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Renewables Update: New Procedure on Support Quota Distribution Auctions

Renewables Update: New Procedure on Support Quota Distribution Auctions

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On 31 January 2020, the Resolution of the Cabinet of Ministers of Ukraine (“CMU”) “On Implementation of Competitive Conditions of Stimulating the Production of Electric Power from Alternative Energy Sources”, dated 27.12.2019, No. 1175 (“Resolution”), came into force. The Resolution has adopted, inter alia, the procedure on holding the support quota distribution auctions (“Procedure”).

The Procedure is developed in order to replace the feed-in tariff. It specifies the order and manner in which the so-called “support quota for commercial entities which produce electric power from alternative energy sources” (“Quotas”) will be distributed.

In particular, the Procedure specified the following:

  • All Quotas will be distributed through public online auctions (“Auction”);
  • Each year CMU will approve a resolution on Quotas for the next 5 years; such resolution must be issued by 1 December of the relevant year and must specify the following information:

-> annual Quotas for the next 5 years;
-> if applicable, the non-distributed Quotas, which are offered for the next Auctions;

-> if applicable, the list of land plots (duly allocated) (“Plots”), which are offered for the construction of renewable energy sources (“RES”) facilities; each such Plot will be complemented by (i) duly approved technical conditions for RES construction and (ii) additional Quotas; and

-> Auction’s timetable.

  • Auctions will be carried out in the following order:

The State Company “Guaranteed Buyer” (“GB”) announces an Auction and publishes relevant details on its website, including:

  • bidding lots (i.e. Quotas) for each RES;
  • details of Plots (if applicable);
  • date of an Auction and deadline for submission of applications;
  • list of documents, necessary for bidding; and
  • starting (i.e. maximum) price for each lot;

Participants register themselves in the online bidding system and submit applications for participation in an Auction with the supporting documents (including an initial price proposal for Quotas, bank guarantee, grid connection agreement, title documents to land plots, etc.);

If noone applies for an Auction or only one application is submitted, the Auction is considered to be invalid;

If an Auction is valid, the bidding is carried out in the following way:

  • the electronic bidding system (“EBS”) starts an Auction;
  • during the first 15 minutes all applicants may cross-check general information about lots;
  • during the next 15 minutes each applicant may (but not obliged to) decrease its initial price proposal;
  • upon expiry of such 15 minutes, EBS automatically closes bidding, discloses all information submitted by all applicants (including price proposals), and generates an initial report on bidding; and
  • during the next 10 business days, GB verifies tender documents and (if no breach is identified) EBS generates the final report on bidding, specifying all price proposals and the winner of the Auction (i.e an applicant who offered the lowest price);

The successful bidder and GB must execute a power purchase agreement within 15 business days following the date of the final report on bidding.

By Gennadii Roschepii, Counsel, and Oleksiy Feliv, Managing Partner, Integrites

Integrites at a Glance

Founded in 2005, INTEGRITES is a full-service law firm with head office in Ukraine and representative offices in Germany and the UK.

INTEGRITES is particularly sought after for its cross-border work – sophisticated deals and transactions, complex dispute resolution, and projects which require in-depth industrial expertise, as well as for comprehensive advice on current business operations.

In 19 years in the market the firm has served 1500+ clients from around the globe, including Fortune 500 companies, international financial institutions, and recognized leaders in various industries: from real estate and construction, infrastructure, and agriculture to manufacturing, pharmaceuticals, and retail.

Climate Change Task Force within the firm provides clients with comprehensive advice on projects targeted at the sustainable development of their business and the country in the context of energy transition and green technologies.

The expertise of the team has consistently received recognition globally and domestically

Managing partner of the firm, Dr. Oleksiy Feliv, received The Lawyer European Awards 2023 as top-3 European managing partner of the year. Named as Commended, Dr. Feliv became the only Ukrainian representative selected for this nomination.

In 2023-2024 Yurydychna Gazeta (Ukraine) named INTEGRITES in top-5 firms with the widest impact on the development of the Ukrainian legal services market, with Dr. Oleksiy Feliv on top of the list of the most effective law firm leaders in the country.

INTEGRITES was shortlisted for Law Firm of the Year: Ukraine award by Chambers Europe and The Lawyer in 2021 and 2022.

Since 2020, INTEGRITES has been listed by GAR100 as one of the world’s best law firms in arbitration.

Firm's website: www.integrites.com