EBA calls for changes to the legislation to preserve the RES industry

25/ 06/ 2020

The Draft Law No.3658 on changing the support for the RES producers has been recently registered in the Verkhovna Rada of Ukraine. The document is a compromise between the state and producers of green electricity to maintain the investment attractiveness of the industry and its further development. The draft law was developed to implement the main provisions of the Memorandum of Understanding between the Government, investors, and producers of green electricity. The document became the greatest achievement in the long negotiation process for the future development of the RES sector and was supported by most market participants. What does this draft law provide for? First is the reduction of green tariffs from July 1, 2020, for objects commissioned from July 1, 2015, to December 31, 2019. The tariffs may be reduced by 10-15% depending on the capacity for solar power plants and by 7.5% for wind power plants. Secondly, starting from 2022 (50% in 2021), the RES producers will be liable for imbalance (difference) between the declared and actual schedules of electricity production. This will encourage companies to develop IT solutions and integrate systems to increase the accuracy of forecasting electricity supply schedules and promote the development of the balancing capacity sector. Third, in the case of energy overproduction which entailed the restrictions on its supply, the draft law provides that the transmission system operator should compensate for electricity not supplied by RES producers, following the methodology approved by the Regulator. The draft law also provides state guarantees regarding the invariability of the legislation upon the day of its adoption for producers at a green tariff. Given the critical situation in the RES sector caused by obvious defects in the electricity market of Ukraine which need to be addressed immediately and the growing cases of non-payment for electricity to investors and accumulated debts to enterprises, the EBA supports the need to adopt legislation on changing support conditions for producers. According to the EBA member companies, the provisions of the draft law should include a decision to extend the support for producers who have already received a green tariff for 2 years, as well as to fix the repayment of current debt of SE Guaranteed Buyer to producers as provided for in the Memorandum. The European Business Association calls on the respective Committee of Verkhovna Rada to support the draft Law No.3658, according to which investors will receive timely payments from the state, and the share of clean energy will increase.

The draft law was developed to implement the main provisions of the Memorandum of Understanding between the Government, investors, and producers of green electricity. The document became the greatest achievement in the long negotiation process for the future development of the RES sector and was supported by most market participants.

What does this draft law provide for? First is the reduction of “green” tariffs from July 1, 2020, for objects commissioned from July 1, 2015, to December 31, 2019. The tariffs may be reduced by 10-15% depending on the capacity for solar power plants and by 7.5% for wind power plants.

Secondly, starting from 2022 (50% in 2021), the RES producers will be liable for imbalance (difference) between the declared and actual schedules of electricity production. This will encourage companies to develop IT solutions and integrate systems to increase the accuracy of forecasting electricity supply schedules and promote the development of the balancing capacity sector.

Third, in the case of energy overproduction which entailed the restrictions on its supply, the draft law provides that the transmission system operator should compensate for electricity not supplied by RES producers, following the methodology approved by the Regulator.

The draft law also provides state guarantees regarding the invariability of the legislation upon the day of its adoption for producers at a “green” tariff.

Given the critical situation in the RES sector caused by obvious defects in the electricity market of Ukraine which need to be addressed immediately and the growing cases of non-payment for electricity to investors and accumulated debts to enterprises, the EBA supports the need to adopt legislation on changing support conditions for producers.

According to the EBA member companies, the provisions of the draft law should include a decision to extend the support for producers who have already received a “green” tariff for 2 years, as well as to fix the repayment of current debt of SE “Guaranteed Buyer” to producers as provided for in the Memorandum.

The European Business Association calls on the respective Committee of Verkhovna Rada to support the draft Law No.3658, according to which investors will receive timely payments from the state, and the share of clean energy will increase.