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Overview of changes in energy legislation by Golaw

31/ 01/ 2018
  AMENDMENTS TO THE PPA WITH ALTERNATIVE ENERGY PRODUCERS On January 09, 2018, NKREKP adopted Resolution No. 1 “On Amending Resolution of the National Commission for state regulation in the field of energy as of October 11, 2012 No. 1314”. This Resolution relates to the further amendments of the template form of PPA between State Enterprise “Energorynok” and alternative energy producers. Among others, the amendments refer to: providing State Enterprise “Energorynok” with the right to sign direct agreements with the creditors of alternative energy producers without any preliminary consent of the latter; providing alternative energy producers with the right of early termination of PPA in specified cases and the right to seek reimbursement from State Enterprise “Energorynok” for such termination; defining that a shortage of funds, for whatever commercial, economic or financial reason, or a change of market conditions, will not constitute a force majeure event; setting a general term of 30 days for pretrial dispute resolution between the parties; differentiating the approaches to further resolution of those disputes in which the negotiations failed depending on the existence of the foreign investor in the AES producer’s company; specifying situations which shall be determined as changes in the legislation for the purposes of PPA. In our opinion such amendments shall have a positive effect on the alternative energy market in Ukraine if all the changes will find practical opportunity of their implementation and enforcement.   THE PARLIAMENT PLANS TO LIMIT VALIDITY TERM OF TECHNICAL CONDITIONS FOR CONNECTING TO ELECTRIC NETWORKS Verkhovna Rada of Ukraine adopted in the first reading a draft law that proposes to establish a three-year period of validity of technical conditions for connecting to electrical networks for power facilities that produce electricity with the use of alternative sources of energy. It shall be mentioned that as of now the technical conditions are valid until completion of construction of the object, regardless of the change of the customer. The draft law will help to solve the problem of so-called reserved capacities. Despite the large part of the reserved capacities more than three years ago, the construction of many such facilities has still not started for various reasons. As a result, new investors who are ready to enter the renewable energy market can not find convenient connecting points. Such situation has arisen due to the unlimited term of validity of technical conditions. The proposed changes will stimulate completion of construction within certain time limits, will allow release of reserved capacities and will facilitate further investments in the renewable energy sector.   PRESIDENT APPOINTED TWO NEW MEMBERS OF THE NATIONAL REGULATORY COMMISSION ON ENERGY AND UTILITIES On December 23, the President of Ukraine appointed two new members of the Regulator. These members of the Regulator were appointed for a period of three months before the election of new members, who will be selected on the basis of open competitive selection. It should be noted that recently Verkhovna Rada of Ukraine has adopted a bill that allows the President to appoint Regulator’s members in amount equal to the number of vacant positions until appointment of new members.   OPIC HAS AGREED TO FINANCE THE LARGEST WIND FARM IN UKRAINE Recently OPIC, the U.S. Government’s development finance institution, approved approximately $150 million financing along with up to $250 million for political risk insurance and reinsurance to EuroCape Ukraine, to support construction and operation of the first 225 MW phase of planned 500 MW wind farm.

AMENDMENTS TO THE PPA WITH ALTERNATIVE ENERGY PRODUCERS

On January 09, 2018, NKREKP adopted Resolution No. 1 “On Amending Resolution of the National Commission for state regulation in the field of energy as of October 11, 2012 No. 1314”. This Resolution relates to the further amendments of the template form of PPA between State Enterprise “Energorynok” and alternative energy producers.

Among others, the amendments refer to:

  • providing State Enterprise “Energorynok” with the right to sign direct agreements with the creditors of alternative energy producers without any preliminary consent of the latter;
  • providing alternative energy producers with the right of early termination of PPA in specified cases and the right to seek reimbursement from State Enterprise “Energorynok” for such termination;
  • defining that a shortage of funds, for whatever commercial, economic or financial reason, or a change of market conditions, will not constitute a force majeure event;
  • setting a general term of 30 days for pretrial dispute resolution between the parties;
  • differentiating the approaches to further resolution of those disputes in which the negotiations failed depending on the existence of the foreign investor in the AES producer’s company;
  • specifying situations which shall be determined as changes in the legislation for the purposes of PPA.

In our opinion such amendments shall have a positive effect on the alternative energy market in Ukraine if all the changes will find practical opportunity of their implementation and enforcement.

 

THE PARLIAMENT PLANS TO LIMIT VALIDITY TERM OF TECHNICAL CONDITIONS FOR CONNECTING TO ELECTRIC NETWORKS

Verkhovna Rada of Ukraine adopted in the first reading a draft law that proposes to establish a three-year period of validity of technical conditions for connecting to electrical networks for power facilities that produce electricity with the use of alternative sources of energy. It shall be mentioned that as of now the technical conditions are valid until completion of construction of the object, regardless of the change of the customer.

The draft law will help to solve the problem of so-called “reserved” capacities. Despite the large part of the reserved capacities more than three years ago, the construction of many such facilities has still not started for various reasons. As a result, new investors who are ready to enter the renewable energy market can not find convenient connecting points. Such situation has arisen due to the unlimited term of validity of technical conditions.

The proposed changes will stimulate completion of construction within certain time limits, will allow release of reserved capacities and will facilitate further investments in the renewable energy sector.

 

PRESIDENT APPOINTED TWO NEW MEMBERS OF THE NATIONAL REGULATORY COMMISSION ON ENERGY AND UTILITIES

On December 23, the President of Ukraine appointed two new members of the Regulator.

These members of the Regulator were appointed for a period of three months before the election of new members, who will be selected on the basis of open competitive selection.

It should be noted that recently Verkhovna Rada of Ukraine has adopted a bill that allows the President to appoint Regulator’s members in amount equal to the number of vacant positions until appointment of new members.

 

OPIC HAS AGREED TO FINANCE THE LARGEST WIND FARM IN UKRAINE

Recently OPIC, the U.S. Government’s development finance institution, approved approximately $150 million financing along with up to $250 million for political risk insurance and reinsurance to EuroCape Ukraine, to support construction and operation of the first 225 MW phase of planned 500 MW wind farm.

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