On 25 April 2019, the Ukrainian Parliament adopted the Law "On Amendments to Some Laws of Ukraine on Ensuring Competitive Conditions for Production of Electricity from Alternative Energy Sources" No. 8449-d (the "Auction Law"). The Auction Law is crucial for renewable energy sphere in Ukraine as it gradually substitutes the current "green" tariff scheme.
Additionally, on 26 April 2019 the National Energy and Utilities Regulatory Commission ("NEURC") adopted several important regulatory acts on renewable energy, including "Procedure on Purchase of Electricity under the "Green" Tariff" ("Procedure") and new model PPA on sale of electricity under the "green" tariff ("New Model PPA").
Below we summarize the key provisions of the Auction Law, Procedure and New Model PPA.
The Auction Law introduces changes to the "green" tariff regime and sets the framework for renewable energy auctions. "Green" tariff and auction regimes will work in parallel.
Projects operating under the "green" tariff will continue enjoying the incentive until 2030. Projects under development, which are not commissioned before 2020 are falling under the so-called "transition period" and may be qualified for the "green" tariff provided that new pre-PPA is duly executed.
- 15% for solar energy;
- 15% for wind energy;
- 15% for other types of RES (biomass, biogas, hydro, geothermal energy); and
- 55% at the discretion of the Cabinet of Ministers of Ukraine.
Although for 2020-2022, the annual quota will be distributed as follows:
- 30% for solar energy;
- 30% for wind energy;
- 15% for other RES; and
- 25% at the discretion of the Cabinet of Ministers of Ukraine.
The Auction Law will come into force after its official publication, save for some provisions.
Procedure and New Model PPA
The Procedure sets key terms for sale of electricity under the "green" tariff within the new electricity market model scheduled for launch starting from 1 July 2019. In particular, it provides terms for (1) signing PPAs; (2) forecasting of generated electricity; (3) forecasting by the offtaker of electricity sale volumes; (4) sale of electricity at day-ahead and intraday market; (5) functioning of balancing group; (6) settlement procedures; and (7) procedure for re-execution of existing PPAs to the New Model PPA.
The New Model PPA defines the framework for purchase of electricity under "green" tariff, which is valid until 2030. The PPA includes force major, arbitration, change of law provisions, terms for pre-PPA validity.
The Procedure and New Model PPA includes some inconsistences with the Auction Law, which should be fixed after the Auction Law becomes effective.
The Procedure enters into force on 1 July 2019, except procedure on signing and re-execution of PPAs, which enters into force upon official publication. The New Model PPA enters into force upon official publication.