Законодавчі зміни в Україні, що встановлюють мінімальні ставки "зеленого" тарифу для біомаси
Conflicting changes in the laws of Ukraine on the "green tariff"

Draft Law No. 8028 (the “Amending Law”) submitted by people’s deputies Goroshkevych O.S. and Martynenko M.V. was eventually adopted on 6.10.2011. The Amending Law introduced a number of positive and important changes. At the same time it introduced certain changes which might create obstacles for development of projects under “green” tariff. Therefore, the interested players of the industry look forward to implications resulted of entry into force by the Amending Law as expected in the nearest future.

To begin with, Article 17-1 of Law of Ukraine On Power Industry Law (the “Power Industry Law”) and Law of Ukraine On Alternative Types of Fuels (the “Alternative Fuels Law”) provides quite restrictive definition of the term “biomass” for the purpose of “green” tariff. Under these definitions, electricity produced from energy crops or biomass of 100% animal origin is outside the scope of “green” tariff scheme of support. The Amending Law sets forth the definition which covers not only plant waste but also products and residues and, in general, comply more with biomass definition in EU Directive 2009/28/EC of 23.04.2009 as well as make electricity produced from any types of biomass eligible to fixed minimal “green” tariff rate from biomass.

According to the current practice based on definitions of biomass and biogas, National Energy Committee of Ukraine (the “NERC”) does not approve fixed minimal “green” tariff rates for producers of electricity from any types of biogas (landfill gas, biogas under a gasification process). Such producers can only hope for good “commercially substantiated” tariff. Unfortunately, it will be most likely quite low and definitely not attractive for investors. Amending Law is aimed at solving this problem and establishes fixed minimal GT rates for electricity produced from the following types of biogas:

- biogas received from biomass of any origin as well as from organic fraction of wastes in the amount of approximately EUR 0,1453;

- landfill gas and biogas received from sewage sludge in the following amounts depending on power capacity of installations
-- till 500 Kw in the amount of approximately EUR 0,14,
-- from 500 Kw till 2000 Kw in the amount of EUR 0,1292
-- more than 2000 Kw in the amount of EUR 0,1077.

It should be noted that under the Amending Law if during operation of biogas plant its total amount power capacity is changed, the approved GT rate should not be affected. This rule encourages to renovate and increase power capacity of the respective power plants. Possibly, in practice it will be quite difficult to invoke this rule because NERC in many cases may interpret additional installations as separate power plants subject to granting new approvals from NERC and lower fixed minimal “green” tariff, for instance, if the installations fall within a higher power capacity bracket.

The Amending Law also solves quite controversial issue regarding main criterion for approval fixed minimal “green” tariff rates for wind farms. The current wording of Power Industry Law permits dubious interpretations:

- the rates depend on power capacity of wind turbines used to construct the wind farm, or

- the rates depend on power capacity of all wind mills composing wind farm.

The Amending Law affirmatively states that the rates depend on power capacity of wind turbines of the wind farm rather than its total power capacity.

Even though Power Industry Law does not expressly exclude combined use of alternative and traditional energy sources by power plants from the scope of the current scheme of support, under NERC regulation on “green” tariff approval producers of electricity from combined energy sources are not eligible to “green” tariff. As a solution for this practical problem, the Amending Law establishes that for producers of electricity from alternative energy sources which partially uses traditional energy sources “green” tariff is established on electricity produced only from alternative energy sources provided that the share of alternative energy sources is not less than 50% of all energy sources used by a power plant. It appears that even after entry into force by the Amending Law during certain period of time will not be able to get the approval of “green” tariff because the respective procedure is absent and NERC needs time to elaborate eligibility and documentation as well as control over combined use of proportion between the used energy sources.

Finally, the Amending Law establishes NERC’s power to control funds received by producer from sales of electricity under “green” tariff. This provision sounds a little bit strange for foreign investors because the state establishes control over profits which as a matter of practice may be used without any restrictions in foreign countries. At the beginning of the existence of the first version of “green” tariff scheme of support the procedure on “green” tariff approval adopted by NERC set forth the requirement to use a share of profit derived from the sale electricity to renovate, upgrade or increase electricity production. Later this requirement was excluded from the regulation. However, NERC’s officials continued stating that such requirement should be in place. It seems that the Amending Law will be a ground for its reintroduction.

There are two possible scenarios for the discussed requirement implementation:

- NERC will establish fixed percentage of profit which should be used for all producers;

- NERC will establish percentage of profit which should be established for each particular producer based on economic substantiation provided either by NERC or by the producer.

The Amending Law shall enter into force on the date following the date of its publication. As of today, it is submitted for signature of President of Ukraine and most likely will be signed and published in the nearest future.

Maksym Sysoiev, LL.M.
Senior Associate, Attorney-at-law in PARITET law firm, Kyiv, Ukraine

Источник: "Українська енергетика"

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