The Ministry of Energy introduces a Feed-in-Premium for RES producers

On 26 August 2021, the Ministry of Energy of Ukraine submitted for public discussion the Draft Law "On Amendments to Certain Laws of Ukraine Regarding Stimulating the Production of Electricity from Alternative Energy Sources on Market Principles."

This Draft Law has not yet been registered in the Verkhovna Rada of Ukraine.

The Draft Law introduces a Feed-in-Premium system, or Contracts for Difference, for producers from alternative energy sources (both for existing PPAs and those to be concluded with the auction winners) instead of fixed payments at the "green" tariff.

RES producers will have the right to receive compensation from the SE "Guaranteed Buyer" in the form of the difference between the established "green" tariff or auction price and the market price. The Draft Law grants to RES producers the right to leave the balancing group of the Guaranteed Buyer and sell electricity on the market with compensation.

Thus, according to this model, RES producers will be able to act as independent market participants, selling their electricity.

Currently, all RES producers, working under the PPAs, are members of the Guaranteed Buyer balancing group, which is the party responsible for imbalances for such producers, and at the same time purchasing all the electricity supplied by RES producers.

RES producers under "green" tariff have the right to continue selling all produced electricity to the Guaranteed Buyer. Those RES producers may conclude Contracts for Difference sell electricity under the "green" tariff and have voluntarily decided to leave the Guaranteed Buyer balancing group.

In addition to the introduction of Contracts for Differences, the Draft Law proposes to cut off projects that are eligible for a "green" tariff, namely, projects of RES producers that are not obliged to participate in auctions commissioned from 1 January 2020 to 31 December 2022. Such projects include wind energy projects of the capacity less than 5 MW and solar energy projects of the capacity less than 1 MW.

Moreover, the Draft Law proposes to amend Article 15 of the Law of Ukraine "On Lease of State and Communal Property", as regards the property lease without holding an auction. The Draft Law grants the right, without holding an auction, to lease state and communal property to the winners of RES auctions, under the terms of which roofs and/or facades of buildings and other capital structures are provided for lease for construction of solar power plants.

For further information, please contact Asters' Partner Yaroslav Petrov or Senior Associate Marta Halabala.

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