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Authorization
05.07.2018

OPEN MEETING OF THE UWEA BOARD

Open Meeting of the UWEA Board devoted to introduction RE auctions in Ukraine took place on 4 July 2018 in Business Conference Hall IVERIA. Considering the immense implications of the auctions system for the renewable energy market in Ukraine and wind sector in particular, a decision was made to hold an Open Meeting of the Board with both the UWEA’s members and representatives of other non-governmental organizations and mass media. The UWEA's legal experts Maksym Sysoev, Counsel at Dentons law firm, Yaroslav Petrov, Partner at Asters law firm, and Svitlana Teush, Counsel 
at Redcliffe Partners law firm, presented the key provisions of the draft laws.

During the discussion the participants paid special attention to such issues as: PPA, bank guarantee, grounds and procedure for extending the deadlines set for the wind farm to be commissioned, contracts for difference and PPA, grid connection contract, quotas, auctions' terms and procedure.

Issue related to responsibility for imbalances requires an immediate solution, it is one of the most difficult ones associated with systemic market reform and introduction of new forecasting, balancing and backup technologies. It was noted that the current situation creates big uncertainties in the market.

According to the draft laws, auction system does not apply to the solar and wind power plants

  • commissioned before 1 July 2019
  • where the owners execute preliminary power purchase agreement (the “Pre­PPA”) before 1 July 2019 as determined by Article 71 of Law of Ukraine “On Electricity Market”.

Meanwhile, the mentioned Article enters into force only on 1 July 2019 and it is unclear when the Regulator elaborates the respective standard Pre-PPA. Apparently, the respective provision of the Drafts should be carefully redrafted to cover the current pre-PPAs signed and allow new pre-PPAs signed on the basis of the template form to be approved by the Regulator and be used before 1 July 2019.

The association will support the proposal that the first auctions will distribute all Ukrainian RE quotas not earlier than for 2020. Moreover, the UWEA proposes to NEC Ukrenergo (national grid operator) to set up a working group of experts to develop a Road Map stipulating quotas, volumes, regions and grid connection cost.

The UWEA will also insist on a 20-year period of state aid for the actions' winners. At the same time, the developer should have a right to independently choose the state support scheme: either a “green” tariff for projects less than 20 MW or an auction for large ones.

According to the UWEA’s board decision the text of the bill No. 8449 could be used as a basis for further amending and supplementing with some efficient proposals set out in other bills and the outcomes of public and expert discussions. The association shall forward all its comments and proposals on the drafts to the Verkhovna Rada Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety. 

Information: On 7 June 2018, the draft law “On Introduction of Certain Changes to Laws of Ukraine regarding Ensuring Competitive Conditions for Generation of Electricity from Alternative Energy Sources” No. 8449 was registered in the Ukrainian Parliament. The Draft Law envisages the implementation of a quota auction system, instead of a green tariff, after 1 July 2019. The Draft Law is primarily aimed at providing mechanisms for controlling and balancing the construction of solar and wind power plants. Seven more alternative draft laws were registered in the Parliament by the end of June 2018.