Nuclear and Renewables become an issue for the National Security Council

On 29 January 2021, the President of Ukraine issued Decree №35/2021 implementing the Resolution of the National Security and Defense Council of Ukraine “On measures to neutralize threats to nuclear energy and industry areas” (the “Resolution”). The Resolution aims to stabilize the energy market and enhance national security, mostly within the nuclear energy industry. However, it also touches upon the Ukrainian renewable energy market regulatory framework.

In line with the Resolution, the Cabinet of Ministers of Ukraine shall:

• develop and submit to the Parliament within one month a draft law ensuring the availability of balancing capacities for the commissioning of renewable facilities and
• take all measures by 1 April 2021to ensure electricity market stabilization by, inter alia, introducing incentive measures for renewable energy producers (solar and wind power plants above 1MW) to set up mandatory energy output forecasting and energy accumulating (battery storage) systems.

The direct potential impact of the Resolution on renewable market players remains unclear as the proposed measures and regulations have yet to be announced in detail.

What is clear is that any possible binding measures, in our view, may not apply to projects featuring the Feed-in tariff regime either under a PPA or a pre-PPA. Otherwise such measures would be considered as retrospective changes and breach the stabilization clause provided in Ukrainian law and enhanced by the recent Law No. 810, which was passed as a result of negotiations between the Government and renewables players.

Overall, it is positive that the Government is pushed to deal with payments to nuclear producers, nuclear storage facilities, and overall problems in the nuclear sector.