Eco-business on the roof: the legal aspects of installing solar panels

The boom of alternative energy around the world lasts for decades.

One of the leaders in this sphere is Germany, which wants to produce electricity exclusively from alternative sources from 2039. Spain plans to abandon coal power by 2050, although it stands in a more favorable position as a result of its solar activity and water availability.

Ukraine hasn’t remained aloof, and in 2009 introduced so-called “green tariffs”, which, however, were fully operational in 2015. They are intended to encourage both ordinary households and businesses to produce electricity from the energy of the sun, water, and wind and sell it to the state at a bargain price.
The most common source of alternative energy is solar power plants. The first of them appeared in Crimea in 2011.

 

How to start a business with electric power generation?

In order to start a business of producing electricity at industrial solar power plants, it is necessary to make a lot of effort and invest a significant amount of money, about 100 thousand dollars. On average, such amount is offered by manufacturers of solar panels and includes the cost of their commissioning. The process of installing an industrial solar power plant is long-term and requires legal support at all stages, from the creation of a legal entity, the search, and lease of a land plot with the intended purpose of “energy land”, to obtaining a license for electricity generation, non-standard connection to electricity networks, registration of membership in The wholesale market of electric energy and conclusion a contract of sale with the energy company.
For individuals, this procedure is much simpler. Today any person consuming electric energy for domestic needs can install a solar power plant with a capacity of up to 30 kW on the roof of their private house and sell the surplus of produced energy to the state at a green tariff.

According to the State Department of Energy Efficiency, 4660 private solar power plants were installed for August 2018, with a total capacity of over 90 mW. In 2017, this figure was significantly lower – only 3010 private solar power plants.

 

Is there any necessity to get permission to install a solar power plant on the roof?

The procedure of connecting the domestic solar power plant to the electricity grids does not require any permits. When installing solar panels, it is important not to exceed the limit of the authorized power, which is specified in a contract on the use of electric energy, concluded between the domestic consumer and the electricity supplier. The maximum possible power limit for a domestic solar installation is 30 kW.

 

What about the procedure of installing the solar panels?

The household consumers install solar power plants on their own, then submit to the power supplier an application and one of the variants of the one-line connection scheme. The forms of these documents are the Annexes 1 and 2 to the Resolution No. 229 from 25.02.2016 issued by The National Commission for State Regulation in the Energy Sector.
After reviewing the application and checking the power of the installed solar panels, the Local Power Distribution Company provides the consumer with an account to pay for the installation of a meter. After making payment and installation of a meter, the electricity supplier and the consumer sign an act on the preservation of seals and the establishment of indicators, and then – a contract for the sale of electric energy at a green tariff.
Green tariff rates without VAT are:

 

  • From 01.01.2017 to 31.12.2019 – 573.36 kop. / kWh;
  • From 01.01.2020 to 31.12.2024 – 515.34 kop. / kWh;
  • From 01.01.2025 to 31.12.2029 – 459.03 kop. / kWh.

 

It is worth noting that for consideration of the application Local Power Distribution Company has 3 days, for installation of a meter – from 3 to 5 days. Further payments for the purchased green electricity tariffs are carried out not later than on the 15th of the month, which is the next after the settlement month.

 

What are the reasons for the refusal?

The installation of solar panels is available for not only owners of private homes but also the owners of apartments, after the conclusion of the lease of the roof area and in the absence of objections other residents. There are also cases when Local Power Distribution Company refused to connect solar panels to electrical networks on the ground that the newly built house has not put into operation yet, but such a refusal is not legitimate, as the legislation imposes only one mandatory requirement – the building should be in a private property.

 

Do you need the help of a lawyer?

The number of Ukrainians who use alternative energy sources is increasing every year. The solar panels on the own roof allow not only to save on electricity, but also to make a profit from its sale. However, you should pay attention to the fact that green tariff rates are gradually decreasing, therefore, you shouldn’t rely on fast earnings at the expense of the established solar power plant. On average, solar panels pay off in a range from 6 to 8 years. In addition, when installing solar panels, despite the simplified procedure, there may be many nuances, for example:

 

  • Incorrectly executed documents;
  • Failure of Local Power Distribution Company to connect to the power grids;
  • Failure of the Local Power Distribution Company to comply with established deadlines and terms;
  • Conclusion of the lease agreement;
  • Malfunctions of existing electrical networks, which lead to failures in the operation of the solar power plant;
  • Non-payment or untimely payment of Local Power Distribution Company for the purchased electricity.

 

Author
You may like
A new law on virtual assets: the picture is formed, but without details. On September 8, 2021, the Verkhovna Rada has finally adopted the long-awaited law "On Virtual Assets", which clarified many ambiguous points. This is especially true for the status of cryptocurrency and the rules of its circulation in the country. Let`s take a closer look at novelties. An ambiguous term Let's start with what the legislator actually means by "virtual assets". There are the following features:  they are an intangible good (cannot be represented on tangible media)  fall under the list of objects of civil rights (that is, they can be owned and be disposed of)  represent an electronic form of a set of data (essentially, they are blocks of information put in order);  the existence and circulation of assets are due to software tools (specific electronic environment). From these features we can draw the following conclusion: virtual assets are not limited to cryptocurrency. Digital currency is part of the concept, but other instruments, such as tokens, NFTs, or even in-game items, fall under the definition. Actually, the actual existence of most digital products, having a certain value, is due to the software environment (ecosystem), either it is blockchain technology, a trading platform, or an online game server. It should be noted that the attempt to define virtual assets was already made in the adopted Law of Ukraine in counteracting money laundering. In this act, they understand it as digital means of payment, which goes against the new definition. As a result, there are now two different explanations for virtual assets, which causes significant confusion not only in regulation but also in interpretation. It is definitely necessary to expect clarifications from competent state bodies. Let's return to the new law. Its application covers legal relations in which the "Ukrainian element" is present:  provider or recipient of services represented in Ukraine;  an agreement according to which the turnover of virtual assets is carried out in accordance with Ukrainian legislation;  the acquirer of assets (or both counterparties) is a resident(s) of Ukraine. The law also introduces an interesting division of all virtual assets into two groups: secured and unsecured. Here again, there is a problem of interpretation. The first category includes products exchanged for (state) currency, the second category includes instruments that can be exchanged only for other digital assets. There is an alternative opinion: that the turnover of secured assets is supported by real goods (money or other property), while unsecured ones are not supported by anything. The latter interpretation is the most credible, as the new law stipulates that virtual assets are NOT means of payment. Moreover, they cannot be exchanged for real goods, be they property, services or money. This significantly narrows the potential for the use of virtual assets not only for commercial but also for civilian purposes. About obligatory licensing The new law states that in some cases, the use of virtual assets will require licensing. The 4 types of activity are mentioned:  storage and management of virtual assets (or its` keys)  servicing of exchange operations with virtual assets (both for other analogues and for real goods);  translation of digital assets;  any intermediary services. A list is quite impressive, but there are some important exclusions:  if your service works with cryptocurrency wallet (it means users can dispose of accumulations into cryptocurrency independently);  If your service works on smart contracts or decentralized protocol, based on which internal transfers are performed. As to intermediary services, everything is more compicated. Actually, any mediation is based on the public share offering. That is why it is subject to licensing. How to get a license? A company that wishes on legal grounds to engage in virtual assets must satisfy legislative requirements. The key role is played by the minimum amount of the statutory capital, which equals 1,19 million hryvnyas (for non-residents it is 5,95 million hryvnyas) in case of storage and administration. For other types of activity (trading, translation and mediation services) the minimum size of the statutory capital amounts to 595 thousand hryvnyas (for non-residents is 2,98 million hryvnyas). The order of the registration of license:  to compose an application and prepare documents.  to pay state fee (68-136 thousand hryvnyas for residents and 340-680 thousand hryvnyas is for non-residents).  to pend review of the request (30 days).  to get a license. The duration of the license is 1 year. No norms about the continuation of legal force of permission are set (we are expecting amendments or explanations from the Ministry of Digital transformation of Ukraine). Notably that non-residents must pay a far greater sum, than domestic companies. The Ukrainian legislator obviously encourages an internal market, getting rid of a strong foreign presence (that, in fact, coincide with modern politics of the state on the whole). Together with an application, the following documents must be prepared: The access code to the copy of the Statute of the company (or the foundation agreement) kept in an electronic file in the database of the Unified State Register of Enterprises and Organizations (USREO);  Funding sources of the statutory capital (where the money are taken from);  confirmation of the actual injection of money;  information about beneficiaries (special attention must be paid to business reputation);  the information about the director and founders;  the check about payment of state fee;  the internal regulations, in accordance with which ones, the privacy policy rules are regulated. In the terms of volume of necessary documentation of licensing is very alike with complete registration of legal entity. It is understood that the state wants the severe adjusting of activity of organizations that will engage in virtual assets. Is it already possible to get a license? The adoption of the law by the parliament is a significant step forward in adjusting and legal market of virtual assets creation in Ukraine. However, the new rules haven`t come into effect yet - their term of introduction depends on making amendments in the Internal Revenue Code. It is yet unknown, when a legislator will decide to enter the renewed system of taxation for such assets. Being "IT-hub" and territory, where cryptocurrency enjoys large popularity, the question of taxes must be decided maximally safely. Despite the presence of obvious gaps in interpretation, a new law on virtual assets gives the official narrative of what takes place and that, how the legal relationships related to cryptocurrency will be regulated. It is to be hoped that in the nearest time the Ministry of digital information will give out the detailed explanations concerning debatable norms.
20/01/2022

We will
call you