Guaranteed Buyer

Kyiv’s Commercial Court has begun hearing a case that could be of interest to solar developers with a stake in Ukraine’s solar sector, or those looking to buy into the country’s energy market. For nearly a year the grid connection of a solar plant had been capped by an adjacent metal producer. The legal proceedings could prove a test for Ukraine’s suitality to provide sufficient investor protection, the plaintiff stated ahead of the trial.

The Ukrainian government’s conference rooms have been stuffier than usual lately, as policymakers and renewable energy industry representatives attempted to thrash out a compromise to reduce the financial burden left on the administration by a feed-in tariff incentive regime which drove almost 2 GW of generation capacity. The resulting retroactive cuts to payments, outlined below by Ukraine-based lawyer Svitlana Teush, have at least had input from both sides.

The government has suggested PV plant operators accept a ‘voluntary’ 12.5% reduction in feed-in tariffs. If developers refuse, policymakers could impose 15-25% cuts, albeit with payment contracts extended five years. The drastic measures are being considered to reduce the cost of the state-owned Guaranteed Buyer body, which purchases all electricity generated in Ukraine from renewable energy facilities.

Ukrainian energy market reforms are continuing and amid uncertainty about future auction mechanisms and prices, attendees at the SEF Kyiv sustainable energy forum again called out the government for dragging its heels on the legislation. However, there was also evident optimism at the show.