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31.07.2020

THE PRESIDENT OF UKRAINE SIGNED THE LAW ON CONDITION OF SUPPORT FOR RES

On 31 July 2020, the President of Ukraine Volodymyr Zelenskyy signed the Law No 810-ІХ “On the Amendments to Certain Laws of Ukraine on Improving the Conditions of Support for Electricity Production from Alternative Energy Sources”. The Bill based on the provisions of the Memorandum of Understanding concluded between the Government of Ukraine and RES business community on 10 June 2020, provides for lowering “green” tariff for wind and solar, establishes the terms of “green” electricity off-taker debt restructuring, determines RES generators’ liability for imbalances and introduces the “green” auctions.

The Bill provides for the following “green” tariff restructuring:

1. The reduction of the “green” tariff for solar power plants (SPPs) and wind power plants (WPPs), commissioned from 1 July 2015 to 31 December 2019:

  • For SPPs with the installed capacity equal to or exceeding 1 MW - by 15%;
  • For SPPs with the installed capacity up to 1 MW - by 7,5%;
  • For WPPs consisting of wind turbines with the unit capacity equal to or exceeding   2 000 kW -  by 7,5%.

2. For all power plants producing electricity from RES and commissioned by 30 June 2015, a FiT cap (maximum price) is set at the level of the tariff approved for electricity generated from solar at ground-based solar facilities with the installed capacity exceeding 10 MW being commissioned by 31 March 2013, reduced by 5% (approximately 24,6 eurocents per kWh).

3. For all power facilities generating electricity from RES being commissioned since 1 January 2020, “green” tariff is reduced as follows:

a) For SPPsby 2,5%

  • with installed capacity up to 1 MW (with no restrictions on dates of their commissioning);
  • with installed capacity of 1 MW and up to 75 MW  and being commissioned by 31 March 2021; 
  • with installed capacity equal to or exceeding 75 MW and being commissioned by 31 October 2020;

b) For SPPs with installed capacity equal to or exceeding 1 MW and being commissioned after the above mentioned dates – by 60%

  1. For WPPsby 2,5%.

4. The state guarantees all RES producers that rate of “restructured green” tariff that has been or to be established within the period from 1 July 2020 to 31 December 2029 will not be changed or cancelled.

5. The RES Producers - members of the balancing group of the Guaranteed Buyer (the GB) shall bear financial liability for imbalances at the rate of:

  • 50 % starting from 1 January 2021;
  • 100% starting from 1 January 2022.

6. Till 31 December 2029 financial liability for imbalances will accrue for such RES producers only in case the relevant tolerance margin exceeds:

  • 5 % for the SPPs; and
  • 10 % for the WPPs.

7. Producers could be eligible for a premium of 5% of the eligible GT rate in case of 30% ”level of locally produced equipment” in a project reaches 30%, or a premium of 10% of the eligible GT rate if the project contains at least a 50% “level of locally produced equipment” and 20% if the ”level of locally produced equipment” in a project comes to or exceeds 70%.

In case of auction price, after 6 years of RES power plant’s operation, the premium will not exceed 10%.

8. 70% of funds obtained by PrJSC “NPC Ukrenergo” (the “TSO”) as of 1 July 2020 from distribution of interstate interconnectors shall be used to cover debt of the TSO to the GB in respect of services related to increase of RES share in the energy mix.

9.  Schedules of auctions will be determined by the CMU and its number and dates are not restricted by certain dates as provided by the effective laws. Caps for auction price for all power facilities producing electricity from RES amount to:

    • 9 eurocents per kWh for auctions until 31 December 2024;

    • 8 eurocents for auctions from 1 January 2025.

10. Transmission tariff for metallurgical enterprises with CO2 emissions less than 250 kg per ton of steel products shall exclude TSO costs related to special obligations related to the increase of RES shares.

11. In addition, the Law abolishes the norm on the invariability of taxation in the "green" energy sector.