August 20, 2024

On August 13, 2024, the Cabinet Ministers of Ukraine (CMU) adopted important resolutions which will accelerate the deployment of renewable energy sources (RES) and distributed generation in Ukraine, namely:

1. National Renewable Energy Action Plan until 2030, which aims to increase the share of renewable energy to 27.1% of the gross final energy consumption by 2030

2. Approval of pilot online auctions to distribute 110 MW of the RES support quota for 2024

3. Approval of the conditions for a contest to construct 700 MW of new high maneuverable generation

National Renewable Energy Action Plan until 2030

On August 13, 2024, the CMU adopted Resolution No. 761-р On Approval of the National Renewable Energy Action Plan for the period up to 2030 and the action plan for its implementation (the "Action Plan").

The Action Plan envisages the following growth of renewables in Ukraine from the beginning of 2024 until 2030 (figures as of 2024 do not cover temporarily occupied territories):

• Solar power plants - from 7327 MW to 12200 MW (7200 MW of producers and 5000 MW of prosumers)
• Onshore wind power plants - from 512 MW to 6214 MW
• Offshore wind power plants - from 0 MW to 100 MW
• Bioenergy facilities (biomass and biogas) - from 319 MW to 876 MW
• Geothermal power plants - from 0 MW to 40 MW

In order to enable the growth of intermittent renewable energy sources, the government plans to commission by2030

• High maneuver generation (most likely gas peakers) - up to 906 MW
• Energy storage facilities - up to 656 MW.

It also plans to incentivize the use of renewable energy in the transportation industry as well as heat and cooling sector.

As a result of the deployment of renewable energy sources until 2030 it plans to achieve the following growth (starting in 2025) and reach the following targets for the percentage of renewable energy in gross final energy consumption (by sector):

• Electricity - from 20.9% to 29.4%
• Heat and cooling - from 20.8% to 32.5%
• Transport - from 4.9% to 17.2%

Thus, the total share of renewable energy in gross final energy consumption should grow from 17.3% in 2025 up to 27.1% in 2030.

The Action Plan also emphasizes the need to develop the production of renewable gases and envisages the following potential for them:

• Biomethane - up to 21.8 billion cubic meters a year
• Green hydrogen - up to 44957 thousand tons a year

Notably, the Action Plan acknowledges that despite the active phase of the war, during 2022-2023, more than 650 MW of new renewable energy capacities were commissioned in Ukraine, including:

• Solar power plants - 371 MW (including 287 MW of households)
• Wind power plants - 227 MW
• Bioenergy facilities (biomass and biogas) - 50 MW
• Small hydropower plants - 1 MW

Pilot online auctions to distribute RES support quota for 2024

On August 13, 2024, the CMU adopted Resolution N 757-р On some issues of pilot auctions for the allocation of the support quota in 2024 (the "Auction Quota Resolution").

The Auction Quota Resolution envisages the following quotas for RES support to be distributed during the first pilot auctions:

• Solar power plants - 11 MW (to be located on the left bank of the Dniper river) at the auction planned for October 2024
• Wind power plants - 88 MW (across the entire territory of Ukraine) at the auction planned for November 2024
• Power plants with other types of eligible renewables -11 MW (across the entire territory of Ukraine) at the auction planned for November 2024

The Auction Quota Resolution envisages the following ceilings for bids at the auctions:

• Solar power plants - 9 eurocents per kWh
• Power plants with other types of eligible renewables - 12 eurocents per kWh

The auctions will be run by State Company "Guaranteed Buyer" on the Prozorro.Sale platform.

According to the Law of Ukraine On Alternative Energy Sources, in order to participate in the auction, a participant must submit an application accompanied by unconditional and irrevocable bank guarantee €5 per kW of the capacity for which it seeks to get support, as well as information on the ultimate beneficial owner, copies of documents on managing authorities of the participant, and information on affiliated persons.

Winners of the auctions will be obligated to provide a bank guarantee in the amount of €15 per kW of the capacity and to commission respective power plants within:

• 18 months for solar power plants
• 36 months for all other eligible powers plants

Contest for New High Maneuverable Generating Capacity

On August 13, 2024, the CMU adopted Resolution N 756-р On some issues related to the contest for the construction of generating capacity and the implementation of demand-side management measures (the "Contest Conditions Resolution") setting forth the following conditions for the construction of generating capacity:

• Term for submitting applications - 6 months after official publication
• Minimal installed capacity of a power plant - 5 MW
• Maximum installed capacity of a power plant - 80 MW
• Total volume of high maneuverable generating capacity to be built - 700 MW
• Maximum deadline for construction - December 2027
• Minimum guaranteed (design) service life of the generating unit equipment - at least 20 years (or 100,000 hours in generation mode)
• Maximum price of procurement - €854977,5 per MW and minimum term for the price payment - 10 years.

The new capacities should meet, inter alia, the following, technical requirements:

• The plants should comply with the technical requirements set out in the Transmission System Code for the connection of such installations and the requirements of environmental protection legislation.
• Highly maneuverable power plants with fast start/stop should be able to start and stop in normal mode at least four times in one day and/or up to eight times in one day in certain cases, if necessary, to ensure start and stop with a maximum permissible downtime between two consecutive start/stop cycles of 15 minutes, a total of 1800 - 2000 starts per year.
• The control range should be at least 80 percent of the installed capacity.
• The time of commissioning (full activation) from the stopped state should be no more than 15 minutes from the moment of receiving the corresponding command from the transmission system operator.
• The guaranteed continuous operation time must be not less than eight hours.
• Generating units must be able to start up in the absence of voltage in the external grid.
• The generating capacity must be ready for operation after a significant downtime of up to one month without any maintenance.
• The generating unit must be equipped with a conservation system.
• The generating unit must be able to operate on both the main and backup or emergency fuels, if necessary.
• The construction of the generating capacity should include the construction of engineering and technical protection of the equipment.

As per Resolution of the CMU dated July 10, 2019 N 677 On Approval of the Procedure for Holding a Contest for the Construction of Generating Capacity and Implementation of Demand Management Measures (the "Contest Procedure Resolution"), the following key steps should be taken:

• The Ministry of Energy of Ukraine should form a contest committee within 30 calendar days of the date of the Contest Conditions Resolution
• PrJSC NPC Ukrenergo, as the transmission system operator, must develop the contest documentation and submit it for the approval of the contest committee within two months of the date of the Contest Conditions Resolution.
• The contest documentation shall be officially published (in both English and Ukrainian versions) within5 calendar days from the date of its approval.

Contest documentation may not change any of the conditions/requirements established in the Contest Conditions Resolution but may provide for additional requirements for the developers and proposals, such as:

• Qualification requirements for the participant (experience of constructing similar projects, financial statements, information on the model for financing the project etc.)
• Qualification requirements for the proposal (technical parameters of equipment, deadline for commissioning the project, minimal guaranteed term of operation, minimal term for payment of the fee for developing the project)
• Requirements for the guaranteed security for the price proposal (to participate in the auction the participant should submit the guaranteed security in the amount of €100 000 plus €1 000 per MW of the proposed capacity, and the winner should provide guaranteed security in the amount of €30 000 per MW of the proposed capacity)
• Requirements for the contest proposal
• Information on incentives to be provided for the winner
• Criteria for selecting the winner
• Draft agreement with a contest winner

In order to participate in the contest, each participant should provide:

• Confirmation of the land rights, if necessary for the implementation of a proposal
• Prepared documentation as per the requirements of the contest documentation.

Please note that the contest set out in the Contest Conditions Resolution is an additional incentive for the deployment of high maneuverable generation, separate from the special auctions for ancillary services run by PrJSC NPC Ukrenergo in August 2024 (99 MW of FCR capacities were auctioned on August 15, 2024 and 1 GW of FRR capacities to be auctioned on August 22, 2024).

This information does not constitute legal advice and is merely the opinion of the author.