Today, on 19 April 2018, the parliament energy committee presented the revised draft concept of renewable energy (RES) auctions in Ukraine following several weeks of public consultations. To read more on the initial RES concepts please click here.

The revised concept should be finalised and, on this basis, the relevant draft law should be developed and presented for public consultations.

The concept is based on the quota approach. A general annual state quota will be established by the government upon consultations with Ukrenergo (electricity TSO).

Auctions should be introduced from 1 July 2019 (by this date the Guaranteed Buyer should be set up and replace the current offtaker, State Enterprise "Energorynok"). This is six months later than the term proposed in the previous concept.

Auctions will be required for wind power plants with over 20 MW, and for solar power plants with over 10 MW, of installed capacity. Thus, the thresholds initially proposed have now been increased twice. Auctions will be optional for power plants with smaller installed capacity; these can opt for either the feed-in tariff (FiT) or auctions.

Auctions will not be required for renewable energy sources other than solar and wind.

If a pre-PPA (power purchase agreement) is signed before 1 July 2019 and a plant is commissioned during the term of validity of a pre-PPA (3 years), this plant will still qualify for the FiT under the law effective as at the signing date, regardless of any further changes in law (and it will not be subject to auctions).

To be admitted to an auction, a participant should pay the bank guarantee calculated as a capacity multiplied by the first bid of an auction participant and by 20%. This may vary depending on the region.

The only auction selection criterion will be the lowest price. The maximum price cannot exceed the FiT rate.

Following an auction, a pre-PPA will be concluded for 3 years. Upon plant commissioning, a main PPA will be concluded for another term of 15 years. Thus, the term of the state support through a guaranteed offtake of electricity by the Guaranteed Buyer can potentially extend up to 2048. This is also the term until when the Guaranteed Buyer should operate.

Bonuses (surcharges to the FiT) for local content will be increased from the current 10% to 15% for the projects where a producer uses at least 50% of local equipment. For the projects using from 30% to 50% of local equipment the bonus will stay as currently set by law (5%).

A FiT for new solar power plants is proposed to be reduced by 30% as from 1 January 2020, and for wind power plants the FiT will be reduced by 10%. This reduction for wind is anyway foreseen by the current electricity market law, so the concept effectively reproduces the existing approach in respect of wind power projects.

The full responsibility for imbalances will be introduced one year after launching the fully liquid market (the launch is scheduled for 1 July 2019, but in practice it can occur later depending on the practical implementation timeline of the new electricity market law).

The guaranteed offtake of all electricity produced under the FiT by a single offtaker (currently, Energorynok, and then the Guaranteed Buyer) has been re-affirmed.

No retroactivity for running projects.

Originally published by LinkedIn.

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