Authorization
On December 5, 2024, Andriy Konechenkov, Chairman of the UWEA Board, along with two members of UWEA’s Legal Affairs Committee—Ihor Retivov from DTEK Renewables and Olha Savchenko from Altelaw—shared their views on the results of Ukraine's initial pilot “green” auctions. They spoke as panelists at a thematic online event organized by the UN Global Compact in Ukraine in collaboration with ExPro, as part of the Ukraine Energy Initiative.
The event aimed to present the renewable energy sector’s business position on the state’s approach to implementing green auctions in Ukraine and the effectiveness of its interaction with market players throughout this process. “Investors lack trust in the state due to the unresolved and accumulating debt in the electricity market,” emphasized Andriy Konechenkov. “We could discuss investors’ interest in participating in state-run green auctions if the state fulfills its financial obligations to renewable energy producers for consumed green electricity, approves Draft Law
No. 11392 (which would allow a single auction participant to bid for 50% of the quota, instead of the current 25%), and revises the proposed quotas to align with the targets outlined in the National Renewable Energy Action Plan through 2030. If we aspire to become part of the EU, it is only fair to align with its auction policies rather than wasting time testing and fixing a flawed model,” he added.
“I believe the issue with “green” auctions is ideological. They replaced the feed-in tariff, so the state’s attitude toward this model is biased from the outset,” suggested Ihor Retyvov. “There was no dialogue with business representatives regarding the opportunities and challenges of projects already existing or ready for construction in Ukraine. As a result, the quotas proposed for the 2024 auction, and the already announced auction for 2025, given the current auction model, are unrealistic and unlikely to attract major players,” he added.
The UWEA representatives also suggested that, apart from resolving existing market challenges, involving small-scale distributed generation in the auction process could positively influence the number of bidders.
A specific topic sparking discussion among the invited speakers was splitting the 250 MW wind energy quota for 2025 into two separate iterations of 100 MW and 150 MW. “In my opinion, there is no critical need for such a division,” commented Andriy Konechenkov. “The larger the quota, the more participants and the higher the competition. I believe the best course of action would be to conduct an auction for 250 MW and then increase this quota to at least 800 MW in 2026.”
In turn, Olga Savchenko outlined the issues behind the refusal to participate in auctions based on the following criteria: military risks and insufficient development of insurance mechanisms for such risks; uncertainty regarding the financing mechanism for public service obligations (PSOs), stemming from inadequate guarantees when separating the cost of the service to increase electricity generation from alternative sources from the transmission tariff and widespread distrust in the state, fueled by concerns that it may retrospectively impose highly unfavorable auction conditions outlined in secondary legislation.
“Since February 2024, there have been no payments under the market premium (FiP) mechanism, whereas this is the tool designed to support projects after an investor has won an auction.’,” stressed Olga. Additionally, Olga emphasized the need to extend the timeframes for verifying land plots or real estate objects that will be proposed for investment and development in future auctions
As a result of the discussion, the organizers will prepare a White Paper with recommendations for improving the auction model in Ukraine and increasing investors’ interest in future auctions.
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