On 13 August 2024, the Ukrainian Government adopted Order No 757-p “Certain Issues of Pilot Auctions for the Allocation of the Support Quota in 2024” (“Green Auctions Order”) scheduling the first auctions for supporting renewable energy producers under the feed-in premium mechanism (“Feed-in-Premium”) later this year.
The Feed-in-Premium mechanism was introduced a year ago as a replacement for a feed-in tariff, as the latter turned out to be economically challenging for the state. The Feed-in-Premium mechanism allows energy producers to freely trade on the market, with the Guaranteed Buyer, a specially designed state enterprise, covering the difference between the auction price and the market price. In turn, the producers must pay service costs once the market price exceeds the auction price.
The Green Auctions Order determines the following terms of the first auctions:
- the overall support quota to be allocated is 110 MWh, with wind energy receiving 88 MWh of support, solar energy 11 MWh, and other renewable sources also receiving 11 MWh
- the bidding price cannot exceed 9 EURct/kWh for solar and wind energy and 12 EURct/kWh for electricity from other renewable sources
- the future facilities can be located anywhere within the territory of Ukraine (excluding temporally occupied territories), except for solar power plants that should be located only on the left bank of the Dnipro River
An auction winner undertakes to commission solar power plants within 1.5 years and other renewable energy facilities within three years after concluding an agreement on receiving the support under the Feed-in-Premium mechanism.
The support under this mechanism is provided for 12 years after connecting constructed facilities to the grids.
The first auction for state support under the Feed-in-Premium mechanism will be held through the Prozorro.Sale online system on 31 October 2024. The auction will allocate the support quota for solar energy in a total amount of 11 MWh.
The bids can be submitted starting from 30 September 2024.
We expect that the implementation of the Feed-in Premium mechanism will attract investments in the renewable energy market, stimulate the construction of renewable energy facilities, and contribute to ensuring Ukraine’s energy independence.
By Glib Bondar, Senior Partner, and Maksym Maksymenko, Partner, Avellum
