On 5 December 2024, Andriy Konechenkov, Chairman of the UWEA Board, as well as two members of the UWEA Committee on Legal Affairs – Ihor Retivov, DTEK Renewables, and Olha Savchenko, Altelaw – shared their thoughts on the results of the first pilot “green” auctions in Ukraine, becoming speakers at a thematic online event organised by the UN Global Compact in Ukraine together with ExPro within the framework of the Ukraine Energy Initiative.
The event was organised with the aim of presenting the position of renewables business regarding the state’s approach to implementing “green” auctions in Ukraine and the effectiveness of interaction with market players during this process. “Investors have no trust in the state because of the accumulated and still unresolved problem of debt on the electricity market”, emphasised Andriy Konechenkov. “We will be able to talk about investors’ interest in participating in state “green” auctions if the state, for its part, fully settles with renewables producers for the consumed “green” electricity, approves draft law No. 11392, which will give one auction participant the opportunity to receive not 25%, but 50% of the total quota, and, in general, revises the proposed quotas, bringing them into line with the renewables development indicators announced and enshrined in the National Action Plan up to 2030. If we aspire to become part of the EU, then it would be fair to be guided by its auction policy, rather than spending time testing a model and correcting the mistakes made”, added the head of UWEA.
“I think that the problem with “green” auctions is ideological. “Green” auctions came to replace the “green” tariff, so the state’s attitude to this model is immediately biased”, suggested Ihor Retivov. “No one conducted a dialogue with business representatives regarding the opportunities and problems of the existing projects ready for construction in Ukraine, so the proposed quotas within the framework of the 2024 auction and the already announced auction for 2025, taking into account the current model of the auctions themselves, are unrealistic and unlikely to be of interest to large players”, he added.
In addition, the UWEA representatives suggested that, apart from resolving all the existing challenges on the market, a decision to involve low-capacity distributed generation in this process could also have a positive impact on the demand to participate in the auctions.
A separate issue that caused discussion and reflection among the invited speakers was the division of the 250 MW quota for wind energy, announced for 2025, into two separate iterations, of 100 and 150 MW respectively. “In my opinion, there is no critical need for such a division, because the larger the quota, the more participants and the higher the competition. In my view, the best solution would be to hold an auction for 250 MW at once, and then raise this quota in 2026 to at least 800 MW”, commented Andriy Konechenkov.
In turn, Olha Savchenko structured the issues behind the refusal to participate in the auctions according to the following criteria: military risks and the insufficient development of their insurance; the uncertainty of the situation with the procedure for financing the PSO, which consists in the underdevelopment of guarantees when separating the cost of the service of increasing electricity production from alternative sources from the transmission tariff; the non-implementation of any payment since February 2024 under the market premium mechanism, under which support will be provided after an investor wins an auction; and the total distrust of the state, which consists in the conviction that the state may retrospectively apply the extremely negative auction conditions that are set out in secondary legislation. Additionally, Olha noted that the timeframes for checking the land plot or real estate object that will in the future be offered for investment and development in the auctions should be increased.
Based on the results of the discussion, the organisers will prepare a White Paper with recommendations on improving the auction model in Ukraine and increasing investors’ interest in participating in subsequent auctions.
