“Green” tariff through an auction

On December 20, 2018, the Ukrainian parliament passed in the first reading one of the bills on changes in the field of alternative sources electric power.

Discussions on projects on this topic lasted for more than six months and the adoption of the revised draft No. 8449-d of 05.12.2018 in the first reading was the first real step on the way of planned changes.

Despite the many small differences between previously submitted projects, the main innovation is the introduction of auctions in which alternative energy sources will compete for the right to sell at a green tariff.

Thus, it is planned to reduce the cost of purchasing alternative energy, since the winner of the auction will be the one who will offer the lowest price.

 

What does the project specifically offer?

From 2020, the distribution of the state support quota will be carried out on a competitive basis. That is, the right to guarantee the purchase of all produced from alternative sources energy will be only those producers who took part and won the auction.
Participation in the auction will be mandatory:

 

  • in 2020 – for wind power stations with the capacity of more than 20 MW and all others – more than 10 MW;
  • in 2021-2022 – for wind farms with a capacity of more than 20 MW and all others – more than 5 MW;
  • since 2023 – for wind power stations with a capacity of more than 3 MW and those with a wind turbine regardless of capacity, as well as power stations of other alternative sources with the capacity of more than 1 MW.

 

Auctions will be held twice a year – until the first of April and until the first of October.

The winner is obliged to construct the object during 2 years (for solar stations) and 3 years (for others) from the moment of signing the contract with the guaranteed buyer.

Auctions will be conducted through the e-commerce system.

This order was established by the end of 2029.

 

Who will avoid auctions?

Several categories of entities will receive privileges for the sale of alternative energy at a green tariff outside the competition.
First of all, they are producers of lesser power than those determined by law as obligatory for participation in the auction, including private households.

Bypass the new order will be able and more powerful power plants, but under one of several conditions:

 

  • putting them into operation by 2020;
  • the conclusion of a preliminary contract for the sale of energy at a green tariff by the end of 2019 and the commissioning of the facility for 2 years (for solar power plants) or 3 years (for all others) after the conclusion of the contract.

 

Of course, it is too early to assess the project’s potential in solving existing problems in the field of alternative energy and green tariffs. There may always be some who want to bypass the order of the auction or build some smaller capacities.

Obviously, those who wish to earn a green tariff with the appropriate capacities should accelerate the completion of projects in order to be able to fall into the list of “exceptions”.

 

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