Press Release of 11 September - Round Table “Auction system of RE: Design and compromises 2”

On 11th September 2018 European-Ukrainian Energy Agency was honored to host high level professionals and key stakeholders of renewable energy maket at the Round Table “Auction system of RE: Design and compromises 2”. 

[Presentation of State Agency of Energy Efficiency and Energy Saving of Ukraine (SAEE)]

Photo Album ]

41500312 10156675603209510 4716211714092171264 oAmong invitees and speakers there were Olga Belkova - Parliament member, Deputy head of the parliament committee on energy sector, Oleksii Riabchyn - Parliament member, Member of the parliament committee on energy sector, Yurii Shafarenko – Head of the RES Deprtment of State Agency of Energy Efficiency and Energy Saving, Buslavets Olga, Director General of the Energy Markets Directorate of the Ministry of Energy and Coal Industry, Ivanov Gennadiy – Head of Branch "Guaranteed buyer"of SE "Energorynok", Maria-Teresa Richter – Energy Lawyer, Energy CommunityRute Baltause – Expert, European Commission,  Nebojsa Arsenijevic - Renewable Energy Lead at IFC,  Magnus Johansen – member of EUEA, Business Development Manager of Scatec Solar, Hodson Thornber – member of EUEA, shareholder of Ukr Wind Investments Ltd and Euroukrwind, LLC. Moderator of the event was Yuri Kubrushko, a member of EUEA, Director of Imepower.

The purpose of the round table was to arrange the dialogue between business and authorities aimed at strengthening the activities of the planned working groups of RES of the Committee of the Fuel and Energy Committee of the Verkhovna Rada of Ukraine in relation to improving the existing state policy and aligning it with the provisions of the EU Directive on RES 2009/28 / EU based on the best practices of the EU in accordance with the obligations of Ukraine in the Association Agreement and the Energy Community.

EUEA is an independent association of companies in energy sector. Members of the association have already invested in total 570 MW of RES in Ukraine and this amount is continuously growing. Founded in 2009, EUEA has become an effective platform for implementing massive energy conservation and renewable energy potential, through cooperation with the business community of Ukraine, state authorities and other key players in the market.

Below you may find major thesis and statements of all participants:

1. All participants stated that auctions for different types of RES should be conducted separately, at least 2 times a year.

2. The threshold for power generating power that is necessarily included in the auction, not the FiT, according the major Draft Law is 10 MW for solar power plants (SPP) and 20 MW for wind power plants (WPP). However, the Energy Community insists on 1 MW for SPP and 3 MW for WPP. In order to settle the interests, an alternative was proposed by State Agency of Energy Efficiency (SAEE), namely: The threshold for power generation, which necessarily falls into the auction, not the FiT, according to the Draft Law is 10 MW for solar power plants (SPP) and 20 MW for wind power plants ( WPP), and 2 years after the entry into force of the Law, to lower the threshold to 1 MW for the SPP and 3 MW for the WPP.

3. The term of the contract for the purchase of electric energy will be 20 years from the moment of its signing, which is supported by the majority of state institutions and participants of the market.

4. National Commission of State regulator of energy policy proposed an additional article to the Draft Law, the content of which reads as follows: "In case of the reconstruction / major repair of power plants of any type of renewable energy sources, which leads to an increase of the capacity of the power plant, the business entity shall receive such state support that is in force at the time of completion reconstruction. "

5. Responsibility for the imbalance. This topic has caused a discussion between SE "Energorynok" and the participants of the meeting. Energorynok proposes to remove the condition of liability for the imbalance from the moment the market is recognized as liquid. That is, in the opinion of Energorynok, responsibility for the imbalance, the companies participating in the auctions, should be immediately, as soon as the law enters into force. However, the participants insisted that the condition "recognition of the market liquid" should be left for making market participants responsible. The market will be liquid according to the National Commission of State regulator of energy policy conclusion and it means the presence of a sufficient number of market participants.

6. Bank guarantee. The size of the irrevocable bank guarantee must be equal to the equivalent of 5,000 Euros for 1 MW of capacity, in which the entity intends to participate in the auction in the appropriate lot (lots). The winner of the auction within three banking days after determining the winner must increase the amount of the irrevocable bank guarantee to an amount equivalent to 10,000 Euro per 1 MW. (Position of Energorynok&Ukrenergo)

Such a high level of collateral may distort competition in favor of powerful companies with high capital. We propose to provide the size of a bank guarantee at a level corresponding to 15,000 euros per 1 MW of installed capacity, regardless of the type of primary energy source. (Position of Ministry of Energy and Coal Industry of Ukraine)

We believe that such a high level of collateral can distort competition for the benefit of powerful, high-end companies. We propose to establish guarantee obligations at the level of 1.5% of the project cost, namely: $ 15,000 per 1MW capacity for SPP; $ 20,000 per 1 MW of WPP.  (SAEE Position)

7. Olga Belkova - Parliament member, Deputy Head of the Parliament Committee on Energy, made a clear statement: the consumer and his interests should be at the core of the reform of the system of support for RES. Undoubtedly, clean energy is in the priority of sustainable development of Ukraine, but the introduction of clean energy should correspond to increase of competitiveness, affordability of prices for consumers, prevention of market collapse.

8.Ruta Baltause presented the point of the European Commission. Commission considers that quotas for the supported capacity should not be either too high or too low compared to an agreed trajectory towards meeting the policy target. Regional quotas should not be set by administrative regions, rather by the transmission network operation regions/ zones. Balance between distributed generation, smaller projects and large projects are also important. Cumulative threshold for mandatory participation in auction needed as well as equal approach regarding balancing obligations for new projects under green tariff and auctioned support. It should depend on capacity rather than type of support.

Grid capacity, access to the grid and balancing obligations can create a significant obstacle for the renewable energy development. Hybrid solutions of different renewable energy technologies, clarity and transparency regarding grid capacity, connection rules are very important. EU ready to engage and to share different experiences of the EU Member States.  Balancing obligations:a) should not be set differently depending of the type of support. They should be set based on capacity as criteria, not the type of support; b) In the EU an important precondition for introducing balancing obligation has been a liquid intra-day market, or as an absolute minimum – a functioning day-ahead market.

Irrespectively of the auctioning model chosen, transparency and clear rules, non-discriminatory approach allowing participation of different players, including those developing smaller projects are important. Bank guarantee as the only pre-qualification can be an enabler for improving the investment framework, provided that anti-speculation measures are taken (no transfer of the award etc.

9. The amount of the bank guarantee should be equivalent to 50,000 Euro per 1 MB of power, according to the Basic Law 8449, for comparison, in Argentina, this amount is 200,000 Euros. However, there are other positions, in particular of 5,000 Euros for 1 MW of capacity, in which the entity intends to participate in the auction in the appropriate lot (lots). The winner of the auction within three banking days after determining the winner must increase the amount of the irrevocable bank guarantee to an amount equivalent to 10,000 Euro per 1 MW. (Position of Energorynok&Ukrenergo). Position of Ministry of Energy and Coal Industry of Ukraine sounds as such a high level of collateral may distort competition in favor of powerful companies with high capital. They propose to provide the size of a bank guarantee at a level corresponding to 15,000 euros per 1 MW of installed capacity, regardless of the type of primary energy source. SAEE Position is to establish guarantee obligations at the level of 1.5% of the project cost, namely: $ 15,000 per 1MW capacity for SPP; $ 20,000 per 1 MW of WPP. 

From the side of European-Ukrainian Energy Agency, we continue communicate with our members and other market stakeholders to make a constructive expert support of the Draft Law improvement.

Photos from the eventPhoto Album 

EUEA is thankful for the support in organization and covering major costs of this event to a member of EUEA - Scatec Solar.

If you wish to know more details, please contact to Oleksandra Gumeniuk - Director of EUEA via e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

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