11:00 06.05.2020

Energy regulator proposes temporarily ban building new renewable energy facilities

3 min read
Energy regulator proposes temporarily ban building new renewable energy facilities

The National Commission for Energy, Housing and Utilities Services Regulation (NCER) has said that it required to temporarily ban building new renewable energy facilities until the issue with the development of green power generation is settled.

The corresponding proposals during a roundtable devoted to overcoming crisis phenomena in the Ukrainian energy sector held on Tuesday were voiced by member of the commission Dmytro Kovalenko during the regulator's presentation of its view on resolving renewable energy problems. Kovalenko, who presented the "hard" and "light" scenarios, said that the time constraints on the construction of new green generation facilities are necessary measures in the short term, regardless of the scenario.

The first option provides for a reduction in the feed-in tariff for solar power plants and wind farms to 9 and 8 eurocents per 1 kWh, respectively, which will lead to savings of UAH 15 billion.

To ensure that investors have an unbiased attitude to their legitimate expectations, it is proposed to provide them with the opportunity, by decision of the country's government, to receive reimbursement of capital, operating and financial expenses incurred by 2030 yielding a rate of return of 10-year government domestic loan bonds in euros with a margin of 2 percentage points (pp), taking into account previously received funds for the feed-in tariff.

As an alternative, it is also considered the possibility, after reimbursing investors of capital, operating and financial expenses, to introduce by 2030 a feed-in premium to the price on the day-ahead market at the level of 3.8 eurocents per 1 kWh for solar power plants and 1.3 eurocents for wind farms.

In addition, the "hard" scenario provides for the creation of a strategic reserve of UAH 7 billion to ensure operational security. It is proposed to form such a reserve by increasing the dispatch rate of Ukrenergo.

In turn, the "light" option provides for a reduction in the feed-in tariff by 30% for solar power plants and by 15% for wind farms, which, according to the regulator, will result in savings of UAH 11 billion.

Each of the two indicated scenarios provides for the possibility of free restrictions on the generation of renewable energy in the amount of no more than 20%, the introduction of 100% responsibility for misbalances, the provision of a mechanism to compensate for the limitation of renewable energy on the basis of a dispatcher's command, as well as the cancellation of a reduced tariff for household customers on the first 100 kWh of consumed electricity in the amount of 90 kopecks per kWh.

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