March 2013

Ukraine Changes Feed-in-Tariff Legislation

Since 2009 Ukrainian renewable energy generating companies have been enjoying a preferential feed-in-tariff. The Ukrainian feed-in-tariff is one of the largest in the world. In 2012 the capacity of solar parks located in Ukraine doubled and reached 371.6 MW and the capacity of wind parks increased by 83% and reached 276.8 MW.

On 20 November 2012 the Ukrainian Parliament adopted amendments to the Law On Electric Power Industry regarding the feed-in-tariff. Amendments became effective on 1 April 2013, save for the sections related to the local content rule, which would take effect on 1 July 2013.

The amendments introduced several significant changes, in particular:

  1. feed-in-tariff may be granted either to a fully commissioned electric power plant or to a separate construction stage of such a plant, which is commissioned before completion of the entire plant;
  2. the definition of "biomass" is limited only to certain types of organic waste;
  3. feed-in-tariff was introduced for electricity produced from biogas and household solar installations with a capacity below 10 kW. The feed-in-tariff for electricity produced by other types of solar installations was reduced in view of the international trend of falling manufacturing costs of solar modules. By contrast, the feed-in-tariff for certain types of hydroelectric power stations increased;
  4. the local content rule will become more strict, since the amendments list particular parts of power-generating equipment that must be produced or assembled in Ukraine. Moreover, every item in the list is attributed with a fixed share, which will be used for calculation of the local content.

Amendments described in items (2) and (4) above have been heavily criticized by foreign investors, which are trying to implement projects and enjoy the feed-in-tariff in Ukraine. The strict local content requirement may become a great obstacle in implementation of renewable energy projects in Ukraine.

For further information please contact senior partner Armen Khachaturyan
and associate Yaroslav Petrov

© Asters 2013
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