Payment for curtailments of sustainable generation in Ukraine

May 26, 2020 05:49 PM ET
  • Since November 2019, particular RES manufacturers have actually been periodically compelled to lower their result or stop manufacturing of electric power completely under the guidelines of Ukraine's transmission system driver, NEC Ukrenergo. DTEK, together with numerous various other big market gamers led the call for restrictions. Most of the nation's RES manufacturers have actually come to be concerned.
Payment for curtailments of sustainable generation in Ukraine
Image: Bossi/Flickr

According to existing regulation, the transmission system driver is required to, as well as has the right, to stabilize Ukraine's power system. This consists of applying a decrease, or entirely quiting electrical power manufacturing.

Such commands are precisely put on various RES manufacturers. Huge generation terminals with a capability of 50 MW or even more are typically targeted due to the fact that, in the viewpoint of the transmission system driver, their curtailment can assist to immediately stabilize the system as well as rapidly fix the functional protection problem.

According to the stipulations of the legislation, the TSO can put curtailment orders on RES manufacturers, if all various other readily available propositions by market individuals to lower their work have actually been approved by the TSO.

Additionally, the regulation develops that the worth of all the electrical energy not produced because of the curtailment has to be compensated completely to the RES manufacturer, according to either the developed "eco-friendly" toll or the public auction cost (whichever applies).

Nonetheless, no by-laws have actually been taken on to manage the treatment for curtailment settlements. As an example, since today neither policies to compute the quantity of the power that could be created by a certain power resource, neither the resources where corresponding payments will be made, are offered.

The setting of the transmission system driver has actually been that lack of the corresponding comprehensive order on curtailment payment will be the basis for not compensating RES manufacturers.

Such a method is not appropriate for the marketplace gamers. In feedback, they have actually asked to review and also control the issue along with the transmission system driver. As the outcome of a number of months of job, a method for computing unrefined electrical power has actually been established and also submitted to the regulatory authority for authorization:

  1. Resources of funds for curtailment settlement will certainly consist of the transmission system driver's transmission toll and also be positioned within a charge for a boost of the share of electrical power created from RES' as its part.
  2. The curtailment payment will certainly be repaid by the Guaranteed Buyer within discrepancy negotiation plans in its harmonizing team. Quantity of curtailment settlement will be based upon lost outcome computed based on the technique for curtailment estimation as well as "environment-friendly" toll authorized by the regulatory authority for the corresponding RES manufacturer. Consequently, the Guaranteed Buyer and also the RES manufacturers will end agreements on repayment for the share of service expense for electrical power discrepancy negotiation. After intro of obligation for inequalities, the RES manufacturers will certainly get curtailment settlement minimized by the quantity of inequalities settlement due by them.
  3. Approach for curtailment computations will certainly develop specifics of curtailment estimations for various RES innovations, specifically, day-to-day generation patterns, weather, and so on

Important problems

The draft technique is presently being refined by the regulatory authority. Nevertheless, one more important concern for RES manufacturers has actually appeared. Throughout arrangements in between the Ukrainian Government as well as RES manufacturers on the feed-in toll reorganizing systems, the federal government shows up to have actually found a powerlessness in the curtailment settlement provisions, which permits it to control them to make RES manufacturers use volunteer restructuring.

Specifically, it is recommended that those RES manufacturers that do not consent to the feed-in toll restructuring will certainly not be qualified to curtailment settlement. It deserves stating that no capped quantity of feasible curtailments will certainly be recommended. Those RES manufacturers that do accept restructuring will certainly be qualified to curtailment settlement.

No matter whether RES manufacturers and also the federal government get to an agreement on the FIT restructuring, it is anticipated that the draft legislation on adjustments to Ukraine's sustainable regulation will certainly be submitted to the parliament no behind completion of May. Presently, all industry market gamers have actually iced up beforehand as well as are expecting the least unsafe situation.

Regarding the writers

Max Lebedev is a companion, head of renewable resource, business regulation as well as M&A methods at Golaw. He is likewise vice chairman of European-Ukrainian power firm. Max's transactional experience consists of a complete lawful assistance to financiers as well as programmers of solar, wind and also biomass power projects in various areas of Ukraine.

Taras Lytovchenko is advise at Golaw, focusing on business regulation and also M&A. With greater than 7 years of experience, Taras takes an energetic duty in the lawful assistance of renewable resource projects in Ukraine. He encourages customers on all phases: from the option and also acquisition of the project to the appointing of the nuclear power plant as well as getting feed-in toll.