Authorization
On November 19, 2019 DTEK RES, Eco Optima, EuroCape Ukraine, GreenWorx Holding, Guriş, MC Wind Parks of Ukraine, NBT, Vindkraft and Ukraine Power Resources, headed by Ukrainian Wind Energy Association, submitted to the Minister of Energy and Environmental Protection of Ukraine Mr. Oleksiy Orzhel a letter that represents a common position of the entire wind power market of Ukraine on state support for wind development in Ukraine with respect to key issues hindering further development of the wind power sector and preserve its investment attractiveness.
In particular, wind market players require to stop any attempts to unilaterally change the conditions for producers of electricity from wind energy and business entities, which have entered or will enter into power purchase agreements (hereinafter PPA or pre-PPA) by December 31, 2019 including any revisions that may be under consideration in relation to the size of tariffs, their validity period, the off-taker’s obligations to purchase the entire amount of electricity generated by renewable energy producers, as well as the possible introduction of new or additional taxes or possible amendments to the VAT exemption now in place for imported wind turbine equipment.
Wind energy companies proposed to amend the Law of Ukraine “On Alternative Energy Sources” to change the conditions for business entities which have entered or will enter into PPAs or pre-PPAs by December 31, 2019 to generate electricity from wind energy and to improve the bankability of the PPA.
Wind Generators expressed appreciation of the initiative of conducting public discussions with market players on such important issues of industry regulation, which was launched by the Ministry of Energy and Environmental Protection of Ukraine, and supported the Ministry’s proposal for a voluntary reduction of the “green” tariff, while offering a voluntary reduction of the tariff to 8,5 Eurocent for the projects commissioned in 2020, 2021 and 2022 with prolongation of PPA duration to 15 years from the wind farm’s commercial operations date.
However, wind power companies emphasized that the aforementioned voluntary option could be implemented under the condition that lenders (such as EBRD and Ukrainian State banks) will agree on the restructuring of such loans.
In order to improve the financial situation of the Guaranteed Buyer SE, the following steps were proposed:
1. To amend the Law of Ukraine “On Electricity Market” with regard to minimising the Guaranteed Buyer’s cost of imbalances to have a faster transition than envisaged by the Law of Ukraine “On Electricity Market.” One option would be a transition during 5 years with 20% annual increases starting in 2021 versus the current transition period of 10 years transition with 10% annual increases.
2. To amend the Decree of the Cabinet of Ministers of Ukraine on the Procedure for financing by the Guaranteed Buyer of technological losses of the transmission system operator and the distribution system operators since the proposed solution would reduce cross-subsidization in the electricity market and repeal any prospective violations with regard to the requirements of subparagraph 3 of paragraph 3 of Article 7 of the Law of Ukraine “On Electricity Market.”
3. To amend the Decree of the Cabinet of Ministers of Ukraine on the possibility of the Guaranteed Buyer to sell electricity purchased from Energoatom and Ukrhydroenergo (except electricity for universal service providers, transmission system operators and distribution system operators) on a day-ahead market at a price that is higher than the PSO price.
The signatory companies underlined their readiness, within the framework of the working groups, to promote a constructive dialogue and to achieve solutions that will be acceptable to all players in the wind power market: “We urge the Ministry to abandon any attempts to force retrospective changes with respect to the “green” tariff regime, including with regard to the reduction of the “green” tariff for WPPs that are already in operation, under construction or still under development, and to focus on proposals that are developed collaboratively among the governmental authorities and business representatives.”
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