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UKRAINE COULD LAUNCH GREEN ELECTRICITY AUCTIONS FROM 2020

The Verkhovna Rada of Ukraine yesterday, on  7 June 2018, registered a bill № 8449 “On Amendments to Some Laws of Ukraine on Ensuring Competitive Conditions for the Production of Electricity from Alternative Energy Sources”. The bill was developed by 17  deputies representing 5 Committees of the Verkhovna Rada.

Text of the bill is available at: (http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=64170)

The bill provides for the introduction of auctions to stimulate the electricity generation from renewable energy sources.

On June 7 2018 the press center of the Interfax-Ukraine news agency hosted a press conference devoted to a new system for supporting renewable energy in Ukraine. Acting Chairman of the Verkhovna Rada Committee on Fuel and Energy, Nuclear Policy and Nuclear Safety MP Oleksandr Dombrovsky, Chairman of the Subcommittee on Electricity and Energy Transportation of the Verkhovna Rada Committee on Fuel and Energy, Nuclear Policy and Nuclear Safety, Ukrainian MP Lev Pidlisetsky and Julia Kovaliv, Head of the Office of the National Investment Council of Ukraine, presented the bill and some changes in the state aid to the national Renewable Energy sector to be introduced from 1 July 2019.

At the beginning of the press conference, Oleksandr Dombrovsky noted that the new bill would retain the most comfortable conditions for investors who had already invested in renewable energy sector of Ukraine and at the same it would prevent an inevitable “green energy default”.

Main provisions of the bill includes:

• The current system of RES support - “green” tariff (GT) - will remain unchanged for the already constructed / commissioned solar and wind power plants.
• Investors which have already signed PPA or will sign it by 1 July 2019 will be eligible to the current system of RES support.
• GT rate for solar plants will decrease by 30% from 2020 (compared to 10%, as  stipulated by the current legislation).

The GT rate for the wind plants remains unchanged.

• The actions are mandatory for new solar projects with 10 MW and over and for wind projects – with 20 MW and over.
• Auctions are planned to be carried out according to the reverse Dutch principle.

The minimum tariff (starting price for auction) will be decided by the Cabinet of Ministers of Ukraine. Maximum auction price will not exceed the current “green” tariff rate.

• Each auction winner will sign PPA with a Guaranteed Buyer (a special legal entity to buy electricity generated from RES under new electricity market legislation). The term of PPA will be 20 years. The signing of such PPA will be binding on the Guaranteed Buyer.
• There will be two rounds of auction per year – up to May and up to October.
• Auctions will be held until 2029.
• Total auction capacity is planned to be splitted into lots of 1 MW.
• Each auction participant shall provide bank guarantee amounting to 50 000 USD for each MW of capacity claimed. If the auction winner implements the project within 3 years the money (guarantee) will be returned.

If the auction winner fails/ refuses to implement the project within 3 years, he will loose his money.

According to Lev Pidlysetskij, such approach will "provide equivalence for each investor, and allow small players to participate in the auctions as well." He forecasted the first pilot auction to be held in the second half of 2019 for solar plants in Chernobyl area.

The bill also provides for increasing maximum installed capacity of installation for households from current 30 kW up to 500 kV. This will apply to both individuals and legal entities.

Video of Press Conference is available at: https://www.youtube.com/watch?v=dNhVU-u2NRk