10 June 2015
Newsletter

Ukraine is reforming the "green" tariff and
creating conditions for investments in renewable energy

On 4 June 2015, Verkhovna Rada of Ukraine adopted in its entirety the Draft Law "On Amending Some Laws of Ukraine As to Providing Competitive Conditions for Producing Electricity from Alternative Energy Sources" No. 2010-d (the "Law"), which significantly changes regulations on the use of "green" tariff and can stimulate the development of projects for production of electricity from renewable energy sources.

The Law introduces several significant additions and changes to the existing regime, particularly the following.

Special aspects of compensation of "green" tariff

"Green" tariff is fixed in euro until 2030. Indexation to euro is made quarterly, but not monthly. Electricity produced by stations from renewable energy sources, except for the volumes used for their own needs, will be paid as per "green" tariff.

Cancellation of the “local content” requirement and introduction of surcharge to the "green" tariff

The rule of "local content" is canceled and surcharge to the "green" tariff is instead introduced as a stimulating factor in cases when using domestic equipment; the amount of surcharge will be 5% (localization of 30%) or 10% (localization of 50%).

Adjustment of the "green" tariff

For all types of renewable sources of energy, except solar energy and energy produced from biogas and biomass, the rate of the "green" tariff remains at the same level as in the current Law "On Introducing Amendments to the Law of Ukraine "On Electric Power Sector" Regarding Stimulation of Electrical Power Generation from Alternative Sources of Energy" dated 20 November 2012 No. 5485-VI.

According to the adopted Law, starting from 1 July 2015 the "green" tariff for solar power plants of industrial purpose is reduced to the level of 0.17 euros per kWh. For solar energy generating stations built in 2016, the "green" tariff will come to 0.16 euros and in 2017-2019 it will amount to 0.15 euros. This figure is twice the value of the average European tariff, therefore the solar energy market in Ukraine will retain its relevance. Also, on temporary basis (before 1 January 2017), the Law reduces the "green" tariff for solar energy generating stations with capacity over 10 MW which were put in service before 1 July 2015.

"Green" tariff for new forms of renewable energy

The "green" tariff is introduced for power plants using geothermal energy sources and will be 0.15 euros. The "biomass" term is brought into line with European standards.

"Green" tariff for households

The Law allows for households to install not only solar but also wind turbines with capacity up to 30 kW with the sale of excess of generated electricity.

Special aspects of network connection

Connecting to the network does not require inclusion of the project into the 10-year Plan for Development of the Unified Energy System of Ukraine. Benefits of compensation of costs for new connections are canceled as ineffective.

At the moment, the draft law awaits signing by the President of Ukraine. The adoption of the Law is significant both for the development of renewable energy in Ukraine and for the whole economic growth of the country.



For further information please contact Asters' senior partner Armen Khachaturyan
and counsel Yaroslav Petrov.

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