Two scenarios for RES sector development in Ukraine

On 05 May 2020 the NEURC published the presentation concerning challenges of the energy sector of Ukraine in 2020 which covers the issue of RES development sector and two possible options to resolve the issue. See full text of the presentation in Ukrainian below the translation of two scenarios offered for RES sector.

Scenario 1:

  • 1. Prohibition of construction of new RES facilities until the issue of construction of flexible capacities is resolved;
  • 2. Reduction of FiT for all SPPs/WPPs to 9(8) eurocents respectively; Effect: saving of UAH +15 billion;
  • 3. In order to provide investors with a fair and impartial attitude to their legitimate expectations, according to the decision of the Cabinet of Ministers of Ukraine, the investor is entitled for reimbursement of incurred capital, operating and financial costs with profitability up to 2030, at the level of profitability of 10-year government bonds in EUR with a margin of 200 bps (+2%), taking into account the funds received at the FiT. The procedure for loss estimation shall be approved by the Resolution of the Cabinet of Ministers; or
  • 4. After reimbursement of incurred capital, operating and financial costs, introduction of Feed-in Premium to DAM price up to 2030 for SPPs at the level of 3.8 eurocents, for WPPs at the level of 1.3 eurocents;
  • 5. Capacity Market – Creation of Resilence Fund – additional payments to ensure operational security of flexible capacities at the level of UAH 7 billion annually, through increase of dispatching tariff of the TSO;
  • 6. Nonreimbursable curtailment – not more than 20%;
  • 7. 100% responsibility for imbalances;
  • 8. Provision of mechanism to compensate for curtailment of RES output due to command of the dispatcher;
  • 9. Cancellation of the preferential consumption tariff (up to 100 kWh) for the population from 01 January 2021;

Scenario 2:

  • 1. Prohibition of construction of new RES facilities until the issue of construction of flexible capacities is resolved;
  • 2. Reduction of FiT for all SPPs/WPPs. For SPPs -30%, for WPPs -15%; Potential effect: saving of UAH +11 billion;
  • 3. Capacity Market – creation of Resilence Fund in the amount of UAH 7 billion annually at the cost of RES producers;
  • 4. Nonreimbursable curtailment – not more than 20%;
  • 5. 100% responsibility for imbalances;
  • 6. Cancellation of the preferential consumption tariff (up to 100 kWh) for the population from 01 July 2020 => additional source + UAH 12 billion (annually);
  • 7. Provision of mechanism to compensate for curtailment of RES output due to command of the dispatcher;

Energy Challenges of Ukraine in 2020 ua