EUEA Advisor – IMEPOWER has prepared the legislative initiatives for 11-31 May 2021 impacting RES producers.
The Verkhovna Rada of Ukraine
15 May 2021, the Law was adopted – “On Amendments to Certain Legislative Acts of Ukraine on certification of the transmission system operator”. The Law was registered by the VRU with No.3364-1-d. It introduces the norms and rules to ensure certification of the electricity transmission system operator NPC Ukrenergo in accordance with the requirements of European laws. More details about the Law are provided in monitoring of legislative initiatives for 01-15 April 2021.
Draft Laws adopted during the first reading
01 June 2021, the VRU adopted during the first reading the draft Law with No. 5009 on amendments to certain legislative acts of Ukraine concerning simplification of grid connection. More details about the draft Law are provided in monitoring of legislative initiatives for 01-15 February 2021.
Proposals (amendments) of MPs to the second reading shall be submitted within 14 days.
Registered draft laws
As stated earlier, on 28 April 2021, there was registered the draft Law with No. 5436 on amendments to the laws of Ukraine concerning the issue of introduction of energy storage systems. List of authors includes MPs Kucherenko O., Bondar M., Buimister L. and others.
The draft Law offers the amendments to the Law of Ukraine “On the Electricity Market”, “On the National Energy and Utilities Regulatory Commission”, in particular:
- introduction of new terms and their definitions, i.e., “energy storage systems”, “energy storage item” and “energy storage operator”;
- assignment of a new participant of the electricity market (energy storage system operator) and its rights and responsibilities;
- setting of requirements for energy storage item operators to obtain a license to conduct energy storage activities and specification of cases for which license is not required;
- specification of the peculiarities of the use of energy storage system by electricity producers, including producers who sell electricity at FiT or auction price: a) activity is allowed without obtaining the license of BESS operator; b) at any time, the power supply of electricity from the storage system shall not exceed the installed capacity of the electrical generating installation; c) FiT or auction price is not changed regardless of the time of installation of the storage system;
- specification of requirements to the activity of the energy storage system operator in all market segments (BC, DAM, IDM, AS, and BM);
- setting of restrictions (prohibition) to combine activity of the energy storage system operator with electricity transmission, electricity distribution, functions of the guaranteed buyer, of the market operator;
- entitling the transmission system operator and distribution system operators to use energy storage systems exclusively to ensure the reliable and safe operation of the relevant transmission system, distribution system, provided that the energy storage systems are fully integrated network elements;
- in case of need for generating capacities and energy storage systems within the power system, the draft law provides for the possibility of a tender to be held by the TSO in order to select the winner in accordance with the Article 29 of the Law, for construction of energy storage systems. While the payback of the project can be provided through payment for capacity adequacy service; it shall be paid from the TSO tariff for electricity transmission services. The maximum amount of payment for the service to ensure capacity adequacy is approved by the CMU. For the term of project implementation, the state guarantees that the agreement between the winner and the TSO will be governed by the laws of Ukraine applicable on the date of the agreement conclusion, except for legislation that reduces taxes and fees (mandatory payments) and/or cancels them.
On 11 May 2021, the alternative draft law was registered with No. 5436-1 on amendments to some laws of Ukraine on energy security and development of energy storage systems. The draft Law was initiated by MPs Kamelchuk Y., Skorokhod A., Yefimov M., and others.
Draft Law No. 5436-1 regulates the issues covered by the main draft Law No. 5436 almost in a similar way. However, the draft Law No. 5436-1 additionally regulates certain issues concerning the following:
- simplification of connection of energy storage systems to the transmission system
- the transmission system operator is entitled to build and use energy storage systems not only as fully integrated network elements but also in cases when:
- the transmission/distribution system operator needs such energy storage systems to ensure efficient, reliable, and secure operation of the system.In addition, they are not used for the purchase and/or sale of electricity in the electricity market, provision of balancing and ancillary services;
- The Regulator recognized the need to construct storage systems based on the assessment of compliance (adequacy) of generating capacity;
- tender for the construction of the energy storage system, to be held in accordance with Article 29 of the Law, did not take place twice in a row;
- the distribution system operator is entitled to build and use energy storage systemsboth as fully integrated network elements as well as to ensure efficient, reliable, and safe operation of distribution system. In addition, the total capacity of the storage items shall not exceed 20 MW and they may not be used for the purchase and/or sale of electricity in the electricity market and/or the provision of ancillary services.
On 19 May 2021, an alternative draft Law was registered with No. 5436-2 on amendments to some laws of Ukraine on the development of energy storage systems and trade in electronic auctions. The draft Law was initiated by MPs Gerus A., Nagorniak S., Solskyi M., and others.
Regulating most issues covered in the main draft Law in a similar way, at the same time the draft Law No. 5436-2 contains the following differences:
- the draft law excludes the possibility of a tender to be held by the TSO to select the winner in accordance with Article 29 of the Law, for construction of energy storage systems using the payback mechanisms stipulated by the Law. In particular, through receipt by the winner of payment for the service of ensuring the capacity adequacy;
- as an incentive mechanism for energy storage systems development, the draft Law proposes to exempt storage systems commissioned into operation from 01 October 2021 from payment for services of transmission, distribution of electricity, dispatching management for the volumes of electricity consumed and delivered by such BESS;
- this draft Law contains no provisions of the main draft Law (defining the features of implementation of energy storage systems construction by producers selling electricity at FiT or auction price, in particular, the provision that the FiT or auction price shall be guaranteed regardless of the time of installation of the energy storage system);
- similar to the draft Law No. 5436-1, the transmission system operator and distribution systems operators shall be entitled to build and use energy storage systems both as fully integrated network elements as well as to ensure efficient, reliable, and safe operation of transmission/distribution systems. The draft law defines conditions/criteria for obtaining a permit similar to draft No. 5436-1.
In addition, draft Law No. 5436-2 provides for the following:
- to define the terms “electronic auction for electricity purchase and sale”, “organizer of an electronic auction”;
- to extend the authorities of the Market Operator in terms of conduction of electronic auctions for electricity purchase and sale under bilateral contracts;
- to entitle the market participants to freely choose the organizer of electronic auctions to participate in auctions for the purchase and sale of electricity under bilateral contracts;
- to grant the opportunity to pay for electricity and services provided in the electricity market between market participants, including through clearing (netting).
The Cabinet of Ministers of Ukraine
On 26 April 2021, the CMU adopted the Resolution No. 518 “On Amendments to the Resolutions of the Cabinet of Ministers of Ukraine No. 483 dated 05 June 2019 and No. 439 dated 28 April 2021”.
As stated in the monitoring of legislative initiatives for the period 15 April – 10 May 2021, the CMU Resolution No. 439 dated 28 April 2021 contained the new version of the Regulation on imposition of special obligations on public service on the market participants in the electricity market (the “PSO Regulation”). According to new PSO Regulation, the Guaranteed Buyer is excluded from the PSO scheme on meeting the electricity needs of household consumers from 01 June 2021. By 15 May 2021, universal services providers had to conclude agreements with SE NNEGC Energoatom, PrJSC Ukrhydroenergo in respect to the provision of services to ensure electricity affordability for household consumers with effective date on 01 June 2021.
Unfortunately, state-owned companies failed to conclude contracts with universal service providers within the specified period. The Cabinet of Ministers of Ukraine introduced the amendments to the CMU Resolution No. 483 dated 05 June 2019 and No. 439 dated 28 April 2021 and postponed respectively:
the effective date of the new PSO Regulation – from 01 July 2021;
deadline for concluding agreements by universal services providers with SE NNEGC Energoatom, PrJSC Ukrhydroenergo in respect to the provision of services to ensure the affordability of electricity for household consumers is 15 June 2021.
The National Energy and Utilities Regulatory Commission
On 26 May 2021, the Resolution No. 850 was issued “On approval of the amount of the contribution for a special (special purpose) fund to cover the arbitration costs of the SE Guaranteed Buyer for IV quarter of 2020.
This Resolution approved the amount of the contribution for a special (special purpose) fund to cover the arbitration costs of the guaranteed buyer for the IV quarter of 2020 in the amount of 1% of net income from electricity production at FiT or auction price. Contribution shall be made by the producers who sell electricity at FiT or auction price and who have decided to resolve disputes under the electricity purchase and sale agreement in arbitration under ICC Arbitration Rules with arbitration place in Paris (the French Republic).
On 19 May 2021, the Resolution No. 828 was issued “On amendments to the Market Rules (day-ahead and intraday market rules)”.
The Resolution approved the amendments to the Market Rules (day-ahead and intraday market rules) approved by the NEURC Resolution No. 308 dated 14 March 2018. The amendments, in particular, regulate the procedure for registration of DAM/IDM participants, conclusion of agreements on electricity purchase and sale, suspension and termination of participation in DAM/IDM, bidding, specification of obligations of DAM/IDM participants, procedure for settlements in DAM/IDM; in addition, a number of editorial clarifications were made.
On 19 May 2021, the Resolution No. 827 was issued “On amendments to the Procedure for conducting an open discussion of draft decisions of the NEURC”.
Amendments to the Procedure for open discussion of draft decisions of the NEURC are introduced to improve the procedure for conducting discussions during the quarantine period or other restrictive measures, in particular, through open discussions online.