Ukraine to hold first auctions for wind and solar next year

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The Ukrainian parliament – Verkhovna Rada – has approved at first reading legislation which contains provisions to help the country move towards a more efficient renewable energy market.

The new rules are primarily intended to replace the feed-in tariff scheme for large-scale solar and other renewables with an auction mechanism to drive down costs. According to the draft document, the first auctions will be held next year exclusively for large-scale solar projects exceeding 10 MW in capacity and wind power plants with a capacity of more than 20 MW, with a second series of auctions in the 2021-2022 for PV projects over 5 MW and wind schemes not exceeding 20 MW.

In 2023, auctions will include solar installations with a capacity of more than 1 MW and wind projects larger than 3 MW. The ceiling price for each of the auctions would be the level of FITs at that point.

For any renewable energy projects outside the auction regime, there will be the possibility of applying for a FIT valid until 2030. “Therefore, the producers will have a choice to participate in the auction, receiving a 20-year PPA, or to work under [the] current FIT scheme, which is valid until 2030,” said the Ukrainian Association of Renewable Energy (UARE) in a statement to pv magazine.

Plans win industry backing

The association’s Irina Krymus added: “After 2023, there will be probably no interest for investors to work under a FIT scheme which will be available till 2030, it will be more reasonable for them to participate in tenders. The investor will have the opportunity to receive a longer period of support on the lower price and the consumer will receive … cheaper electricity from renewables.”

FITs for existing solar projects will be maintained but those for future plants not participating in tenders will be reduced by 25% next year, followed by a reduction by 2.5% per year in the next three years.

The association said the new provisions will reduce the cost of clean energy for the consumer and create a competitive renewable energy market while offering a long-term planning opportunity for strategic investors. “Hopefully the draft law will pass successfully the second reading in the near future,” the UARE added.

Ukraine currently grants a FIT of €0.1502/kWh to ground-mounted PV projects connected to the grid between 2017 and this year. That has led to strong growth in the past two years, attracting operational installed PV capacity of 841 MW as of the end of March. On the top of the FIT program, the government is also supporting a GW-sized PV project at the site of the Chernobyl nuclear disaster as well as distributed generation projects through net metering.

The country also introduced, in April 2017, the Law of Ukraine On the Electricity Market – a series of reforms to liberalize the nation’s energy market.