Clean Energy Tool
Reliable, consistent and digestible information for investment in clean energy projects around the world.
Reliable, consistent and digestible information for investment in clean energy projects around the world.
"Guaranteed buyer" sums up its activities from May and June 2023
On June 8, 2023, Guaranteed Buyer SE, who is the off-taker of the whole volume of renewable electricity generated under the feed-in tariff, reported that in May 2023 it sold 591,690 MWh of green electricity under 255 bilateral contracts concluded with 188 winning bidders at the Guaranteed Buyer’s auctions, average selling price in May 2023 amounted to UAH 2,677.77/MWh (EUR 66.95/MWh). The volume of electricity sold in May 2023 is the largest amount sold during one month since the beginning of 2023 and little more than double that sold in May 2022.
In May Guaranteed Buyer SE purchased 889,900 MWh from producers, 715,900 MWh of this were produced by solar generation.
In total, during the first 5 months of trading, SE "Guaranteed Buyer" has held 51 auctions, 588 auction winners have been identified and 834 additional agreements have been concluded with them.
In June Guaranteed Buyer SE paid to renewable producers UAH 253 mln (EUR 6.235 mln) for electricity delivered in April 2022 and increased the level of settlements with renewables for April 2022 to 49.4%.
Guaranteed Buyer SE is repaying historic debts after receiving the repayment of debts from Ukrenergo JSC (the national transmission system operator) which is currently UAH 21.5 billion (EUR 537.5 mln) in debt to Guaranteed Buyer SE for its services relating to an increase of renewable electricity generation.
In general, the status of settlements with renewable energy producers benefitting from the feed-in tariff is displayed in the chart.
National Bank of Ukraine observes the worsening of banks’ financial standing due to the hardships on Ukrainian RES market
In its Report on financial stability for June 2023 National Bank of Ukraine states that up to 4% of the loan portfolio of private-owned banks and up to 13% of loan portfolio of state-owned banks are loans to Ukrainian RES.
Due to revenue shortfalls, damage (according to NBU up to 20% of solar power plants and 80% of wind power plants were damaged during hostilities), and loss of facilities, debtors are unable to fulfil their debt obligations. The share of non-performing loans in the industry at the beginning of May rose to 51% compared to less than 3% before the outbreak of the full-scale russian invasion. The lack of a safety net could lead to a new wave of defaults after companies exit the temporary relief regime debt repayments.
Ukraine increased electricity imports by almost 6 times - up to 23.6 thousand MWh in May
In May, Ukraine increased electricity imports by 5.9 times to 23.6 thousand MWh. At the same time, electricity exports during this period decreased by 57% to 41.3 thousand MWh. This is evidenced by the calculations of ExPro.
Ukraine imported almost 18 thousand MWh from Slovakia and 5.6 thousand MWh from Moldova. The increase in imports was caused by lower prices in European markets. According to the Okte exchange, the base load price on the Slovak spot market dropped to 40 euros/MWh at the end of May. For some hours, the price could reach negative values.
In May, exports were made to two destinations - Moldova (57.5%) and Poland (42.5%). Ukraine lost the opportunity to export to Slovakia due to inconsistencies in the conduct of auctions for the allocation of capacity. Since the beginning of 2023, Ukraine has imported 238.8 thousand MWh and exported 137 thousand MWh.
ENTSO-E has increased the capacity of interconnectors for electricity imports to Ukraine and Moldova
On June 21, 2023, the European Network of Transmission System Operators for Continental Europe (ENTSO-E) increased the capacity of interconnectors for electricity imports to Ukraine and Moldova to 1200 MW. Now, the maximum available transmission capacity from continental Europe to the Ukraine/Moldova block will increase by 150 MW.
Guaranteed Buyer SE received UAH 21.6 million for PSO export in May
Exporters transferred UAH 21.6 million (EUR 544 million) to the state-owned enterprise in May 2023 for the implementation of the export PSO, reducing the load on the main generation for the service of covering the tariff for the population. This is an important initiative and support of PSO for the population in a special period.
Ukrainian legislation effective since July 2022 obliges Ukrainian exporters to pay 80% of their profit to the Guaranteed Buyer as a public service obligation.
Ukraine reshapes the renewable sector regulations to ensure the restoration and green transformation of its energy system
Ukraine introduces the Law On Amendments to Certain Laws of Ukraine on the Restoration and Green Transformation of the Energy System of Ukraine (the “Green Transformation Law”).
The Green Transformation Law:
• Introduces the mechanism for issuance, transfer and utilization of guarantees of origin
• Reinitialises the green auctions support scheme
• Allows renewable facilities operators benefiting from the feed-in tariff to restore damaged facilities while retaining the feed-in tariff
• Limits the opportunity to retain grid connection terms for a wind project located within the occupied territories
Detailed overview of the Green Transformation Law has been published on our website.
Ukraine transposes REMIT rules in the national legislation
The draft law "On Amendments to Certain Laws of Ukraine on Prevention of Abuse prolongation Wholesale Energy Markets" adopted on June 10th, 2023 has become the law effective since July 2, 2023.
The Law transposes REMIT rules in Ukraine. The document provides for the introduction of obligations for companies organizing trading operations to report suspicious transactions. According to the draft law 5322, the National Commission for State Regulation of Energy and Public Utilities will be responsible for combating oligarchic manifestations, as the document provides for strengthening its powers to investigate abuses.
Draft Law 5322 obliges the National Commission to approve a list of practices that may be considered manipulation or attempted manipulation of energy markets. It also provides for the creation of a mechanism for influencing and bringing to justice perpetrators of violations. Additional opportunities are provided for the NEURC to monitor, detect violations, investigate them, identify dishonest participants, and impose fines on them.
Additionally, the Law Provides Investors with the Path to Complete Pending Wind Power Projects whose development has been affected by the russian full-scale invasion and changes “feed-in” tariff rates for wind power projects commissioned after July 1, 2023.
Detailed overview of this aspect of the Law has been published on our website.
NEURC sets new electricity price caps
On June 27, the Regulator adopted the Resolution "On Setting Price Caps on the Day-Ahead Market, Intraday Market and Balancing Market".
The Resolution sets the following price caps:
• day-ahead market (DAM) and intraday market (IDM):
• maximum marginal prices for hours of minimum load
(from 00:00 to 07:00 and from 23:00 to 24:00) - UAH 3000 (EUR 75)/MWh;
• for hours (from 07:00 to 19:00) - 5600 UAH (EUR 140)/MWh;
• for hours of maximum load (from 19:00 to 23:00) -
7200 UAH (EUR 180)/MWh;
• price floor - 10 UAH (EUR 0.25)/MWh;
on the balancing market:
• the maximum price ceiling is 125% of the DAM price determined by the market operator for each settlement period of the relevant day of delivery;
• price floor - 0.01 UAH /MWh.
In comparison to price caps applicable before May 31, 2023, DAM and IDM price caps increased, while price floors felt to the minimum level.
RES market participants opposed decrease of floor prices levels due to their restrictive effect on the market development. UARE reported that the proposed minimum price cap on the day-ahead market will undermine the already unstable financial position of the SE Guaranteed Buyer. As a result of such a restriction on DAM, they expect a deterioration in the trading activities of SE Guaranteed Buyer, which will result in an increase in the level of non-payments by Guaranteed Buyer to producers under the FIT, an increase in the amount of compensation paid by the Transmission System Operator to Guaranteed Buyer, and an increase in the electricity transmission tariff.
The Government approved the plan for the corporatization of SE ENERGOATOM
On June 27, 2023, the Cabinet of Ministers adopted a decision approving the plan to transform the State Enterprise National Nuclear Energy Generating Company Energoatom into a joint-stock company with 100% state-owned shares.
The plan provides for a full inventory of the company's property in June-July 2023, selection of a valuation entity on a competitive basis for the purpose of conducting an independent valuation of property, etc.
In November 2023, according to the plan, it is planned to approve the property valuation report and prepare draft government decisions on approving the transfer deed of property to the authorized capital of the joint-stock company, on approving the draft charter of the JSC, the regulations on the supervisory board, the executive body of the JSC, etc. Also in November, a draft decision on the issue of shares is scheduled to be submitted to the Government for consideration. The actual issue of shares and the transfer of 100% of the issued shares of Energoatom is expected to take place in December 2023.
The process of transforming the state-owned enterprise into a joint-stock company with 100% of its shares owned by the state will be completed with the formation of the personal composition of the supervisory board and executive body of the company in December 2023 - March 2024.
The decision was made pursuant to the Law of Ukraine "On Joint Stock Company "National Nuclear Energy Generating Company "Energoatom", which provides for the corporatization of the state enterprise and is in the context of the corporate reform implemented by the state.
EBRD top manager is confident that after the war Ukraine will be very interesting for private investors to develop renewable energy sources
This statement was made by Harry Boyd-Carpenter, Managing Director of Climate Strategy and Implementation at the European Bank for Reconstruction and Development, during the URC 2023 conference in London on June 21, 2023. According to him, we should expect a large wave of investment in renewable energy sources, as Ukraine has already demonstrated its ability to develop renewable energy before a full-scale invasion, when 5 GW of privately financed renewable energy was created.
According to him, Ukraine will also receive public sector money, but it should be used primarily for the development of nuclear energy, as well as for the construction and reconstruction of grids to ensure the operation of a decentralized renewable energy system, among other things.
Boyd-Carpenter noted that the contours of Ukraine's energy sector in the future are quite clear: it will be built on nuclear and renewable energy, and the country has enormous resources in all these areas.
At the same time, the EBRD representative noted that renewables had previously developed under "imperfect market and tariffs," calling it a difficult transition period, but expressed confidence that their development would be based on three fundamental pillars that would remove these problems. These are:
▪️commitment to a "green" future;
▪️market reforms;
▪️integration with the European energy system.
In addition, Carpenter assured that the EBRD intends to continue to financially support Ukraine.
"EBRD will provide EUR 3 billion of support to Ukraine. And we are already halfway there. Much of this has come in the form of liquidity support for the energy sector - Naftogaz and Ukrenergo," the banker emphasized.
The United States will provide Ukraine with $520 million in financial assistance to rebuild its energy infrastructure
On June 21, 2023, U.S. Secretary of State Anthony Blinken announced that the United States would provide $1.3 billion in financial assistance to Ukraine to be used for energy and infrastructure needs during a speech at an international conference on rebuilding Ukraine.
According to the Secretary of State, the US will invest $520 million to help Ukraine modernize its energy system
UNDP publishes report on "green" transformations in Ukraine's energy sector
On June, 20, 2023, UNDP updated its report "Towards a Green Transition of the Energy Sector of Ukraine" on the Energy Damage Assessment.
According to the report’s foreword, Ukraine's energy system remains extremely vulnerable and continues to operate in emergency mode with little or no safety margin for both power grids and generation.
UNDP analysts also provide the following statistics:
• Generation capacity has more than halved, from 37.6 GW to 18.3 GW as of April 30, 2023;
• Maneuvering capacity in the system suffered the most and decreased by 68% from 14.3 GW to 4.6 GW, mainly at thermal power plants;
• Available nuclear generation capacity decreased by 44% from 13.8 GW to 7.7 GW;
• Available hydropower generation decreased by 29% from 6.6 GW to 4.7 GW;
• Available RES capacity decreased by 24% - from 8.1 GW to 6.2 GW.
The World Bank estimates that the damage caused to the infrastructure of electricity, gas, heat supply and coal mining exceeds USD 10 billion and continues to grow, the report says.
At the same time, according to the UNDP, in the medium term, the loss of outdated coal generation opens the possibility of replacing it with greener alternatives and decentralizing generating capacity.
EBRD to support Ukraine’s energy sector with EUR 600 million this year
The relevant memorandums were signed on the sidelines of the Ukraine Recovery Conference in London by Prime Minister of Ukraine Denys Shmyhal, the EBRD, and SC "Ukrhydroenergo", NPC Ukrenergo, and Naftogaz.
The memorandum with Naftogaz envisages three main areas of cooperation:
• formation of strategic natural gas reserves;
• investments for decarbonization and reduction of methane emissions
• investments to improve energy efficiency.
The Memorandum in the field of hydropower provides for assistance in restoring and modernizing hydropower plants, and enhancing their reliability and efficiency.
The Memorandum of Support for Ukrenergo aims to provide resources to the company to cover critical costs. To ensure stable and uninterrupted transmission and dispatch of electricity.
G7+ and Ukraine joint statement about clean energy partnership
On June 21, 2023, G7+ countries and the Government of Ukraine made a statement of deepening the current cooperation in The G7+ Ukraine Energy Coordination Group.
The G7+ group will work with Ukraine to develop and deepen a Clean Energy Partnership over the coming months with goals of:
• accelerating the adoption of the applicable core European Union energy legislation (EU acquis), increasing energy market efficiency, and integrating with the EU market
• increasing the production and use of low carbon energy sources
• implementing just transition principles in making efforts towards the phase out of Ukraine’s use of unabated coal in power generation to accelerate carbon neutrality while adding power capacity that improves the reliability and competitiveness of Ukraine’s energy system
• upgrading energy infrastructure to the best global standards to enhance resilience and increase efficiency
• through an enabling environment, attract innovative technological and financial solutions.
The group will focus on utilizing existing donor instruments to provide coordinated support towards a resilient, efficient, more decentralized, and smart energy system which will serve Ukraine’s economic revitalization and long-term growth. Our efforts will aim to support private financing for the energy sector, laying the groundwork for Ukraine’s transition away from its reliance on hydrocarbons, and firmly link Ukraine’s energy reconstruction to its EU accession path and EU energy and climate policy. The Partnership will complement existing bilateral energy partnerships between G7+ members and Ukraine and will recognize the importance of involving and empowering local administrations in the green recovery. The work of this partnership group will support the wider efforts of the Multi-Agency Donor Coordination Platform (MDCP) for Ukraine.
Ukrainian Regulator simplifies the access to the gas transmission and distribution systems for biomethane producers
On June 8, 2023, the NEURC adopted the Resolution "On Approval of Amendments to Certain NEURC Resolutions on Promoting the Development of Biomethane Production", which improved the conditions for access of biomethane producers to gas infrastructure facilities.
The document amends the Gas Transmission System (“GTS”) Code and the Gas Distribution Systems (“GDS”) Code, improves the conditions for biomethane producers' access to gas infrastructure facilities and eliminates technical restrictions on the transmission of biomethane to the gas distribution system.
Particularly, the surplus biomethane that would not be consumed by the consumers connected to the local GDS operator’s network could be transferred to the GTS, for example for export or delivery to other consumers in Ukraine.
New rules also foresee that gas transmission points (where gas flows between GTS and GDS) with the capacity below 3,000 cubical meters may not be equipped with gas chromatographs, that significantly reduces costs of low-capacity producers of biomethane.
The new rule also supplements the Methodology for Determining and Calculating Tariffs for Natural Gas Transmission Services, according to which, if it is possible to transport natural gas through new entry or exit points without a set tariff, the NEURC may set tariffs for such points. The tariffs will be equivalent to the current tariffs for the respective points in the gas transmission system. The revenue generated from such tariffs will be credited to the regulatory account.
Such steps should encourage biomethane producers to increase gas production. This will contribute to the development of biomethane production in Ukraine and the achievement of climate neutrality, the fulfilment of Ukraine's Second Nationally Determined Contribution under the Paris Climate Agreement, which is in line with the strategy of reforming the energy sector in EU member states and Ukraine. According to the NEURC, Ukraine could produce approximately 22 billion of cubical meters of biomethane annually.
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