LEGAL ALERT: Future of the RES support reform in Ukraine

09.12.2019

The public discussion about the future of the RES support reform in Ukraine resulted in a number of visions of its development presented by MPs. Followed by the draft law of the Ministry of Energy of Ukraine (ME Draft), an alternative Draft 2543 has been recently submitted to the Verkhovna Rada.

It suggests similar measures to those envisaged in the ME Draft, although it appears more favorable to investors in the renewables sector in Ukraine. Here are the key things to know about Draft 2543:

 

OPERATING PROJECTS

Options available:

  • Stick to the current FiT scheme

PPA in force till 2030

  • Voluntarily reduce the FiT (applications accepted by March 1, 2020, for projects* commissioned in 2017-2019)

Solar – reduction by 10%
Wind – reduction by 5%

*entitled to the FiT support scheme for 15 years from the date of commissioning

 

PROJECTS WITH PRE-PPA

Options available:

  1. FiT effective since 2020 under the current regulation

– PPA is valid until 2030
– COD significantly reduced:

for solar – until April 1, 2020
for wind – until Jan 1, 2021

  1. reduction of the FiT (applications for projects** accepted by March 1 2020)
  • solar by 15%
  • wind by 7.5%
  • PPA terms – 15 years from COD
  • COD:

for solar – no later than September 30, 2020
for wind – no later than June 30, 2022

**entitled to the FiT support scheme for 15 years from the date of commissioning

LIABILITY FOR IMBALANCES

Projects*** opting for existing support scheme:

  • until Dec 31, 2020 – 0 %
  • since Jan 1, 2021 – 10%
  • since Jan 1, 2022 – 20%
  • since Jan 1, 2023 – 30%
  • since Jan 1, 2024 –40%
  • since Jan 1, 2025 – 50%
  • since Jan 1, 2026 – 60%
  • since Jan 1, 2027 – 70%
  • since Jan 1, 2028 – 80%
  • since Jan 1, 2029 – 90%
  • since Jan 1, 2030 – 100%

** subject to tolerance margins: 10% – for sun, 20% – for wind. These margins will be reduced to 5% for sun and 10% for wind on 31 December of the year when the share of RES energy will reach 5% of the Ukrainian energy balance*

Voluntarily restricted operational projects****:

  • until Jan 31, 2020 – 0%
  • since Jan 1, 2021 – 20%
  • since Jan 1, 2022 – 40%
  • since Jan 1, 2023 – 60%
  • since Jan 1, 2024 – 80%
  • since Jan 1, 2025 – 100%

**** subject to tolerance margin of 10% for sun and reduced tolerance margin of 15% for wind. These margins will remain unchanged until the end of 2029, irrespective of when the share of RES energy will reach 5% of the Ukrainian energy balance

 

STABILIZATION CLAUSE

The Draft Law 2543 provides for stabilization clause for the projects opting for changing the FiT scheme.

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