Compensation of FiT lost due to production curtailment

The National Energy and Utilities Regulatory Commission of Ukraine (the “NEURC”) adopted an amendment to the Market Rules, which introduced penalty for non-curtailment by the generation unit and compensation of Feed-in-Tariff (FiT) during curtailment periods. The curtailments in 2019 and 2020 prompted practical solution for the statutory “take or pay” principle, however, the move will strain financial settlements on the heels of recent FiT cuts and will reinforce the urgency of reform for the financial side of the power market.

The settlement administrator is responsible for penalty calculation on the monthly basis. The formula for penalties has x1.05 factor on the amount of excess energy; the squared excess capacity divided by the double ramp rate can be deducted from the reference amount of the excess power.

The RES producers should draw monthly invoice for FiT compensation and hand it to the Guaranteed Buyer, which asks TSO to confirm the calculation.

The amount of curtailed energy is calculated using the reference method: actual production is assumed at a same output ratio of the reference (standard) generation unit during the curtailment and non-curtailments periods. Thus, the compensation is due for the factored difference in the outputs. Metering of the reference generation unit must be approved by the respective system operator.

If the reference rate is unavailable, the estimation method should be applied, using the output rate during the past periods in the following sequence:

• ratio to the non-curtailed reference unit
• average output of the same unit in the most recent five (5) days within preceding 30 calendar days when the same time slots were not curtailed. If insufficient, reference base can be expanded by the same 30 days in the foregoing year
• curtailed amount is determined based on the forecast output by the PvPS operator

Amendment was published on NEURC site on 17 November 2020 and became effective the next day. More at

 

Gas measurement units

Bill No. 2553 “On Amendments to Certain legislative acts of Ukraine regarding the introduction of energy units for accounting and measurement on the natural gas market” (Bill 2553) has been presented for the second reading.

The transition from cubic meters to the energy units is part of harmonization with the EU NC Codes effort that passed successfully the first reading last summer.

However, between the readings, Bill 2553 was amended with mandatory conversion of the already booked transmission and storage capacities at a fixed gross calorific value (GCV) of 10.35 kWh per each m3 (Chapter II, sections 2(2) and 3(2)).

If passed in the presented form, the obscure wording of these new provisions may be applied to physical amounts of gas already stored or shipped in the system and, thus, effectively reward companies that own gas with lower GCV and expropriate value from the owners of the gas with greater GCV.

In more fortunate scenario, the companies may end up paying additional fees or getting reimbursement, respectively, by the TSO and GSO for their shipping and storage services – despite availability of GCV from impartial source in relation to all gas shipments from the EU.

Review and approval of Bill 2553 by the relevant Committees of Verkhovna Rada are expected before the end of the calendar year. More at