16:35 05.12.2019

UABIO proposes establishing annual 200 MW quota for biostations in auctions, extending 'green' tariff for future projects for five years

3 min read

KYIV. Dec 5 (Interfax-Ukraine) – The Bioenergy Association of Ukraine (UABIO) considers it expedient to establish for biomass and biogas power plants an annual volume of quotas for participation in "green" auctions at the level of 200 MW, and also to simultaneously fix feed–in tariffs for future projects until 2035.

Corresponding proposals on maintaining investor interest in bioenergy in Ukraine and ensuring the development of this sector in the country were announced by UABIO Chairman Georgiy Geletukha at a press conference on Thursday at the Kyiv-based Interfax-Ukraine news agency.

Geletukha said recently the number of companies that build large capacities has been increasing, but taking into account the volume of quotas (up to 100 MW per year) which are considered for biostations, large projects will not be able to bid for state support at auctions.

"There is one important provision in the legislation, according to which one company cannot claim more than 25% of the annual quota. That is, even if the quota is at the level of 100 MW per year, then one company can take a maximum of 25 MW at the auction. Therefore, large projects do not go to auctions," he said, citing as an example a number of projects implemented by Kernel to build a biostation with a total capacity of over 60 MW, as well as a project of the Khmelnytsky biofuel power plant at 46 MW.

Geletukha also noted a decrease in the interest of bioenergy investors in the feed-in tariff system.

"It takes up to three years to launch biomass and biogas projects. If you start to implement the project now, it will be built in three years. And then the investor has a 'green' tariff for seven years, until 2030 (when the system of support based on a green tariff expires). During this period, at best, he will simply have his investment returned," he said.

Geletukha added that against this background, UABIO members are currently focusing mainly on the new support system, however, the level of quotas discussed is insufficient. Extending the validity period of feed-in tariffs for future projects will make this mechanism more attractive, and parallel auctions with a quota of 200 MW for biostations will provide investors with a choice.

"There are two real options. The first is to extend the validity of the feed-in tariff for biomass and biogas. Not until 2030, but at least until 2035, with the current level of the 'green' tariff. It will work. The project will pay off by 2030, and the investor will earn at least something in 2035. The second option is to increase quotas for auctions. My vision is that the quota should be 200 MW per year," he said.

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