Energy and quarantine: who is affected and what to expect

How the quarantine already affects energy consumption in Ukraine and the world, and what to expect next, adviser at Sayenko Kharenko law firm, head of the Committee on Energy, Oil and Gas of the Ukrainian Bar Association, Maryna Hrytsyshyna shared her thoughts in the author’s column for Kosatka.Media.  

On March 11, quarantine from March 12 to April 3, 2020throughout Ukraine was introduced by a resolution of the Cabinet of Ministers of Ukraine. And on March 17, 2020, the Verkhovna Rada of Ukraine adopted the Law amending certain legislative acts of Ukraine aimed at preventing the onset and spread of coronavirus disease (COVID-19) (the Law). This Law provides for the expansion of force majeure circumstances and establishes measures related to the spread of coronavirus disease (COVID-19).

A little more time has passed since the establishment of quarantine in Ukraine. Therefore, it is now difficult to determine how the situation with COVID-19 will affect the energy sector of Ukraine. However, it is now clear that the consequences will have a certain negative connotation for the energy sector.

Impact on consumers

Despite the fact that the majority of the population during quarantine is actually at home, the consumption of electric energy during quarantine is reduced. According to NPC Ukrenergo, electricity consumption in Ukraine since the introduction of quarantine has already fallen by more than 5%. A similar situation has developed in the EU countries.

For example, during two weeks of quarantine in early March in Italy, electricity consumption fell by 20%. Of course, this is partly due to a decrease in the decline in the work of enterprises. However, weather conditions also affect electricity consumption. So, electricity consumption in France in the same period decreased by only 10%.

Due to the introduction of quarantine and recommendations on the transfer of workers to work remotely from home, the Law provides for certain measures regarding consumers of electric energy. In particular, for the period of quarantine or restrictive measures related to the spread of coronavirus disease, and within 30 days from the date of its cancellation, it is prohibited to charge and recover fines, penalties for late payments for housing and communal services.

In addition, for the same period, it is forbidden to terminate suspend the provision of housing and utility services to citizens if they are not paid or if they are not paid in full, forced eviction from housing and forced collection of housing during the enforcement of court decisions to collect debts for housing and utilities and forced eviction of citizens for late payment of housing and utilities.

According to the Law “On Housing and Public Services”, the supply and distribution of electric energy are related to housing and communal services. Of course, given the tendency for maximum population isolation during quarantine, we can expect delays in paying for electric energy from consumers. Therefore, the law has settled this issue.

Impact on renewable energy producers

For renewable energy producers, the quarantine time is not favorable for the development of projects. The quarantine law established by the Cabinet of Ministers of Ukraine is classified as force majeure. In addition, from March 16 to April 3, entry into the territory of Ukraine for foreigners and stateless persons is stopped.

At the same time, many renewable energy projects are being implemented with the participation of foreign companies and with the involvement of foreign experts. Therefore, force majeure and restrictions on entry into Ukraine make many companies (temporarily) stop working in Ukraine.

In addition, given the international impact of COVID-19, there may be delays in the supply of equipment for renewable energy projects. All this can lead to delays in the implementation of projects that are under construction.

The lack of a solution to the budget deficit of SE Guaranteed Buyer does not contribute to the development of renewable energy sources in Ukraine. It was considered through the restructuring of feed-in tariffs. However, after the change of government on March 4, 2020 and the introduction of quarantine, the resolution of the issue was suspended.

Impact on other participants in the electric energy market

All other participants in the electricity market are also trying to reduce the negative impact of COVID-19 on the operation of enterprises.

On March 16, NPC Ukrenergo announced the creation of an Operational Headquarter to take preventive measures for coronavirus and transfer the maximum number of employees to remote work.

NEURC also informed about the conduction of the meetings of the Commission using video communications for the period of quarantine.

The Ministry of Energy also takes measures to prevent the spread of COVID-19 for the period of quarantine. So, during quarantine, public discussion of the planned activity after the submission of the environmental impact assessment report is carried out in the form of the provision of written comments and suggestions.

Now COVID-19 has the greatest impact on the working hours of employees in the energy sector and leads to a decrease in electricity consumption. However, the final consequences of COVID-19 will be clear only after quarantine.

Read also: Impact of coronavirus on the renewable energy sector: Ukrainian context

Tags: electricity, NEURC, Ukrenergo, feed-in tariff, коронавирус, Guaranteed buyer, ВИЭ, quarantine

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