Ucraina green tariff

Application of “Green Tariff” as an instrument of development of the renewable energy sector in

Ukraine

GRISCHENKO & PARTNERSLAW AND PATENT OFFICE

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Application of “Green Tariff” as an instrument of development of the renewable energy sector in Ukraine

LEGAL FRAMEWORK

Ukraine is aiming to adapt the national law in this area to the EU Directive on the promotion of electricity from renewable energy sources in the internal electricity market (2001/77/EU)

Effective national laws governing the renewable energy sector of Ukraine:

• Law of Ukraine “On Alternative Sources of Energy”• Law of Ukraine “On Alternative Types of Fuel”• Law of Ukraine “On Electric Energy Industry”• Law of Ukraine “On Energy Saving”• Law of Ukraine “On Joint Production of the Heat and Electric Energy

(Cogeneration) and Utilization of the Waste Energy Potential”, etc.


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LEGAL FRAMEWORK

Existing mechanisms to encourage development of the alternative energy sector:

Application of a “Green” (privileged) tariff to the electric power produced from alternative sources

Binding of the wholesale electricity market by a law to purchase the total volume of the electric power produced from alternative sources

Establishment of a state energy saving fund (declarative) Tax and customs privileges State subsidies (declarative)


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APPLICATION OF “GREEN TARIFF”

De jure, a “Green Tariff” can be applied in relation to the energy produced from the following sources:

- solar power- wind power- geothermal power - wave and tidal power- hydropower- power of biomass - organic waste gas- sewage station gas- biogas - methane from degasification of coal deposits- transformation of the waste energy potential of technological

processes


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However, the Law of Ukraine “On Electric Energy Industry” prescribes a mechanism of setting privileged tariffs only in relation to the electric power produced from the following sources:

- solar power- wind power- geothermal power - wave and tidal power- hydropower- power of biomass - organic waste gas- sewage station gas- biogas - methane from degasification of coal deposits- transformation of the waste energy potential of technological processes


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Consequently:In practice, a privileged “Green Tariff” may only be prescribed for the electric energy generated by the following sources:

• solar power• wind power• hydropower of the hydroelectric mini-

power plants• floral biomass


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The “Green Tariff” may be prescribed if: the eclectic power Producer uses alternative power sources only.

In case the technology of eclectic power production is based on the simultaneous use of traditional types of fuel, the “Green Tariff” may not be applied

not less than 30% - since January 1, 2012 - and not less than 50% - since January 1, 2014 – of the cost of the materials, raw materials, assets, works and services involved in construction of electric power generating facilities are of Ukrainian origin

there are available finished energy generating facilities, as connected to the network. Conformity of the facilities to the project documents, requirements of the state standards, construction standards and rules to be witnessed by an appropriate Certificate

The “Green Tariff” is prescribed until January 1, 2030.


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CASE: STEPS REQUIRED TO PRESCRIBE THE “GREEN TARIFF”

(A) To apply to the National Electric Power Regulation Committee of Ukraine (NEPRC) for a

license to produce electric energy

(B) To file in NEPRC a request for a “Green Tariff” to be prescribed

(C) To become a member at the Wholesale Electricity Market


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(A) To apply to the National Electric Power Regulation Committee of Ukraine for a

license to produce electric energy


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Application of “Green Tariff” as an instrument of development of the renewable energy sector in UkraineCASE: STEPS REQUIRED TO PRESCRIBE THE “GREEN TARIFF”

(A) Issue of a license to produce electric energy

Regulations provide that in order to produce eclectic power the Producers shall obtain a license in case:

they own or use equipment generating power from alternative sources of the capacity of not less than 10 megawatt, or

they intend to sell the electric power produced through the Wholesale Electricity Market


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De jure, the electric power produced from the alternative sources may be sold:

- either to State Enterprise “Energorynok” through the Wholesale Electricity Market, or

- directly to the consumer.

However, due to high cost of “green” energy and to conflicts of Ukrainian laws, practically the Producers have to sell the energy through the Wholesale Electricity Market


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Consequently:

In practice, before filing in NEPRC a request for a “Green Tariff” to be prescribed the Producer is obliged to obtain from NEPRC a license to produce electric power from the alternative sources.


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(B) To file in NEPRC a request for a “Green Tariff” to be prescribed


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(B) Prescription of the “Green Tariff”

It is in the competence of NEPRC to prescribe the “Green Tariff”

The applicant shall submit the documents specified by an applicable Regulation of NEPRC.

The documents shall be considered by NEPRC within 30 days and a resolution shall be adopted by a meeting of NEPRC within subsequent 15 days.

If a “Green Tariff” is prescribed, the Producer shall submit quarterly reports to NEPRC.

Currently, the Producer may dispose of the profit realized from the sale of electric energy at its sole discretion.


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(C) To become a member at the Wholesale Electricity Market


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(C) Joining the Wholesale Electricity Market

The Producer shall submit to the Board of the Wholesale Electricity Market an application with the required documents attached.

Within 30 days, a meeting of the Board of the Wholesale Electricity Market shall decide whether to admit a new member.

According to the Law, State Enterprise “Energorynok” is obliged to purchase at the Wholesale Electricity Market all the electric power generated from the alternative sources


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STATISTIC

As of the end of 2009, the “Green Tariff” was prescribed for:

Type of the alternative power source

Wind Power Stations Hydroelectric Mini-Power Plants

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STATISTIC

As of the end of 2009, the Register of the facilities applying alternative power sources comprised 42 companies, specifically:

• 7 facilities applying wind power• 4 facilities applying power of biomass• 2 facilities applying the waste energy potential of

technological processes• 1 facility applying mining gas• 1 facility applying visbreaking


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Thank you for your attention!


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Ucraina green tariff

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