Members of the EUEA (iC consulenten, Imepower, Ukrwindinvestments) met with Vyhrist Sergiy, Ph.D., associate professor of the legal department of the University of Economics and Law “KROK”, Expert on approximation of Ukrainian legislation to EU  environmental legislation.

IMG 20181018 100557On October 12, the Law of Ukraine, which was previously known as Draft Law No. 8015 dated 02.08.2018 on increasing the investment attractiveness of the construction of renewable energy facilities came into force. In September, the Verkhovna Rada passed it to the second reading, and on October 1, the President signed it. This procedure was introduced to adapt Ukrainian legislation to the EU legislation and for the sake of convenience and transparency, a single online register was created.

All constructions are classified in Ukraine at the designing stage in three consequence classes: objects with insignificant (CC1), medium (CC2), and significant (CC3) consequences. Ukrainian law has different regulatory requirements for each consequence class. For example, as opposed to CC2 and CC3 objects, CC1 objects: are exempt from expert examination of design documentation; do not require construction permits and commissioning certificates, but follow simpler procedures that only require submission of a notification on commencement of construction works (prior to commencement of the construction) and a declaration of readiness of the object for operation (aftercompletion of the construction); are allowed to be constructed by contractors who do not have construction licenses.

The New Law lowers the threshold for classification of construction projects so that they can be considered as CC1 objects. In particular, the New Law changes one of the main requirements for classification – the amount of material and social damages that can be caused by the breakdown of the object that is classified. At the moment, for a construction project to be classified as CC1 object, the outlay must not exceed 2,500 statutory minimal wages (currently UAH 9,307,500 or approximately EUR 284,000).

Under the New Law, construction projects are still subject to EUR 284,000 damages threshold, but the damages of the customer (that include the cost of the  project construction) are not included in this amount if no state funds or guarantees are involved in the project. Considering that the customer’s damages (that include the cost of the project construction) usually amount to the majority of the material and social damages that can be caused by the breakdown of the object that is classified, it will be much easier for construction projects to be classified as CC1 objects, and enjoy benefits listed above as cost of their construction will not be taken into account.

With respect to solar and other renewable power projects that usually don’t have any other material or social damages that can be caused by their breakdown except for customer’s damages this means that they will be usually considered as CC1 objects irrespective the cost of the project, if no state funds or guarantees are involved.

In relation to wind power projects, the New Law also: allows existing wind power projects classified with a level III complexity category (see the table below) to be classified as CC1 objects; establishes that wind power projects subject to an environmental impact assessment (the “EIA”) can be classified as CC1 objects, if they receive a positive expert view by an authorised environmental body; and clarifies that expert examination of the designing documentation of a CC1 classified wind power project is performed only in relation to its compliance with expert view of an authorised environmental body and with the results of an EIA.

Construction projects, however, can be still classified as CC2 or CC3 objects on the basis of other requirements to consequence classes established by Ukrainian law (for instance, if they require an EIA).

To do or not to do?

It was important to find out that the entity itself decides whether it is necessary for it to pass the EIA. However, at the stage of obtaining a building permit, government bodies may require the EIA conclusion. In accordance with the EIA Act, the entity itself assumes the responsibility for deciding on the category to which it belongs.

Experts recommend evaluating the impact as a whole. If you need to build a SPP, you need to take the project in a complex: the solar panels itself, the electric network and the substation. This reduces the risk of additional requirements for assessment at the stage of obtaining opinions from the authorities.

EIA*  Environmental Impact Assessment