasibility of installing several wind generators with lower capacity instead of one with higher capacity, which affects the increase in the project’s investment costs.

The calculations of the payback periods of on-grid hybrid wind–solar plants without energy storage systems under the program mentioned above and the support scheme based on the feed-in tariff prove that the most economically attractive for households is the implementation of projects with a total installed capacity of 10 kW with a ratio of wind and solar components of 40:60 at a discount rate of 4.4%. Implementing such projects allows households to return the invested capital in 9.77 years. Even though the most attractive discount rate—1.1% was applied for projects with a capacity of 5 kW—the payback periods of such projects are higher since the amount of surplus electricity, which is subject to sale at the feed-in tariff, is smaller. As investment costs grow due to an increase in the capacity of projects, opportunities to attract interest-free lending decrease, which leads to the need to increase the share of equity capital, which causes an increase in the discount rate. As can be seen from the calculations, its growth has a more significant impact on the payback period than the growth of the project’s total installed capacity. Thus, higher-capacity projects at a higher discount rate have less attractive payback periods than lower-capacity projects at a lower discount rate. However, it can be argued that installing on-grid hybrid wind–solar systems of 5–30 kW without energy storage systems under the interest-free lending program and the support scheme based on the feed-in tariff is quite attractive for households’ owners. The payback periods of such projects vary in the range of 9.77–12.08 years, depending on the total installed capacity, the ratio of capacities of wind and solar components, and the discount rate. At the same time, installing such power plants at households’ own expense increases the payback periods of investment projects from 13.05 to 24.34 years, depending on the abovementioned characteristics.

On-grid hybrid wind–solar power plants with energy storage systems demonstrate extended payback periods. Their being equipped on-grid with storage batteries significantly increases the investment costs of such projects and, as a result, their payback periods. In this study, we considered the same energy storage system capacity for different on-grid hybrid wind–solar systems, which can provide autonomous electricity supply to households for 2 days without electricity from the grid. With such an approach and the conditions for the implementation of projects under interest-free lending and the support scheme based on the feed-in tariff, on-grid hybrid wind–solar systems with a capacity of 30 kW and a capacity ratio of wind and solar components of 40:60 have the shortest payback period—16.1 years. At the same time, for power plants with a total installed capacity of 5 and 10 kW, the payback periods exceed 20 years, which makes their implementation economically unattractive for households. In turn, the payback periods of on-grid hybrid wind–solar power plants with energy storage systems, when implemented at the households’ own expense under the feed-in tariff, exceed the life cycle of power plants. The exception is power plants with a capacity of 30 kW with a ratio of the capacity of wind and solar components of 40:60, for which it is 24.5 years. However, this indicator is almost equal to the life cycle of power plants, which is also not economically attractive for households.

The results prove that implementing on-grid hybrid wind–solar power plants with and without energy storage systems under the net billing is not economically beneficial for households since the payback periods of investment projects under this support scheme exceed the life cycle of power plants. The main reason is the subsidization of electricity tariffs for households in Ukraine. If the price of electricity for them is being kept below the market level, households will need more economic stimulus to invest in such projects under the net billing. In addition, the impossibility of using the accumulated funds for selling electricity to the grid after 12 months is also a significant disadvantage of net billing compared to the feed-in tariff. Given this, it is evident that households will not actively participate in the net billing under such conditions.

The above analysis suggests that the preferential lending program introduced by the government is currently the best option for attracting funds for implementing on-grid hybrid wind–solar systems in Ukrainian households. The approach to forming the conditions for obtaining an interest-free loan is logical since it is aimed at supporting the implementation of projects of optimal installed capacity for Ukraine’s households. Another priority of the program is to provide low-income households with interest-free loans, so households with a high total income cannot apply for them. Households that are not covered by this program can implement projects with their funds. As seen from the above calculations, this significantly increases the payback periods of the projects. However, it should be noted that all types of on-grid hybrid wind–solar systems without energy storage systems have acceptable payback periods, including under the condition of implementation at the households’ funds. In addition, it is worth noting that such households can attract loans under other state programs aimed at financing renewable energy projects in the residential sector, in particular, the programs of Oschadbank “Green Energy” and Ukrgasbank “Eco Energy” [78,79]. However, interest rates on loans under the mentioned programs vary from 10.49% to 20.99% per annum, which will have a significant impact on increasing the payback periods and reducing the economic efficiency of such investment projects.

At the same time, implementing the abovementioned interest-free lending program does not solve the problem of financing projects of on-grid hybrid wind–solar power plants with energy storage systems. It is worth noting that the hostilities had an unprecedented impact on the destruction of the energy infrastructure, which resulted in a significant shortage of electricity in Ukraine’s power system. According to experts, scheduled electricity outages in Ukraine may last for several years [80], since restoration of damaged power generation facilities will require significant time and financial resources. Given the above, only installing power plants with energy storage systems can ensure uninterrupted household electricity supply in the short and middle term.

Although economic feasibility cannot be the main criterion for making decisions about investing in renewable energy projects in conditions where the stability of electricity supply is a critical factor for survival, the increase in the credit limit under the interest-free lending program for on-grid hybrid wind–solar power projects with energy storage systems can be an excellent incentive to intensify their installation. It will also reduce the energy poverty of the population by giving, instead of subsidies, the opportunity for low-income households to invest in their energy independence using renewable energy technologies. Along with improving financial and credit instruments, the government’s attention should be directed to creating favorable economic and legal conditions for the functioning of energy cooperatives, which can become an effective tool for accumulating financial resources for the joint implementation of such projects. Energy cooperatives can also be considered as a tool for overcoming energy poverty and social cohesion of the population. Implementing renewable energy projects under energy cooperatives will contribute to removing the financial burden from municipalities. In addition, promoting the production of domestic energy storage systems can significantly contribute to reducing dependence on their imports and costs on the domestic market.

It is also possible to increase investment attractiveness in on-grid hybrid wind–solar power plants by improving the feed-in tariff methodology. As a basis, a methodical approach to determining the optimal level of the feed-in tariff outlined in [17] can be used; the introduced changes may relate to the expansion of influencing factors. Thus, in addition to the profitability of the generating facility and its capacity, when calculating the rate of the feed-in tariff for on-grid hybrid wind–solar power plants, it is advisable to take into account the influence factor, which reflects the ratio of the capacity of the wind and solar components and equipment of such power plants with energy storage systems.

The research results emphasize the need to increase the economic attractiveness of the net billing because its current model is unlikely to provide a rapid increase in the generating capacity of on-grid hybrid wind–solar power plants. One of the main steps should be gradually increasing household electricity tariffs to the market level. It will make the development of such plants attractive to households seeking to avoid excessive electricity costs. In the short term, to make the transition from the feed-in tariff to the net billing more acceptable, it is advisable to revise the rule regarding the impossibility of using accumulated funds due to selling electricity to the grid after 12 months. Thus, the permission to invest unused funds in new renewable energy projects for thermal energy production, energy efficiency projects, etc., can make the net billing more flexible and attractive for households, especially those with low incomes.

It is worth noting that green auctions are another mechanism for promoting the development of renewable energy, the regulatory framework for which was developed in Ukraine but has not yet been implemented. According to [48], this mechanism is designed to foster high-capacity renewable energy facilities. Thus, the owners of solar power plants with more than 1 MW capacity and wind power plants with more than 5 MW capacity are obligated to participate in green auctions. Although the application of this mechanism for small on-grid hybrid wind–solar plants of households is impractical due to the complexity of the auction procedure, its extension to on-grid hybrid wind–solar power plants with an installed capacity of more than 1 MW could be a good incentive for the implementation of such projects under energy cooperatives.

6. Conclusions

Promoting the development of distributed generation in Ukraine based on on-grid hybrid wind–solar systems is particularly important in the context of the destruction of energy infrastructure due to military actions. Such power plants can provide a stable electricity supply to households in the conditions of a significant electricity shortage in Ukraine’s power system. Despite the considerable advantages of on-grid hybrid wind–solar systems, only four such generating facilities were installed in Ukraine’s households. Their further development will directly depend on energy policy, particularly the effectiveness of state support schemes.

This study assessed the economic effectiveness of installing on-grid hybrid wind–solar systems in the residential sector of Ukraine under the feed-in tariff and the net billing support schemes. The results emphasize the advantages of the feed-in tariff over the net billing, proving that implementing the net billing in its current version will not contribute to the large-scale development of on-grid hybrid wind–solar systems.

Within the framework of the feed-in tariff, subject to the implementation of projects under the government’s interest-free lending program, the most economically attractive are the projects of on-grid hybrid wind–solar power plants without energy storage systems with a total installed capacity of 10 kW, which guarantee the return of invested capital in 9.77 years. At the same time, on-grid hybrid wind–solar systems with a total installed capacity of 30 kW guarantee the shortest payback period (16.1 years) when equipped with energy storage systems. At the same time, implementing projects under the net billing is unprofitable for households since their payback period exceeds the life cycle of hybrid wind–solar systems.

Large-scale development of on-grid hybrid wind–solar power plants in the residential sector in Ukraine will require improvement of state support mechanisms. Among the main policy recommendations, it is possible to single out increasing the credit limit under the government’s interest-free lending program for hybrid wind–solar power plants with energy storage systems, establishing market electricity tariffs for households, and reviewing the mechanism for using accumulated funds under the net billing.