Ukraine presents RES support quotas and introduces pilot online auctions

On 13 August 2024, the Cabinet of Ministers of Ukraine presented [1] renewable energy support quotas for 2024 and scheduled the first pilot auctions in 2024 for the allocation of the support quota among investors intending to build new renewable energy facilities. This is the first attempt to launch auctions since the auction model was introduced into legislation in 2019.

The allocation of quotas will take place at closed auctions (competing bids will not be disclosed) on the Prozorro.Sale platform, the auction for the construction of solar power plants (to be developed on the eastern bank of the Dnipro River in regions including Kyivska, Poltavska, Chernihivska, Sumska, and Dnipropetrovska) is scheduled for October 2024. The auction for wind power plants will take place in November 2024, auction dates to allocate other types of renewable energy production have not yet been scheduled. Bidding prices must not exceed € 0.09 per kWh for solar and wind and € 0.12 per kWh for other types of renewables.

Support will be provided in form of guaranteed purchase by the Guaranteed Buyer of the service under the feed-in premium mechanism (for more details about the FiP please follow the link: Ukraine reshapes the renewable sector regulations to ensure the restoration and green transformation of its energy system).

Auctions are to take place under the rules approved in 2019 [2]. The date of the auction will be announced on the Guaranteed Buyer’s website, the auction must take place not earlier than 30 days and not later than 90 days following the announcement’s publication.

How it will work

Investors will submit sealed bids containing their price offer (the caps mentioned above must be taken into consideration) and the declared capacity for which the investor seeks support within the limits of the support quota. Investors must disclose their shareholding structure along with beneficial owners and affiliates. Each bidder must provide a bank guarantee in the amount of € 5 per 1 kW of the declared capacity for which the support is being sought that must remain valid for at least 50 business days following the auction date. The bank guarantee may be issued either by a Ukrainian bank or a foreign bank provided that the issuing bank meets specified requirements related to its size and credit rating.

The winners will be the participants who submit the lowest bids according to the compiled ranking within the lot for the declared capacity.

Winners must provide a bank guarantee in the amount of € 15 per kW of the offered capacity and commission the power generation facilities within 18 months for solar power plants or 36 months for all other eligible power plants following the date of entering into the contract for provision of service through the feed-in premium mechanism with the Guaranteed Buyer. Winners will also have six months following the date of entering into the contract with the Guaranteed Buyer to acquire the land for development and enter a grid connection contract with the respective grid operator.

[1] Resolution № 757-р "Some issues of pilot auctions for the allocation of support quotas in 2024"

[2] Resolution of Cabinet of Ministers of Ukraine № 1175 dated 27 December 2019 "On Implementation of competitive conditions for the promotion of electricity generation from alternative energy sources"