15:15 13.03.2015

Feed-in tariffs cut justified – Vovk

3 min read
Feed-in tariffs cut justified – Vovk

Head of the National Commission of Ukraine for Energy, Housing and Utilities Services Regulation (NCER) Dmytro Vovk has said that the decision of the regulator to revise feed-in tariffs downwards, taking into account the history of the approval of the tariffs and the present economic crisis, is justified.

"Green energy is a costly affair even for the population of developed countries: not everyone is ready to "vote with his purse" for the tariffs increased to ensure profit-making of the companies generating electricity from renewable sources. If the economy is in crisis and there is a misbalance in energy, the revision of the conditions/rule for alternative energy is justified," he told Interfax-Ukraine.

Vovk said that the legislation passed when Viktor Yanukovych was president created an imbalance in favor of solar energy, which companies affiliated with the Kliuyev brothers were involved in he said.

He said that the tariffs which were previously approved were considerably higher than in developed countries which resulted in the following internal rate of return (IRR): 60% for solar and 25% for wind power generation.

The obligatory requirement of local content restricted access to the market, he said.

He added that the country took the liability of buying 100% of electricity generated, even if some of the electricity is consumed by the plant, and paying 100% to the plant, irrespective of payments made by consumers, while the rest of market players depend on the payments of consumers.

He said that there are questions about the pegging of the tariffs to the euro and their monthly indexation.

Vovk said that the concept was taken from the conditions of developed countries where, with a fair price formation, the share of power transmission is 40% and the share of generation is 60% of the structure of the end tariff (while in Ukraine it is 15% and 85%).

He said that a well-developed power grid is required to balance the non-rhythmical generation of alternative energy with a high level of maneuverability, which Ukraine does not have.

Vovk said that the current development strategy foresees that by 2030 Ukraine is to have 8 gigawatts of alternative generation, while today, not taking into account Crimea, it is around 0.9 gigawatts and this will result in the growth of the tariff by over 15% only from the fulfillment of the task, not taking into account other factors.

He expressed hope that representatives of the parliament and market players will jointly direct the development of green energy rationally.

AD
AD
AD
AD
AD