A case of maintenance work is causing a dust-up in Ukraine as one of the parties involved claims to have fallen victim to oligarchy driven corruption and frames a pending court ruling as indicative of Ukraine's suitability for international companies to do business.
TIU Canada, a Ukraine-based IPP for merchant power stations, wholly owned by Canadian investment fund manager Refraction Asset Management and Refraction 1 Fund, alleges its 10.5 MW solar plant at Nikopol had been illegally disconnected from the grid.
The power plant operator claims that the Nikopol solar plant's substation is on the premises of the metal processing site Nikopol Ferroalloy Plant (NFZ). The latter had informed TIU Canada in December 2019 that it needed to disconnect the solar generator from the substation for “repairs”. The disconnection reportedly followed on March 2020, with TIU Canada claiming that NFZ had no right to disconnect its power station under Ukrainian law. With the generator offline for almost a year, the damages are allegedly somewhere in the tune of €1.5 million. The site has still not been reconnected.
It would not be the first time solar power companies struggle with legal practices in Ukraine. While the market experienced substantial growth in 2018 and 2019, reaching well above 1 GW of annual installations, the government rowed back on the €0.1502/kWh feed-in tariff remuneration scheme earlier this year, fearing rapidly rising costs. On top of that, the Ukrainian grid appeared unequipped to accommodate the sizeable solar PV capacity added each year. What followed was an extensive curtailment of renewable energy generators. The government entity tasked with compensating the loss of power generation, Guaranteed Buyer, now reportedly finds itself in troubled waters, unable to keep up with payments.
Whether TIU Canada's disconnection is directly connected to the Ukrainian energy market's eventful spring is not entirely clear. The timing of the events, however, aligns rather well. Also, the substation's 10-month repair period does raise questions — even during a pandemic.
The case has gone on trial in Kyiv's Commercial Court after a series of preliminary hearings last months. TIU Canada says that the matter's outcome is a test of the Zelensky administration's commitment to protecting foreign investment and ultimately attracting more solar companies to develop new projects in Ukraine. TIU Canada says it operates 54 MW of solar power in the country, has invested around $65 million in the sector, and employs about 30 people. Depending on the legal proceedings, these efforts could be jeopardized, the company claims.
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