REUTERS
The draft law was backed by 288 MPs with at least 226 votes required.
The Verkhovna Rada, Ukraine's parliament, has passed a bill in the second reading and as a whole, which provides for a cut in the so-called "green," or feed-in tariff for photovoltaic (PV) systems and wind farms in an effort to tackle a shortage of funds on the electricity market.
Draft law No. 3658 on amendments to certain laws of Ukraine regulating conditions for electricity generation from alternative energy sources was backed by 288 MPs with at least 226 votes required, an UNIAN correspondent reported on July 21.
"This is a long-awaited and extremely necessary bill for the electricity industry. It legislatively regulates the pressing issues of 'green' power generation, is designed to ease the financial burden on the final price of electricity by optimizing the 'green' tariff and balance the interests of the public, electricity consumers, and electricity market players. It will also improve the solvency of market participants, while ensuring the further development of renewable energy," the explanatory note to the draft law said.
What changes will be introduced
In particular, the feed-in tariffs will be retroactively reduced from July 1, 2020, for facilities commissioned from July 1, 2015, to December 31, 2019: by 15% for PV systems whose capacity exceeds 1 MW and by 7.5% for PV systems and wind farms whose capacity is below 1 MW.
"For [power] generation facilities below 1 MW, the reduction will be half the rate for all the others, i.e. 7.5% instead of 15%. Thus, an approach to small-sized facilities will be different, as they will have a higher tariff than others," Chairman of the Verkhovna Rada Committee on Energy, Housing and Utilities, Andriy Gerus said while presenting the bill.
Read alsoCabinet signs memorandum with investors in green energy
Lawmakers also supported the clause extending the project completion deadline for companies that have already started building "green" power plants until October 31, 2020 (instead of July 1, 2020) and a reduction in their tariffs will be 2.5%.
The document also sets limitations on feed-in tariffs applicable to renewable energy facilities put into operation before June 30, 2015, cutting their rates to 52%.
Moreover, feed-in tariffs for solar power plants to be commissioned from August 1, 2020, will be cut by 50%.
Parliamentarians also supported an amendment excluding the provisions under which tax legislation could not be changed for power plants operating on alternative energy sources, as was proposed in the bill submitted for the first reading.
In addition, lawmakers supported an amendment, according to which at least 20% of refunds to the state-owned company Guaranteed Buyer, which is responsible for fulfilling the state's obligations to pay for electricity from renewables at feed-in tariffs, will be paid from the national budget.
From 2022, full responsibility (50% in 2021) will be introduced for the failure to balance actual and forecast schedules of electricity generation for all renewable energy companies. At the same time, the margin of error will be 10% for wind farms and 5% for PV systems.
The draft law proposes that the transmission system operator should be responsible for compensation of electricity not released by renewable energy companies as a result of performing dispatching commands by them to reduce and/or limit the load in keeping with the methodology approved by the regulator.
The document also provides for measures to hone tender procedures for the construction of new renewable energy facilities.
Background
More than 20% of the country's renewable energy market belongs to Ukrainian businessman Rinat Akhmetov's DTEK energy holding. Then come Swedish, Chinese and Ukrainian companies.
As of the beginning of June, the installed capacity of renewable energy facilities was 7 GW, excluding large-sized hydro power plants, renewables energy facilities located in the Russian-occupied areas (637 MW), and households' small-sized PV systems (618 MW).
The share of electricity from renewables grew to 8% in Ukraine, yet they accounted for 26% of money circulating on the market.
In May 2020, the Energy and Environmental Protection Ministry developed the terms of a memorandum to cut feed-in tariffs by 15% for PV systems and by 7.5% for wind farms. It was proposed that the ceiling limitations on the tariff be set at 22 euro cents per kWh.
While meeting with investors in the renewable energy sector, Ukrainian Prime Minister Denys Shmyhal said that Ukraine could not afford to have Europe's most expensive "green" energy.