Ukraine improves grid connection terms

13/ 08/ 2021

On 15 July 2021, the Verkhovna Rada of Ukraine adopted Bill No. 5009 amending certain legislative instruments of Ukraine to simplify grid connection (the Bill). Now, the Bill is pending signature by the President of Ukraine and official publication. The Bill reduces significantly the time required for connection to power grids, reduces the lists of documents required for connection, simplifies the procedures for obtaining information necessary for the development of projects and, accordingly, reduces the cost of connecting to power grids. Extension of connection agreements and specifications Connection agreements made before the entry into force of the Bill will remain effective until they expire. If an agreement has been executed for an indefinite term, the parties are required to address their contractual relations not later than by 1 January 2024 through signing an additional agreement. If the additional agreement is not signed, then such agreement will expire on 1 January 2024. In the case of connection agreements concluded with producers from renewable energy sources, except for solar energy producers (RES producers), and where a RES producer has entered into a preliminary power purchase agreement at a feed-in tariff until 31 December 2019, the specifications for the electric power facility will remain valid until 31 December 2022. This is an important change enabling the completion of development of many renewable power projects in Ukraine. Land issues The Bill is quite largely focused on land issues related to grid connection. In particular, the Bill introduces the requirement to obtain approval from the Cabinet of Ministers of Ukraine to change the designated purpose of state- and community-owned land plots of the nature reserve fund and other nature conservation, historical, cultural, and forestry land. The Bill spells out separate procedures for creating easements over state- and community owned land, procedures for developing a land management project, and approval deadlines. No easement is required to obtain a permit to develop technical documentation for establishing the borders of a part of the land plot that is covered by sublease. The developed documentation is attached to the application for creation of an easement. However, if the easement is to be created over land that has not been shaped into land plots, the authority that disposes of the land must, within a month, issue a permit for the development of a land management project to have the land plot allocated. The Bill also addresses the issue of registration of transfers of proprietary rights to a land plot. This should allow for the implementation of the principle provided by Article 120 of the Land Code of Ukraine, according to which land follows the real estate located on it. Additionally, the Bill provides for the development and approval of a standard form agreement creating a land easement and the preparation of a list of persons at local executive authorities (1) to whom requests must be submitted to obtain information and / or documents necessary for the development of design documentation for the construction of electrical networks to the point of connection of the customers electrical installations and the linear section of the interconnection and (2) who approve the design documents in respect of the above. Grid connection fee The Bill points out that the funds received by the transmission system operator (TSO) and distribution system operators (DSO) as a connection fee for the construction of electrical networks of the linear section of interconnection must be returned to the customer if certain conditions are met. The National Energy and Utilities Regulatory Commission of Ukraine is expected to determine the procedures for the TSO and the DSOs to return the funds raised as the connection fee for the construction of electrical networks of the linear section of interconnection. Approving project documentation through user account The project documentation for the construction and / or technical re-equipment of external power supply networks and electrical networks of the linear section of interconnection is approved through a user account in the Uniform Construction State Electronic System or another information system integrated with the electronic system in the manner provided by the Law of Ukraine on the Regulation of Urban Planning. The Cabinet of Ministers must ensure the creation of software for the Uniform Construction State Electronic System and the State Register of Proprietary Rights to Real Estate. Empowerment of the DSO Under the Bill, the DSO is required to perform, without any interaction with the Customer and on a turnkey basis, all connection works (development, and approval by other stakeholders, of design documents for the construction and / or technical re-equipment of external power supply networks of the customers electrical installations (to the point of connection of the customers electrical installations)) with a capacity of up to 400 kW, and to take measures for the allotment of land plots for the placement of respective electric power facilities. This provision is to come into force 18 months after the publication of the Bill. For more information, please contact Asters Partner Yaroslav Petrov, Counsel Anzhelika Livitska and Senior Associate Bohdan Shmorhun, Associate Olena Sichkovska-Chornobyl.

On 15 July 2021, the Verkhovna Rada of Ukraine adopted Bill No. 5009 amending certain legislative instruments of Ukraine to simplify grid connection (the “Bill“). Now, the Bill is pending signature by the President of Ukraine and official publication.

The Bill reduces significantly the time required for connection to power grids, reduces the lists of documents required for connection, simplifies the procedures for obtaining information necessary for the development of projects and, accordingly, reduces the cost of connecting to power grids.

Extension of connection agreements and specifications

Connection agreements made before the entry into force of the Bill will remain effective until they expire. If an agreement has been executed for an indefinite term, the parties are required to address their contractual relations not later than by 1 January 2024 through signing an additional agreement. If the additional agreement is not signed, then such agreement will expire on 1 January 2024.

In the case of connection agreements concluded with producers from renewable energy sources, except for solar energy producers (RES producers), and where a RES producer has entered into a preliminary power purchase agreement at a feed-in tariff until 31 December 2019, the specifications for the electric power facility will remain valid until 31 December 2022. This is an important change enabling the completion of development of many renewable power projects in Ukraine.

Land issues

The Bill is quite largely focused on land issues related to grid connection. In particular, the Bill introduces the requirement to obtain approval from the Cabinet of Ministers of Ukraine to change the designated purpose of state- and community-owned land plots of the nature reserve fund and other nature conservation, historical, cultural, and forestry land.

The Bill spells out separate procedures for creating easements over state- and community owned land, procedures for developing a land management project, and approval deadlines. No easement is required to obtain a permit to develop technical documentation for establishing the borders of a part of the land plot that is covered by sublease. The developed documentation is attached to the application for creation of an easement. However, if the easement is to be created over land that has not been shaped into land plots, the authority that disposes of the land must, within a month, issue a permit for the development of a land management project to have the land plot allocated.

The Bill also addresses the issue of registration of transfers of proprietary rights to a land plot. This should allow for the implementation of the principle provided by Article 120 of the Land Code of Ukraine, according to which land follows the real estate located on it.

Additionally, the Bill provides for the development and approval of a standard form agreement creating a land easement and the preparation of a list of persons at local executive authorities (1) to whom requests must be submitted to obtain information and / or documents necessary for the development of design documentation for the construction of electrical networks to the point of connection of the customer’s electrical installations and the linear section of the interconnection and (2) who approve the design documents in respect of the above.

Grid connection fee

The Bill points out that the funds received by the transmission system operator (TSO) and distribution system operators (DSO) as a connection fee for the construction of electrical networks of the linear section of interconnection must be returned to the customer if certain conditions are met. The National Energy and Utilities Regulatory Commission of Ukraine is expected to determine the procedures for the TSO and the DSOs to return the funds raised as the connection fee for the construction of electrical networks of the linear section of interconnection.

Approving project documentation through user account

The project documentation for the construction and / or technical re-equipment of external power supply networks and electrical networks of the linear section of interconnection is approved through a user account in the Uniform Construction State Electronic System or another information system integrated with the electronic system in the manner provided by the Law of Ukraine on the Regulation of Urban Planning. The Cabinet of Ministers must ensure the creation of software for the Uniform Construction State Electronic System and the State Register of Proprietary Rights to Real Estate.

Empowerment of the DSO

Under the Bill, the DSO is required to perform, without any interaction with the Customer and on a turnkey basis, all connection works (development, and approval by other stakeholders, of design documents for the construction and / or technical re-equipment of external power supply networks of the customer’s electrical installations (to the point of connection of the customer’s electrical installations)) with a capacity of up to 400 kW, and to take measures for the allotment of land plots for the placement of respective electric power facilities. This provision is to come into force 18 months after the publication of the Bill.

For more information, please contact Asters Partner Yaroslav Petrov, Counsel Anzhelika Livitska and Senior Associate Bohdan Shmorhun, Associate Olena Sichkovska-Chornobyl.