Energy News

Office of the President

New Head of the Office of the President of Ukraine – Andriy Yermak, the decree is signed by the President of Ukraine on 11th of February 2020.

Government

On February 21, 2020, Prime Minister Oleksiy Honcharuk reported to the Verkhovna Rada of Ukraine on the Government’s activities.

The progress report and the results of the implementation of the Program of the Cabinet of Ministers of Ukraine in 2019 can be viewed at the web site. While reporting on the Government’s activities in the field of energy, the Prime Minister stated that the Government see the problems with high levels of “green” tariffs, but did not want to change the rules for investors retrospectively.

Ministry of economy

On the 17th of February, 2020, the Ministry of Economy unveiled an economic strategy, Economic Strategy: Growth through Investment, which replicates the ambitious goals of the Government’s program, namely: to increase the country’s GDP by 40% in 5 years, create more than 1 million jobs and attract $50 billion in foreign direct investment.

According to the vision of the Strategy for rapid investment growth, efforts are concentrated in three areas:

Creating effective markets;

Investment initiatives, primarily in infrastructure, privatization and promotion of bank lending;

Ensuring a favorable business climate.

Minecoenergo

The Ministry continues its contradictory policy between ambitious plans and ongoing activities: 

presented the results of 2019 and plans for 2020. Among the plans for 2020 in RES sector: approval of the concept of green transition to 2050; updating the Energy Strategy; approving an Integrated plan for energy development and climate change by 2030; introduction of “green” auctions, reform of the environmental tax into the CO2 tax in 2020; solving the Guaranteed Buyer Deficit Problem; approval of a phased schedule for bringing electricity prices for the population to the market level to eliminate cross-subsidies and the abolition of PSO for the population.

published proposals on changes in the legislation in the field of alternative energy: 

1) cut-off dates for new objects under the “green” tariff, namely: SPP – 01.07.2020; WPP – 01.01.2021; 

2) full liability for imbalances for those objects that will not agree to the following: 

3) voluntary reduction of the level of “green” tariffs for all SPP facilities by 12.5%; WPP by 5%. 4) voluntary restructuring for facilities introduced after 2017: WPP -5% + 5 years, SPP + 5 years, the percentage of reduction depends on the size of the object: up to 10 MW -15%; from 10 to 50 MW -20%; from 50 MW -25%. 

For facilities that will go for reduction/restructuration: 

Responsibility starts from 10% from the day of legislative approval of changes; 50% from 2021; 100% from 2022. 

Forecasting tolerances are: WPP, SPP 10%, and after reaching the share of RES in electricity production 10%, no deviation will be allowed. 

Unpaid curtailment of RES facilities up to 200 hours per year. 

A priority of payment for electricity. 

 

The Ministry of Energy together with the World Bank will investigate the effects of climate change in Ukraine by 2100. This will allow us to anticipate the risks of climate change in Ukraine by 2030, 2050 and 2100 in 3 scenarios, likely to increase greenhouse gas emissions and increase temperatures.

NEURC

On February 7, 2020, a draft regulation was posted on the Regulator’s website, which had the characteristics of a regulatory act – changes to the Procedure for monitoring compliance by licensees conducting activities in the fields of energy and utilities, legislation in the relevant fields and licensing conditions.

The Draft Procedure provides for a change in the number of scheduled inspections (instead of once every two years, once a year) and the duration of inspections (together with the envisaged new possibility to extend the inspection term, the duration has changed almost twice). Reasons for carrying out unscheduled inspections have been clarified and other amendments.

Day-ahead Market and Intraday Market rules were amended on February 28. Amendments related to changes in the minimum and maximum load times, work of the balancing market – procedures for changing the balancing group, clarifying payments for imbalances, monitoring activities.

The Regulator approved the Guaranteed Buyer service cost in December of UAH 836.6 million, the corresponding decision was made at the meeting on February 7, 2020.

The source of financing the final green tariff payment for December 2019 identifies the funds to be guaranteed to the Guaranteed Buyer by universal service providers (USPs) as a result of adjusting their electricity to actual data. 

Ukrenergo

Vsevolod Kovalchuk resigns as Acting CEO of NPC Ukrenergo. By decision of NPC Ukrenergo Supervisory Board, Volodymyr Kudrytskyi, First Deputy Chairman of the Management Board, will assume the functions of the Company’s Acting CEO starting from 27 February 2020 and until completion of the CEO recruitment competition.

The EBRD is working to attract a grant for the implementation of the Ukrenergo energy storage project so that this project has the least load on the Ukrenergo tariff.

On February 13, 2020, the Energy Community Secretariat published its Opinion on the Ukrainian Regulator’s draft certification decision on Ukrenergo, the Ukrainian electricity system operator. 

In its Opinion, the Secretariat takes the view that Ukrenergo does not own the electricity transmission assets as required by Article 9(1) of the Electricity Directive, and does not enjoy and exercise rights over them equivalent to an owner. Compliance with Article 9(1)(a) of the Electricity Directive is a fundamental prerequisite for certification. Therefore, the TSO cannot be certified under the ownership unbundling model. NEURC is to adopt a final certification decision within two months, taking the utmost account of the Opinion of the Secretariat.

Guaranteed Buyer

The Guaranteed Buyer reports that it fully paid for the electricity purchased in 2019 at the “green” tariff (3 129 MWh). The level of settlements for the first decade of February is 33%.

The Guaranteed Buyer faces a significant threat of failure to fulfill its obligations as a result of its losses on the PSO performance during January-February 2020 due to the general situation in the Day-ahead market (supply exceeds much demand) and cause non-fulfillment of its obligations under the contract with Energoatom, which resulted in limitation of electricity from the NPP to the Guaranteed Buyer by 25% of the planned electricity supply until settlement of the debt issue.

SE “Energorynok”

The company pays monthly its debt to market participants, which arose in June 2019: for the period from 01/07/2019 to 01/02/2020 were transferred to producers of RES 1.85 billion UAH.