The Ukrainian government approves memorandum on fixing problems in the renewable energy sector

On 10 June 2020 the Cabinet of Ministers of Ukraine approved the Memorandum on fixing problematic issues in the renewable energy sector of Ukraine (the “Memorandum”). The Memorandum was developed within the mediation procedure between renewable energy investors and the Ministry of Energy and Environmental Protection of Ukraine (“Ministry of Energy”) under the Energy Community Secretariat Dispute Resolution and Negotiation Center.

Subject to some minor amendments, the Memorandum suggests the following changes to the renewable energy regulatory framework:

Reduction of the “green” tariff without extension of the PPA

• 15% for PV projects above 1MW commissioned between 1 July 2015 and 31 December 2019;
• 10% for PV projects below 1MW commissioned between 1 July 2015 and 31 December 2019;
• 7,5% for wind projects (where individual turbines are above 2MW) commissioned between 1 July 2015 and 31 December 2019;
• 2,5% for wind and PV projects commissioned after 1 January 2020.

Tariff cap for projects commissioned before 1 July 2015 – 22 EUR cent

Cut-off day

• 31 July 2020 for PV projects;
• Wind projects will not be subject to the cut-off day and they can be finished based on existing pre-PPA.

Responsibility for imbalances

• 50%since 1 January 2021;
• 100%since 1 January 2022.

Until 31 December 2029 responsibility for imbalances is conditional to the tolerance margin of 5% for PV and 10% for wind projects.

Commitments of the Government:

• Adoption of relevant legislative changes until 1 August 2020;
• Stabilization clause for PPAs;
• Quarterly payment of existing “green” tariff debts until 31 December 2021;
• Conducting renewable energy auctions by the end of 2020.

The Memorandum becomes effective after signing by the Prime Minister of Ukraine, the Minister of Energy and Environmental Protection of Ukraine, the Chairman of the National Energy and Utilities Regulatory Commission, the Chairman of the Parliamentary Committee on Energy, Housing and Utility Services. The Memorandum becomes effective for renewable energy associations and investors after joining the Memorandum. To join the Memorandum it is necessary to send a letter to the Ministry of Energy.

The Memorandum has been signed by the Prime Minister of Ukraine, acting Minister of Energy and Environmental Protection of Ukraine, the Ukrainian Wind Energy Association and the European-Ukrainian Energy Agency. Ukrainian Association of Renewable Energy has not signed the Memorandum.

By signing to the Memorandum renewable energy investors do not withdraw their right for investment arbitration.

More details here.