L&M Finance Group


In 2019, a new model of the electric energy market was introduced in Ukraine, which, according to various experts, showed itself ambiguously. According to this GP model, the Guaranteed Buyer was obligated to purchase all electricity from renewable energy sources, according to the established so-called Green tariff or auction price. Subsequently, the purchased electricity was sold on the wholesale market, and Ukrenergo offset the costs of the Guaranteed Buyer’s services related to the purchase at the “green” tariff by increasing the transmission tariff for the transmission system operator.
But a number of lawsuits in August 2019, in which rapid growth and the size of tariffs were appealed, violated the stipulated mechanism, and in September 2019 altogether changed it, significantly reducing the initially established tariffs. As a result of such actions, the Guaranteed Buyer State Enterprise had already had a huge budget deficit in settlements for purchased electricity at the green tariff by the end of 2019, and doubts regarding the final settlements for producers of electricity from renewable energy sources.
Since the beginning of 2020, the situation on the electricity market has not changed significantly. It is expected that one of the most important issues to be resolved will be the issue of electrical energy storage systems. In the meantime, for the implementation of the Law of Ukraine “On Amending Certain Laws of Ukraine regarding Providing Competitive Conditions for the Production of Electric Energy from Alternative Energy Sources”, the Cabinet of Ministers of Ukraine adopted the Resolution “On Introducing Competitive Conditions for Stimulating the Production of Electric Energy from Alternative Energy Sources”. The resolution approved:
  1. Procedure for conducting auctions on the allocation of support quotas;
  2. The procedure for selecting operators of electronic platforms for auctions for the distribution of support quotas;
  3. Powers of the State Enterprise "Prozorro. Sales" to ensure the functioning of the electronic trading system, having received the status of administrator of the electronic trading system.
According to the Procedure for holding auctions, the State Energy Efficiency of Ukraine and the transmission system operator annually submit proposals to the authorized body on the size of the annual quotas for supporting business entities that produce electric energy from alternative energy sources for the next five years, by individual types of alternative energy sources. The authorized body determines the size and parameters of support quotas for business entities, and submits for approval to the Cabinet of Ministers of Ukraine a draft decision on setting annual support quotas for 5 years, which contains the following information:
  1. Size of annual support quotas;
  2. The size of the portion of the annual support quota unallocated at previous auctions;
  3. The size of the additional annual quota of support;
  4. Proposals of land for the construction of renewable energy facilities;
  5. Schedule of auctions, which determines the timing of their holding, the type and size of part of the annual quota.
  6. Other information on the organization and conduct of auctions.
Business entities that intend to participate in the auction, in their personal account through the operator’s website of an authorized electronic site, submit an application for participation in the auction by filling out the appropriate electronic form. The application for participation in the auction must contain a closed offer, consisting of the value of capacity and price offer. Limitations of the maximum sizes of the price offer are contained in the Resolution, and subsequently, it is the value of the price offer specified in the bidder’s closed offer that determines his chances of winning the auction. After the end of the tender, a contract of sale of electric energy is signed between the guaranteed buyer and the business entity, which, according to the results of the auction, received the right to support.
It is expected that business entities that produce or intend to produce electric energy from alternative energy sources for those electric power facilities or the stages of their construction (start-up complexes) for which a “green” tariff was previously established or the right to support by auction results.