The Law correlates with the provisions of the Memorandum of Understanding signed on June 10, 2020, between the Government of Ukraine and two associations representing the interests of investors in the field of renewable energy sources (RES): the Ukrainian Wind Energy Association and the European-Ukrainian Energy Agency. It was signed by the President on July 31, 2020 and entered into force on August 1, 2020.
Reduction of FIT rates
Under the Law, the FIT rates will be reduced as follows:
| Type of generation facility | FIT reduction % |
| Solar power plants (“SPPs”) with installed capacity of 1 MW or more commissioned between July 1, 2015 and December 31, 2019 | 15% |
| SPPs with installed capacity of less than 1 MW commissioned between July 1, 2015 and December 31, 2019 | 7.5% |
| Wind power plants (“WPPs”) commissioned between July 1, 2015 and December 31, 2019 and consisting of wind turbines with a unit installed capacity of 2 MW or more | 7.5% |
| WPPs commissioned after January 1, 2020 | 2.5% |
| SPPs with installed capacity less than 1 MW commissioned after January 1, 2020 | 2.5% |
| SPPs with installed capacity of 1 MW or more commissioned between January 1, 2020 and October 31, 2020 | 2.5% |
| SPPs with installed capacity between 1 MW and 75 MW commissioned between November 1, 2020 and March 31, 2021 | 30% |
| SPPs with installed capacity between 1 MW and 75 MW commissioned from April 1, 2021 | 60% |
| SPPs with installed capacity of 75 MW or more commissioned from November 1, 2020 | 60% |
| FIT rates (eurocents/KWh) | |||||
| Type of generation facility | Solar (mounted on ground, <1MW) | Solar (mounted on ground, 1-75MW) | Solar (mounted on ground, ≥75MW) | Wind unit (≥2MW) | Wind unit (0.6-2MW) |
| Commissioned between 1 July 2015 and 31 December 2015 | 15.69 (-7.5%) | 14.42 (-15%) | 14.42 (-15%) | 9.42 (-7.5%) | 6.79 |
| Commissioned in 2016 | 14.79 (-7.5%) | 13.59 (-15%) | 13.59 (-15%) | 9.42 (-7.5%) | 6.79 |
| Commissioned in 2017 – 2019 | 13.90 (-7.5%) | 12.77 (-15%) | 12.77 (-15%) | 9.42 (-7.5%) | 6.79 |
| Commissioned between 1 January 2020 and 31 October 2020 | – | 10.97* (-2.5%) | 10.97* (-2.5%) | – | – |
| Commissioned between 1 November 2020 and 31 March 2021 | – | 7.88* (-30%) (com. between ____________ 7.62* (-30%) (com. between | 4.5* (-60%) (com. between ____________ 4.35* (-60%) (com. between | – | – |
| Commissioned after 1 April 2021 | – | 4.35* (-60%) | – | – | – |
| Commissioned in 2020 | 10.97 (-2.5%) | – | – | 8.82* (-2.5%) | 5.88* (-2.5%) |
| Commissioned in 2021 | 10.61 (-2.5%) | – | 4.35* (-60%) | 8.82* (-2.5%) | 5.77* (-2.5%) |
| Commissioned in 2022 | – (only auctions available) | – (only auctions available) | – (only auctions available) | 8.82* (-2.5%) | 5.67* (-2.5%) |
* – RES facilities which will be commissioned under the concluded pre-PPAs.
Amendments regarding a two-year extension of the FIT have not been upheld despite numerous requests by Ukrainian business and international establishments.
Application of FIT for electricity generated from biomass and/or biogas
The FIT for producers of electricity from biomass and/or biogas shall only apply to electricity generated by facilities commissioned before January 1, 2023.
Introduction of accelerated liability for electricity imbalances
Accelerated liability for electricity imbalances will apply for RES facilities with an installed capacity of more than 1 MW:
| Period | Imbalances liability in % under the legislation (effective prior to the Law) | Imbalances liability in % for RES facilities (<1MW) under the Law | Imbalances liability in % for RES facilities (>1MW) under the Law |
| until 31 December 2020 | 0 | 0 | 0 |
| from 1 January 2021 | 10 | 10 | 50 |
| from 1 January 2022 | 20 | 20 | 100 |
| from 1 January 2023 | 30 | 30 | |
| from 1 January 2024 | 40 | 40 | |
| from 1 January 2025 | 50 | 50 | |
| from 1 January 2026 | 60 | 60 | |
| from 1 January 2027 | 70 | 70 | |
| from 1 January 2028 | 80 | 80 | |
| from 1 January 2029 | 90 | 90 | |
| from 1 January 2030 | 100 | 100 |
Accelerated liability for electricity imbalances does not apply to RES facilities with an installed capacity of less than 1 MW. For such facilities, as before, the gradual introduction of a liability for imbalances is stipulated from 01 January 2021: 10% with a subsequent increase of 10% every year until reaching 100% in 2030.
Decrease of tolerance margin
Currently, the tolerance margin (applicable until 31 December 2029) constitutes 20% for WPPs and 10% for SPPs. The Law envisages a reduced tolerance margin, which will constitute:
- 10% for WPPs;
- 5% for SPPs.
Special tariff for electricity transmission services for “green” electrometallurgy enterprises
The Law envisages the establishment of a special tariff over transmission services of electricity purchased for the purposes of steel production by the enterprises of “green” electrometallurgy.
The tariff for such enterprises will be lower, since it will not include expenses of the TSO for fulfilling its Public Service Obligations in ensuring an increase in the share of electricity production from alternative energy sources.
A “green” electrometallurgy enterprise is a legal entity conducting economic activity in the production of steel with direct emissions of CO2 (carbon dioxide) from steel production not exceeding 250 kg per ton of steel product and using the electric arc production method.
A special tariff for electricity transmission services for “green” electrometallurgy enterprises will be applied within the period of FiT validity (until the end of 2029). A special tariff shall be established simultaneously with the revision of the standard tariff of NPC “Ukrenergo” for electricity transmission services.
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The Law also contains the procedure for establishing of such special tariff by the NEURC. The grounds for establishing a special tariff by the NEURC are as follows:
- Certificate of the Ministry for Development of Economy, Trade and Agriculture of Ukraine on confirmation of the status of a “green” electrometallurgy enterprise for a particular enterprise;
- Certificate of the Ministry of Environmental Protection and Natural Resources of Ukraine confirming production of steel by the “green” electrometallurgy enterprise through the electric arc production method and with the direct emissions rates of steel production of CO2 at the level not exceeding 250 kg per ton of steel products.
Updated rates of a premium to FiT or auction price
The Law envisages the following updated rates of a premium for the use of equipment manufactured in Ukraine:
| Premium to FIT or auction price, % | Level of use of equipment manufactured in Ukraine, % |
| 5 | ≥30, but ˂50 |
| 10 | ≥50, but ˂70 |
| 20 | ≥70 |
At the same time, the maximum size of a premium to an auction price for the use of equipment manufactured in Ukraine upon reaching six years of operation of the relevant power facility must not exceed 10%.
Ensuring payments to RES producers
The Law stipulates that the Cabinet of Ministers of Ukraine (CMU) shall financially support the Guaranteed Buyer for payments to RES producers via state budget expenditures. Such expenditures are formed in accordance with budget requests by the Ministry of Energy on the basis of calculations provided by the NEURC, in the amount of not less than 20% of the forecasted marketable products of electricity generation from alternative energy sources for the relevant year.
The Law also contains another temporary measure to ensure payments to RES producers. It envisages that the funds received by the TSO (NPC Ukrenergo) from the capacity allocation of cross-border interconnectors as of July 1, 2020 shall be used for the following purposes:
- 30% – to guarantee the actual availability of allocated capacity, maintenance and increases of capacity allocation through investment into the electricity transmission system, in particular, construction of new intestate electricity transmission lines; and
- 70% – for the repayment of the Guaranteed Buyer’s debts.
The Guaranteed Buyer shall transfer the received funds in the following way:
- 50% – to SE Energoatom; and
- 50% – to pay RES producers for generated electricity.
Furthermore, in order to repay the debts of the Guaranteed Buyer to RES producers existent as of August 1, 2020, the CMU shall, within three months from the enactment of the Law, submit to the Parliament the draft laws on reimbursement of such debts within 2021-2022 by issuing domestic government loan bonds with a maturity of five years.
Settlement of the issue of compensation to RES producers for curtailments
The Law defines the TSO (NPC Ukrenergo) as the entity responsible for compensation to RES producers for curtailments. RES producers will act as suppliers of balancing services, but outside of the balancing electricity market. The cost of load reduction services will be compensated to RES producers under the awarded feed-in tariff or at the auction price. The calculation of the volume of non-delivered electricity should be carried out in accordance with the methodology, which will be an annex to the Market Rules. The procedure for providing services to reduce the load by RES producers will be defined by the Market Rules. The corresponding draft amendments to the Market Rules were published on the NEURC’s website on June 11, 2020.
Stabilization clause
The Law stipulates that for the period from January 1, 2020 until December 31, 2029 FITs will not be amended or cancelled for RES producers for whom they have already been established or are intended to be established, and reduction coefficients will not be changed or applied in any other way that may lead to losses and/or damages and/or non-receipt of legitimately expected revenues by such RES producers.
It also envisages a fixation in the Law of Ukraine “On the Regime of Foreign Investment” of state guarantees for the protection of foreign investments related to the application of the FIT for the entire duration of the FIT. The rights and obligations of RES producers under the PPA should be governed by the legislation effective as of the date of enactment of the Law.
These guarantees do not apply to changes in legislation relating to the matters of defense, national security, tax legislation, ensuring public order, environmental protection.
Clarification of price caps at auctions
The price offers of SPPs and WPPs cannot exceed 9 euro cents per 1 kWh for auctions before December 31, 2024, and cannot exceed 8 euro cents per 1 kWh for auctions from January 1, 2025.
The price offers of producers from other RES (biomass, biogas, as well as micro, mini and small hydroelectric power plants) cannot exceed 12 euro cents per 1 kWh.
Reduction of the minimum share of mandatory allocation of annual support quotas by separate technologies
The annual support quota shall be divided into shares by the separate technologies of RES. The Law reduces the minimum share of the mandatory allocation of annual support quotas by separate technologies (solar, wind, other types of RES) from 15% to 10%.
Other amendments to the procedure for the organization and holding of auctions
The Law clarifies that the CMU may, by a submission from the Ministry of Energy within the annual or additional support quota:
- Define certain areas (regions) for the construction of RES facilities;
- Define the maximum levels of capacity of an RES facility for which the RES producer can obtain the right for support at the relevant auction;
- Propose land plots for the construction of RES facilities with defined technical parameters and technical conditions for connection to the power grid; and
- Propose rooftops and/or facades of buildings and other capital facilities leased for the construction of SPPs with defined technical parameters and technical conditions for connection to the power grid.
The features of announcing and conducting such auctions are defined by the Procedure for conducting auctions on the allocation of the support quota.
The Law envisages that auctions will be held in accordance with the schedule of auctions for the relevant year. The maximum share of the annual support quota that one ultimate beneficial owner can obtain in one calendar year shall remain at the level of 25%.
Please note that minor changes may still be made, since the Law has not been officially published yet.
Legislation: Law of Ukraine “On Amendments to Certain Laws of Ukraine on the Improvement of Conditions of Support for the Production of Electricity from Alternative Energy Sources” of July 21, 2020.
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