14:10 08.06.2018

MPs register bill introducing auction system during stimulation of renewable energy

3 min read

KYIV. June 8 (Interfax-Ukraine) – MPs from the Verkhovna Rada committee for fuel and energy complex Oleksandr Dombrovsky, Lev Pidlesetsky and 15 more lawmakers from various factions have registered bill No. 8449 introducing the auction system during stimulation of renewable energy.

"Today, work begins at an official, legislative level. Our bill is not a dogma, we are ready for dialogue, for discussion," Dombrovsky said, presenting the document at a press conference at Interfax-Ukraine in Kyiv on Thursday.

The co-author of the bill said that the document preserves the most comfortable conditions for investors who have already invested in renewable energy sources in Ukraine, but it helps to prevent a "green energy default" that is inevitable if the course in the energy sector remains unchanged.

According to the bill, for companies that have already built renewable energy plants, the current support system (the feed-in tariff) will remain in force. However, the size of the feed-in for solar power plants from 2020 will decrease by 30%, and not by 10%, as stipulated in the current legislation.

Also, the "old" system will remain relevant for the construction of renewable energy plant, which have already signed the power purchase agreement (PPA, the agreement between the producer and the buyer of electricity) or will sign it before July 1, 2019.

"The new auction system will be mandatory for new projects in large generation: solar power plant projects starting from 10 MW, wind farms - from 20 MW... A pilot auction should be held in the second half of 2019 for the Chornobyl zone," Pidlesetsky, the co-author of the bill, said.

According to him, the document delegates the government the right to set an annual quota, for which capacity the auctions will be organized, as well as the starting price of kWh for auctions (the maximum is limited by the size of the feed-in).

The auctions are planned to be conducted on the basis of the Dutch auction with a division into lots with a capacity of 1 MW. This will allow small players to participate in auctions. It is planned that each of the participants will have to provide a bank guarantee for $ 50,000 for each lot. The winner will be able to return this guarantee upon the completion of construction in a period of up to three years (if he refuses to implement the project, he will lose the money).

Pidesletsky said that the bill has a requirement, according to which auctions will be held till 2029. Each winner will be able to sign a contract with a guaranteed buyer of electricity for a period of 20 years (signing theagreement will be mandatory for the guaranteed buyer).

According to Dombrovsky, an important postulate of the bill is the preservation and expansion of a simplified system for supporting small roof solar power plants.

"If now this system [with feed-in tariffs] operates for solar power plants with a capacity of up to 30 kW belonging to individuals, we propose to raise the limit to 500 kW and expand its effect on small businesses (legal entities)," he said.

The co-authors of the bill hope for its adoption at second reading by the end of this year.