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Business calls for reviewing the renewable energy regulation to continue work in full

25/ 08/ 2022
  In 2019, according to Climatescope, Ukraine ranked 8th (up from 63rd place) among 104 countries in the world in terms of the countrys investment attractiveness for the development of low-carbon energy sources and the construction of a green economy. And, according to the estimates of the EBA experts, in 2020 Ukraine will be among the TOP-5 European countries in terms of the development rate of solar energy. However, business representatives note that the invasion of Russia has not only halted the development of the industry but has also caused devastating losses to producers of clean power. Thus, about 60% of industrial solar power plants and more than 85% of industrial wind power plants are concentrated in the southern and southeastern regions of Ukraine, where active hostilities are taking place. According to various estimates, 30-40% of solar power plants in these regions have been affected as of today. And since the start of the large-scale war in Ukraine, more than 3/4 of the wind energy capacities have been stopped. Meanwhile, the EBA member companies received information that Ukrainian authorities consider canceling the feed-in tariff. That raises concerns in the business community. As estimated by the EBA experts, only in the last 10 years leading international and Ukrainian investors in RES (renewable energy sources) have brought to Ukraine about 12 billion US dollars of direct foreign investment in the Ukrainian economy thanks to the unchanged legislation and the feed-in tariff stimulation. And the cancelation of all these will have an extremely negative effect on the RES industry, not only on investments. Thus, the EBA Energy Committee experts note that without RES generation, it will be extremely difficult to ensure uninterrupted electricity supply during autumn-winter 2022-2023, especially given russias military aggression. After all, currently, the experts estimated that the United Energy System of Ukraine has collectively lost approximately 4% of its generating capacity, and another 35% of capacity is located in the occupied territories. Besides, Ukraine recently started exporting electricity to Europe, and according to the statements of NEC Ukrenergo in the media, the state earned UAH 700 million in just one month. With plans to expand exports, revenues could rise to billions of hryvnias every month, provided renewable energy stations are completed and sustainable funding for the industry is secured. However, unfortunately, initiatives to cancel the feed-in tariff do not correlate with the green transformation course, the REPowerEU9 Plan, and the Recovery Plan of Ukraine. Equally important is the fact that real market prices for electricity are 4-5 times higher than the prices of electricity sales in Ukraine. Moreover, todays level of feed-in tariff fixed until 2030 is extremely competitive when compared with European electricity prices. Thus, it seems that it is more profitable for Ukraine to build its own generation, and to export the excess electricity to European countries, receiving significant profits. In addition to the potential cancellation of the feed-in tariff, the RES sector faced other risks – restrictions on payments, imbalances, fixed feed-in tariff without adjusting it to currency fluctuations, and the inability to complete already started projects. Therefore, the European Business Association appeals to the President of Ukraine Volodymyr Zelensky, the Prime Minister of Ukraine Denys Shmyhal and the Minister of Energy of Ukraine Herman Galushchenko with a proposal to support the industry and foster the revision of the approaches to the regulation of the renewable energy sector in order to avoid a crisis situation. At the same time, business proposes to conduct an open dialogue and discuss this issue, particularly, with the Minister of Energy, in order to find possible compromise solutions. Moreover, business asks to facilitate the introduction of changes to the regulatory legal acts of Ukraine - to cancel Order of the Ministry of Energy of Ukraine On settlements on the electric energy market No. 140, Order On settlements with producers under the feed-in tariff No. 206. At the same time, Law No. 555-IV sets the deadline for the station to be built to receive the feed-in tariff, which expires on December 31, 2022. However, the war continues, and active hostilities in certain territories do not contribute to the full implementation of investment projects, so in order for investors to be able to complete the facilities and receive the feed-in tariff, it is necessary to extend the terms for the period of martial law + 1 year after its end at least. We hope that the voice of business will be heard, which will help avoid bankruptcy of foreign investors and a crisis during the heating season for the whole country.

In 2019, according to Climatescope, Ukraine ranked 8th (up from 63rd place) among 104 countries in the world in terms of the country’s investment attractiveness for the development of low-carbon energy sources and the construction of a “green” economy. And, according to the estimates of the EBA experts, in 2020 Ukraine will be among the TOP-5 European countries in terms of the development rate of solar energy. However, business representatives note that the invasion of Russia has not only halted the development of the industry but has also caused devastating losses to producers of clean power.

Thus, about 60% of industrial solar power plants and more than 85% of industrial wind power plants are concentrated in the southern and southeastern regions of Ukraine, where active hostilities are taking place. According to various estimates, 30-40% of solar power plants in these regions have been affected as of today. And since the start of the large-scale war in Ukraine, more than 3/4 of the wind energy capacities have been stopped.

Meanwhile, the EBA member companies received information that Ukrainian authorities consider canceling the feed-in tariff. That raises concerns in the business community.

As estimated by the EBA experts, only in the last 10 years leading international and Ukrainian investors in RES (renewable energy sources) have brought to Ukraine about 12 billion US dollars of direct foreign investment in the Ukrainian economy thanks to the unchanged legislation and the feed-in tariff stimulation. And the cancelation of all these will have an extremely negative effect on the RES industry, not only on investments.

Thus, the EBA Energy Committee experts note that without RES generation, it will be extremely difficult to ensure uninterrupted electricity supply during autumn-winter 2022-2023, especially given russia’s military aggression. After all, currently, the experts estimated that the United Energy System of Ukraine has collectively lost approximately 4% of its generating capacity, and another 35% of capacity is located in the occupied territories.

Besides, Ukraine recently started exporting electricity to Europe, and according to the statements of NEC “Ukrenergo” in the media, the state earned UAH 700 million in just one month. With plans to expand exports, revenues could rise to billions of hryvnias every month, provided renewable energy stations are completed and sustainable funding for the industry is secured. However, unfortunately, initiatives to cancel the feed-in tariff do not correlate with the green transformation course, the REPowerEU9 Plan, and the Recovery Plan of Ukraine.

Equally important is the fact that real market prices for electricity are 4-5 times higher than the prices of electricity sales in Ukraine. Moreover, today’s level of feed-in tariff fixed until 2030 is extremely competitive when compared with European electricity prices. Thus, it seems that it is more profitable for Ukraine to build its own generation, and to export the excess electricity to European countries, receiving significant profits.

In addition to the potential cancellation of the feed-in tariff, the RES sector faced other risks – restrictions on payments, imbalances, fixed feed-in tariff without adjusting it to currency fluctuations, and the inability to complete already started projects. Therefore, the European Business Association appeals to the President of Ukraine Volodymyr Zelensky, the Prime Minister of Ukraine Denys Shmyhal and the Minister of Energy of Ukraine Herman Galushchenko with a proposal to support the industry and foster the revision of the approaches to the regulation of the renewable energy sector in order to avoid a crisis situation. At the same time, business proposes to conduct an open dialogue and discuss this issue, particularly, with the Minister of Energy, in order to find possible compromise solutions.

Moreover, business asks to facilitate the introduction of changes to the regulatory legal acts of Ukraine – to cancel Order of the Ministry of Energy of Ukraine “On settlements on the electric energy market” No. 140, Order “On settlements with producers under the feed-in tariff” No. 206. At the same time, Law No. 555-IV sets the deadline for the station to be built to receive the feed-in tariff, which expires on December 31, 2022. However, the war continues, and active hostilities in certain territories do not contribute to the full implementation of investment projects, so in order for investors to be able to complete the facilities and receive the feed-in tariff, it is necessary to extend the terms for the period of martial law + 1 year after its end at least. We hope that the voice of business will be heard, which will help avoid bankruptcy of foreign investors and a crisis during the heating season for the whole country.

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