Ukrainian Parliament Passes Bill in First Reading to Cut ‘Green’ Tariffs and Start Auctions for Wind and Solar Energy; Bill Now Faces a Second Vote



Kyiv Post, by Vyacheslav Hnatyuk,
Published on December 21, 2018

The Ukrainian parliament, Verkhovna Rada, approved in its first reading a draft law on Dec. 20 that is meant to improve regulation of the country’s alternative energy market making it more attractive for investors.

The bill regulates the use of an environmental tariff known as “the green tariff.”

It seeks to alleviate the price burden on consumers and establish competition among market players by establishing auctions for renewable electricity. Currently, no such auctions exist in Ukraine.

Also, the bill aims to improve the investment image of the country and to decrease the country’s energy dependency by introducing clear rules for investing into and producing alternative energy.

“Passing the new law in the near future is preconditioned by the fact that the currently effective legislation can be in effect until 2030,” Maksym Shmereho, an employee of the parliament’s Committee for Energy and Nuclear Security who has been part of the team drafting the bill, told the Kyiv Post.

But the current legislation will lose its investment attractiveness by 2023, Shmereho added.

The draft law will have to be approved in its second reading in spring. If approved, it will then have to be signed by Ukraine’s President Petro Poroshenko to become law.

Yaroslav Petrov, a partner at Asters law firm, views the bill “positively, because it shows that the country has taken its course on developing the alternative energy sphere beyond 2023.” Petrov agrees that making the market more competitive will positively influence the market by bringing electricity prices produced by renewables down to realistic levels, since “once the auctions were introduced in Europe, this influenced (its whole market).”

Vitaliy Radchenko, a partner at CMS Cameron McKenna in Kyiv, welcomes the law, too.  He mentions, however, that the bill leaves a lot of regulation mechanisms to be developed by the Cabinet of Ministers through specific by-laws.

In particular, this refers to the preparation of auctions. After passing the law “it will take up to three months for developing the procedures of holding auctions, and up to six months for holding the first auction on alternative electricity,” Radchenko says.

Radchenko believes that the time frame of passing the new law and developing the by-laws will not stall the industry in general, however “this can prolong the development of large-scale projects.”

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