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 Participants of the Solar Energy Market Sharply Criticized NERC Draft Law Reducing the "Green" Tariff

Key players of the Ukrainian market of solar energy sharply criticized the draft regulation, promulgated by NERC website about the "green" tariff changes for solar power plants.

Market participants, investors and lenders to the projects of the brunch who were present at the meeting of the NERC on 30 July called such initiatives to be discriminatory, RBC Ukraine reports.

"There is reason to believe that the regulator makes anti-competitive practices within the meaning of Article 15 of the Law "On Economic Competition," the meeting participants stressed. The representatives of the European-Ukrainian Energy Agency (EUEA), the law society Arzinger, the EBRD, Oshchad Bank", developers of Rengy Development, SUNELECTRA and others as well as heads of professional associations in the field of renewable energy and a representative of the Ministry of Energy and Coal Industry of Ukraine took part in discussion of the announced project.

According to the participants, the NERC is trying to replace the calculation of "green" tariffs laid down by the Law (article. 17-1) by own calculation using the abovementioned project having any reasons and exceeding the authority envisaged by the Law "On Electric Power Industry", referring to the order of the Cabinet "On improving the system of payments for electricity from alternative energy sources" №589-p, which is exceptionally recommendatory.

"The proposed change is flagrant violation of the Constitution and laws of Ukraine and it is impossible, taking in consideration that the provisions of Art. 17-1 of the Law "On electric power industry" in this part have not changed since 2009 and were used as they are for the past five years as well as with regard to the principle of higher legal force of legal norms over the norms in the bylaws (which is the Cabinet's order)," the market players noted.

In their view, the adoption of this regulation will make all built solar power plants (400 MW of installed capacity, excluding the Crimea) unprofitable, will lead to defaults on bank loans (more than EUR 750 million of loans and guarantees about EUR 165 million of which are the loans of Oshchad Bank) and will cause losses to investors in excess of EUR 250 million and equipment suppliers on the terms of trade credit in the amount of about EUR 300 million.

Speaking at the meeting, the representative of the EBRD stated categorically about inadmissibility of adopting the recommendations for the calculation of "green" tariff provided by the order №589-p and drew the attention of the audience to the fact that this move would entail a violation of the guarantees to investors in solar energy projects, including those built for the EBRD loans.

During the discussion, the representative of the Ministry of Energy and Coal Industry of Ukraine voiced a number of calculations on the basis of which the ministry came up with such an initiative. The meeting participants drew the Commission (NERC) attention to the fact that these calculations raise numerous questions from analysts and industry experts and contain evidential inaccuracies. The calculation methods and their basis is questionable, therefore, the conclusions of the feasibility and savings due to the tariff reduction does not have an economic ground, the alternative energy sources market players summarized.

Media previously wrote that it is possible to reduce the schedule rate only by legislative action but not by an act of government. Otherwise, this will lead not only to image problems for the government (The representatives of leading law firms, as well as the EBRD representative to Ukraine have been repeatedly expressed this opinion), the real harm to the entities and the need to repair the damage from the budget but also quite tangible penal consequences for exceeding powers and authority (The Article 365 of the Criminal Code of Ukraine).

According to the results of the meeting the EBRD and EUEA decided to write a letter of appeal to the Prime Minister of Ukraine Arseniy Yatsenyuk drawing the Government's attention to the inadmissibility of the adoption of this regulation.

The NERC draft introduces amendments to the procedures for the establishment, revision and termination of the "green" tariff for economic entities. In particular, it is proposed to reduce peak index in the calculation of "green" tariff fixed on 1 January 2009, from 1.8 to 1.01, which would entail the tariff reduction by almost half.

 
 
 
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