Energy Committee discusses legislative changes in clean generation financing

On September 27, the Committee on Energy and Utilities Services held a round table where problems with clean generation financing were discussed, and the need for legislative changes (including on current projects) was announced. This is stated on the website of the department.

The following options for change were discussed at the round table:

  • retrospective tariff cuts (less preferred option)
  • a new tax to the state budget for existing stations (windfall tax, special revenue collection until 2030). Reduction of excise tax on electricity by the amount of such a tax;
  • a tax on existing stations in local budgets (2-3% of income);
  • limitation of the terms of Pre-PPA, which provide for the use of the "green" tariff, starting from 2020;
  • a change in the feed-in tariff from 2020 for new stations;
  • an additional environmental tax on CO2 emissions as a source of financing for clean generation.

It is noted that such changes are likely to affect the SPPs and wind farms, which were commissioned in 2017-2019 (the later the introduction/the cheaper the technology, the higher the tax).

Also, the tax is likely to vary depending on the capacity of the station (higher power – higher tax rate).

As a guideline, the payback of projects at the level of 6-6.5 years and IRR of about 15% (including debt capital) were announced.

In Ukraine, there was already a default on “green” payments in June-July this year.

The Committee noted that the current model of supporting the "greens" will not be able to exist for a long time. According to experts, already at the end of 2019, the amount of net profit in State Enterprise Guaranteed Buyer will not be enough to make all payments to clean generation. Thus, the need for legislative changes to ensure the long-term development of renewable energy is obvious.

Tags: The Cabinet of Ministers, contracts, renewable energy, tariffs, solar energy, wind energy, bio-TPP, legislation, electricity, NEURC, EU, Ukrenergo, feed-in tariff, ETL, electricity market, Guaranteed buyer

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