Energy sector of Ukraine: main changes

The first decade of June 2020 has ended with the most important decisions for the renewable energy sector of Ukraine. On the one hand, the Ministry of Energy and some RES Investors reached an agreement on the main conditions for the feed-in tariff restructuring and signed a Memorandum of Understanding for the Resolution of Problematic Issues in the Renewable Energy Industry of Ukraine (“MoU”). On the other hand, the NEURC amended the Transmission Code with restriction on the issuance of the technical conditions for the grid connection. 

Below we analyse these decisions in more detail.

Memorandum of Understanding with the RES Investors

On 10 June 2020, the Prime Minister of Ukraine Denis Shmygal, the acting Minister of Energy and Environmental Protection of Ukraine Olga Buslavets, the officials of the European-Ukrainian Energy Agency and the Ukrainian Wind Energy Association signed the MoU.

The MoU has further to be signed by the Head of the Energy Community Secretariat’s Dispute Resolution and Negotiation Centre and the Head of the National Energy and Utilities Regulatory Commission of Ukraine (“NEURC”). The issues of signing the MoU by the Head of the NEURC will be considered during the next meeting of the NEURC on 17 June 2020.

What were the main reasons for signing the MoU?

The following events preceded the conclusion of the MoU:

• from November 2019 – negotiations between the RES investors and the government;
• from December 2019 – a mediation procedure under the auspices of the Energy Community Secretariat; and
• from March 2020 – an increase of debt owed by the Guaranteed Buyer to the RES producers, only 31 per cent of which was paid by 5 June 2020.

In fact, the RES producers receive only 13 per cent of the payments due to them for March 2020 and just 5 per cent due for April and May 2020. Taking into account such payment delays, some RES producers found the signing of the MoU the more appropriate measure for solving the problem than the court proceedings.

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