EU, EBRD, IFC urge Ukraine to launch “green” auctions

Source : 112 Ukraine

Representatives of the international organizations shared their common stand on the launch of “green” auctions mechanism instead of “green tariff” and change legislation
11:59, 27 February 2019

Open source

European Union, European Bank of Reconstruction and Development, World Bank and Energy Community strongly support the necessity of transit from the existing “green tariff”, acting in Ukrainian legislation, to the competitive system based on the “green” auctions. A joint letter of the representatives of these organizations states that, UNIAN reports. The letter is addressed to Oleksandr Dombrovsky, the chairman of the relevant committee, Andriy Paruby, the Chairman of the Verkhovna Rada, and the Prime Minister Volodymyr Groysman. The signatories comment on the preparation of the bill No. 8449-d on amendments to the laws of Ukraine on providing competitive circumstances for generation of electricity from alternative sources.

“European Bank of Reconstruction and Development (EBRD) and International Financial Corporation (IFC) believe that the current system is no longer suitable for the long-run development of the sector, though it was useful for its launch. As the result, EBRD will not be able to finance new projects in Ukraine, depending on the “green tariff”, with exception of those already in the stage of development, unless the law will be adopted to guarantee the long term of the sector’s economic stability to facilitate the necessary comfort for investors and sponsors,” reads the message.

The representatives of the international organizations shared their common stand on the launch of "green" auctions mechanism. According to them the major changes to be taken into account while developing the bill 8449-d are the following:

- the schemes supporting auctions shall come into effect after the new legislation comes into its force;

- the “green tariff” shall not be expanded for all technologies;

- the maximum possible duration of the support mechanism is offered to introduce in order to get the most affordable electricity for the customers and the country;

- not to support regional quotas in order to provide effectiveness, competitiveness, and transparency of the process;

- Ukraine’s Ministry of Energy and Coal Mining shall make public long-term goals to develop renewable energy and 1-year and 5-year quota forecasts to provide the necessary long-term vision for investors;

- an electronic platform shall be used to support the auction process, the platform is cost-effective, transparent and technically compatible;

- payoff/demand rate shall not exceed 0.8 to guarantee the competitiveness of the process;

- Banking guarantee for participating in the auction shall make at least 15 000 EURO per 1 MW of total capacity in order to prevent speculative and frivolous applications.

“We appeal to Ukrainian authorities to adopt the law as soon as possible in accordance to the comments and suggestions in order to prevent loss of momentum and potential investment bust into the sector in case the introduction of the auctions will be postponed,” the letter states.

Related: EU to provide 54 million euro to support energy efficiency in Ukraine

Earlier, Ukrainian MP Yury Chyzhmar said that the Ukrainian Parliament is blocking of the process of making a decision on the bill 8449-d in the second reading. According to the MP, energy oligarchs and DTEK, Ukraine's largest energy holding company, obstruct, together with other big energy companies.

Related: U.S. to assist Ukraine to diversify supply sources of nuclear fuel, - U.S. Secretary of Energy

“DTEK and other big energy companies are not interested in implementing an auction system in “green energetics”, which will significantly cut the fees because it means they will lose profitability. Apart from that, DTEK is interested in the continuing existing of the “dirty energy industry” of coal thermal power stations, which provide 28% of electricity and get 47% of funds of the energy market,” the MP noted.

Related: Sustainable Energy Forum: Ukraine to install 500 MWe by the end of 2018


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