"Law on agreements" expected restructuring of the tariff for a 2 MW SPS facility “Alanta”
One of the EDS-Development products are the existing SPSs from the company's own assets. Three solar power stations with a total capacity of 11 MW are offered for sale:
- Alanta Energy 2 MW - in operation since 2019.
- Sun Energy 2 MW - in operation since 2017.
- Sun Energy Mezhyrich 7 MW - in operation since 2019.
Signing of the Memorandum of Understanding on the settlement of problematic issues
in the field of renewable energy in Ukraine in June 2020, being essentially an intention - has not yet put an end to understanding the situation with tariffs. It is necessary to wait for the signing of the “Law on agreements”.
We can assume how our selling proposition will change if the new tariffs enter into force.
SPS “Alanta Energy” 2 MW
Inverter capacity of the station: 2.0 MW
Start of generation: 1st stage – September 2018, 2nd stage – April 2019
Annual generation: 3 155 000 kW/year
Current “Green” tariff: 0.15 euros ex VAT
New “Green” tariff: 0.127 euros ex VAT
Current income for the year: 473 250 euros
Income as per new tariffs: 400 685 euros
Price: 2 232 000 euros
Payback period as per current tariffs: 5 years
Payback period for the ratio of price to new tariffs: 5.8 years
Certainly, it is necessary to wait for the adoption of the “Law on agreements” in order to propose the final version of the payback period calculation of the facility. However, it is indisputably that industrial solar power stations that were commissioned before 2019 are an attractive ready-made product for investment.
Memorandum of Understanding on the settlement of problematic issues in the field of renewable energy in Ukraine - June 2020 OR what’s waiting for us after the adoption of the “Law on agreement”?
State authorities of Ukraine and investors/RES producers concluded a Memorandum of compromise in June 2020.
Why is that necessary?
- The rapid growth of RES facilities over the past year has led to a significant increase in payments to producers as per the “green” tariff. According to the Agreements and Article 65 of the Law of Ukraine "On the electrical energy market", the Guaranteed buyer is obliged to pay timely and fully for the electrical energy under the electrical energy sale and purchase agreements as per the "green" tariff, while the GB must ensure the availability of electrical energy for household consumers, i.e. cannot raise tariffs to the population. Thus, serious contradictions arose regarding possible changes in the legislative framework.
- Today, the RES Manufacturers create imbalances that go to the expenses of the Guaranteed Buyer.
- This Memorandum should also ensure the introduction of auctions for the allocation of RES support quotas and the further development of the area in Ukraine on a competitive basis.
Note: Memorandum is NOT an amendment to any Agreement or legal document. The memorandum retains the right to appeal to a court or arbitration to protect its rights and interests.
On the part of the state bodies of Ukraine
- Until August 1, 2020 - The Law on agreement will be adopted.
- Since August 2020 - full and timely current payment by the GB to the RES producers for e/e.
- In the 4th quarter of 2020 - the GB will pay 40% of the debt to the Producers;
quarterly by 15% in 2021 - the GB will pay off 60% of the debt to the Producers.
- Not later than one month after the Law will enter into force - will determine the procedure for compensation for non-generated e/e.
- Will propose changes that will allow RES Producers to leave the balancing group of GB and sell electrical energy freely on the market.
- Not later than one month after the Law will enter into force - will revise the tariff of PJSC NPC Ukrenergo for the service of electrical energy transfer.
- Not later than one month after the Law will enter into force - will review the price limits for the GB on the "day-ahead" market.
- Restructuring of the RES producer loans - together with the state-owned banks and the National Bank of Ukraine.
- Will adopt regulatory legal acts on the introduction, operation and promotion of energy balancing and storage systems.
- Until the end of 2020 - will approve annual support quotas and hold auctions for the quota distribution.
On the part of the RES Producers
The RES Producers accept the following conditions for restructuring the "green" tariffs:
- The "green" tariff is reduced without extending the validity of the contracts, i.e. until 2030.
- For the SPS from 1 MW and more, which were commissioned from July 1, 2015 till December 31, 2019 inclusive - 15%.
- For the SPS up to 1 MW, which were commissioned from July 1, 2015 till December 31, 2019 inclusive - 10%.
- For the WPS that were commissioned from July 1, 2015 till December 31, 2019 inclusive, and which consist of wind turbines with a unit installed capacity of 2000 kW or more - by 7.5%.
- For the SPS and WPS commissioned from January 1, 2020 - by 2.5%.
- For the SPS and WPS commissioned before July 1, 2015, the limit (maximum) "green" tariff is set as for the SPS over 10 MW commissioned before March 31, 2013 inclusive, reduced by 15%.
- If the "green" tariffs for the electrical energy facilities, taking into account the above-mentioned restructuring conditions, exceed the limit "green" tariff, the "green" tariffs for such facilities are reduced to the level of the limit "green" tariff.
- The penalty for all errors in forecasting the production of e/e is in the amount of 50% from January 1, 2021 and 100% is from January 1, 2022 and only if the corresponding forecast errors exceed more than 5% - for SPS and more than 10% - for WPS.
- The RES producers accept conditions for limiting the deadlines for commissioning new SPS facilities as per the "green" tariff until July 31, 2020.
- The fact that the construction of the RES facilities that won the auctions for the distribution of the support quotas is completed, is further confirmed by the act on the provision of services for connecting the transmission system or distribution system to the electrical grids of the operator.
- PJSC NPC Ukrenergo and the GB, together with the RES Producers, will analyze and agree on a plan for improving the technology for forecasting weather conditions and forecasting the production of RES e/e. The Ministry of Energy and Environmental Protection (or its legal successor) will study the possibility of financing this project by international financial institutions.
- The Energy Community Secretariat will assist the state authorities of Ukraine and the RES producers in the implementation of the agreements set out in this memorandum. In case of any disputes in connection with or in the context of the implementation of this Memorandum, the Parties may submit the dispute for a peaceful resolution through mediation with the support of the Center for dispute resolution and negotiations of the Energy Community Secretariat. The initiation of mediation in accordance with this clause does not deprive any RES producer of the right to go to court or arbitration to protect their rights and interests.
- After the Parties fulfill all the obligations provided for by this Memorandum, the state authorities of Ukraine undertake, within the limits of their competence, to take all necessary measures in order to prevent the adoption by the relevant state authorities of Ukraine of laws and other regulatory legal acts on deterioration of the conditions for carrying out business activity by RES Producers, in particular by introducing additional taxes, fees, fines, reducing the "green" tariff, and so forth.
- The RES Producers and the state authorities of Ukraine will bear their own expenses associated with the implementation of this Agreement.
- If the Law on agreement adopted by the Verkhovna Rada of Ukraine will contain provisions that contradict the provisions agreed by the Parties in this Memorandum, this Memorandum loses force, and the agreements specified in it are deemed to be not reached.
- This Memorandum is public and open to accession by any producers of electrical energy from renewable energy sources and / or associations that unite them, by sending a letter of accession to the Memorandum to the Ministry of Energy and environmental protection of Ukraine (or its legal successor).
- The terms of this Agreement do not apply to consumers of electrical energy, including energy cooperatives and private households, whose generating installations produce electrical energy from alternative energy sources and for which a "green" tariff is set on the date of signing this Agreement.
Land allotment for industrial construction
Land acquisition - a land management procedure that establishes (terminates) the rights to a site. The action transfers, establishes or fixes the boundaries of the earth.
- permanent - transfer to ownership;
- permanent - long-term lease;
- temporary - allocation for use for specific surface or underground work.
This is an important stage for the privatization or registration of land, mandatory for registering the location of the site, land management and cadastral work.
Land allotment project
The project for the allocation of land for construction is a comprehensive document defining:
- purpose of the land;
- the boundaries of the land and the planned structure;
- compliance of the construction with urban planning documents;
- availability of use restrictions.
During the development of the project, a boundary plan, a topographic plan and a cadastral plan (in case of its absence) are compiled.
Land allocation procedures are regulated by law and determine the nature of the possible use of the site.
Who carries out the land allocation
Only specialists and legal entities with appropriate licenses can carry out land acquisition procedures.
The company EMF-Development provides comprehensive land allocation services for industrial construction. Our experts competently, in a short time and at an affordable price will perform the whole range of works.
Our manager will provide a free consultation: