The National Energy and Utilities Regulatory Commission has approved the procedure, under which renewable energy producers benefitting from the “feed-in” tariff could exit the Guaranteed Buyer balancing group

On April 25, The Regulator approved the procedure for the entry and exit of renewable energy producers benefitting from the “feed-in” tariff from the balancing group of the Guaranteed Buyer.

The NEURC’s decision implements the legislative enactment adopted in August 2022 allowing producers benefitting from the feed-in tariff to temporarily exit the Guaranteed Buyer balancing group which by now is indirectly a pre-requisite for receiving the feed-in tariff.

Renewable procedures can leave the Guaranteed Buyer balancing group or exclude separate generating units from the balancing group by suspending the electricity purchase and sale agreement under the "feed-in" tariff. To leave the balancing group the producer submits to the Guaranteed Buyer the application with the desired date of exit. The leave becomes effective starting from the first day of the month following the month in which the producer applied for the leave; however the leave could not become effective earlier than 20 days after the date of the application. 

Once the leave becomes effective the power purchase agreement on the purchase and sale of electricity under the “feed-in” tariff suspends in terms of the Guaranteed Buyer obligation to purchase the whole volume of electricity supplied by the respective producer, and of the producer’s obligation to reimburse the Guaranteed Buyer imbalances costs and contribute to the special fund of the Guaranteed Buyer. 

The producer may re-enter the balancing group within 60 days after it applies to resume its membership in the Guaranteed Buyer balancing group.

RGC connects Ukraine's first biomethane plant

On April 13, The Regional Gas Company connected the first Ukraine biomethane plant to its networks. The company will produce about 3 million cubic meters of gas per year to meet the needs of approximately 1,500 household and industry customers.

A Biomethane Plant in the Chernihiv Oblast was commissioned by Gals Agro in 2018. The first stage of the plant had an electric capacity of 2.4 MW. Jenbacher cogeneration plants (Austria) are used there. In 2020, the construction of the second stage of the plant began, which made it possible to increase the capacity by 4.5 MW to a total of 6.9 MW. In addition, a reserve capacity for biogas production was planned for another 1.5 MW (el.), or up to 3 million m3 of biomethane per year.

In 2021, it was decided to equip the plant with a module for biomethane production. That was done because of increasing natural gas prices, difficulties with timely payment for electricity produced from renewable energy, and decarbonization of all stages of manufacturing the product that will be exported to the European Union in the future.

At the beginning of 2023, the biomethane module was installed and connected to the Chernihivgaz JSC networks.

NEURC suggests promoting the development of biomethane production

On April 25, NEURC, the Ukrainian Energy Regulator, published on the official website a draft resolution "On Approval of Amendments to Certain NEURC Resolutions on Promoting the Development of Biomethane Production" to receive comments and suggestions.

The document defines the specificities of connecting a reverse compressor station, a part of the gas transmission system, which facilitates the physical transfer of surplus gas from the biomethane production facilities to the Gas Transmission System from the gas distribution systems. These changes contribute to the alleviation of the technical limitations of biomethane transmission to the gas distribution system, thereby incentivizing biomethane producers to increase gas production volumes.

The establishment of physical and virtual entry points in the gas transmission system from the gas distribution systems (through which biomethane is transmitted in the presence of a reverse compressor station), proposed by the Draft Resolution, will ensure efficiency and transparency in accounting for the biomethane supplied to the gas distribution system and Gas Transmission System.

Furthermore, the draft resolution proposes amendments to the Methodology for Determining and Calculating Tariffs for Natural Gas Transportation Services for entry and exit points based on multi-year incentive regulation, approved by the resolution of the National Energy and Utilities Regulatory Commission dated September 30, 2015, No. 2517, with the aim of regulating the establishment of tariffs for natural gas transportation services for new entry and/or exit points into/from Gas Transmission System during the regulatory period. In addition, the Draft Resolution proposes to amend the Methodology for Determining and Calculating Tariffs for Natural Gas Transportation Services for Entry and Exit Points based on Multi-Year Incentive Regulation, approved by the NEURC Resolution No. 2517 dated 30.09.2015, to regulate the issue of setting tariffs for natural gas transportation services for new entry and/or exit points to/from the gas transmission system(s) during the regulatory period. 

Once passed, this Draft Resolution will enable virtual and physical storage and transfer of biomethane to Ukrainian consumers and export of biomethane via the Gas Transmission System to the European Union.

The Ministry of Energy plans further steps to develop the renewable gas industry  
 
On April 7, a meeting was held under the chairmanship of Deputy Minister of Energy of Ukraine Yulia Pidkomorna to discuss further steps to implement the Memorandum of Strategic Partnership between Ukraine and the European Union in the field of biomethane, hydrogen and other synthetic (renewable) gases.

The event was also attended by representatives of the Ministry of Foreign Affairs, the Ministry of Agrarian Policy and Food, fuel and energy companies and industry associations (Ukrainian Hydrogen Council, Ukrainian Hydrogen Association).

Yulia Pidkomorna stressed the importance of further cooperation in the field of renewable gases and the implementation of the Memorandum.

"The next important step is to hold a forum where participants will be able to present projects in the field of renewable gases and form a circle of innovative and investment interests of European partners. We invite all industry stakeholders to submit proposals for consideration within the framework of the planned business forum," the Deputy Minister stated.

The Chairman of the Committee on Energy, Housing and Utilities of Verkhovna Rada of Ukraine presented TOP-5 priorities in the energy sector for 2023

On April 17, The Chairman of the Committee on Energy, Housing and Utilities of Verkhovna Rada Andrii Herus presented top-5 priorities in the energy sector for 2023 in Ukraine during the First inter-committee meeting of the Verkhovna Rada of Ukraine and the European Parliament.

These priorities include:

- the restoration of the Ukrainian energy system

- energy efficiency, including responsible consumption

- development of green energy

- integration of Ukrainian energy markets into European energy markets

- development of export and import opportunities

Members of Parliament introduced a draft law "On Amendments to Certain Laws of Ukraine on Restoring Energy Security and Green Transformation of the Energy System of Ukraine" 

On April 17, MPs officially introduced a draft law "On Amendments to Certain Laws of Ukraine on Restoring Energy Security and Green Transformation of the Energy System of Ukraine", which proposes several changes in current legislation.

According to the text of draft law, among other things, it is planned to introduce incentives for the production of electricity from alternative energy sources through the self-generation mechanism.

Support for active consumers under the self-production mechanism will be provided by guaranteeing the purchase of electricity produced from alternative energy sources and supplied by such active consumers based on a self-production electricity purchase and sale agreement, which is an annex to the electricity supply agreement with the consumer.

Particularly, the draft law suggests:

• launching the mechanism of issuance and transfer of the guarantees of origin for electricity, unfolding the Ukrainian Register of Guarantees of Origin of Electricity integrated with the regional register of the Energy Community regional register, and Ukraine should become a full member of the Association of Issuing Bodies (The Association of Issuing Bodies)
  
  
• designating the NEURC as the entity authorized to issue guarantees of the origin of electricity from renewable energy sources, especially biogas (by issuing digital certification in 5 working days after application)
  
  
• reload of the renewables auctions support scheme considering the contracts for difference model

Ukraine launches a special fund for energy efficiency projects in 2024 

On April 11, Verkhovna Rada of Ukraine has amended the Budget Code of Ukraine to establish a special fund of the state budget, the State Fund for Decarbonization and Energy Efficient Transformation.

The fund will be replenished with proceeds from the environmental tax levied on carbon dioxide emissions from stationary sources of pollution. This includes the implementation of programs to improve the energy efficiency of households, utilities, public buildings, micro, small and medium-sized businesses. Another area is the introduction of energy services and the development of decentralized energy production and storage systems.

The Fund will start operating from 1 January 2024, and the Ministry of Infrastructure is currently working on developing the Procedure for its functioning," said Oleksandr Kubrakov, Vice Prime Minister for Reconstruction of Ukraine, Minister of Communities, Territories, and Infrastructure Development.

It is envisaged that the Fund's resources will be used for:

• measures and state targeted energy efficiency programs
  
  
• reducing the cost of obligations under loan and lease agreements concluded for the implementation of energy efficiency measures and the introduction of energy services
  
  
• fulfilment of debt obligations on borrowings received by the state for the implementation of such programs
  
  
• increase the use of renewable energy sources and alternative fuels and reduce carbon emissions

The Government approved the Energy Strategy until 2050 

The Cabinet of Ministers of Ukraine has approved the Energy Strategy of Ukraine until 2050 upon the proposal of the Ministry of Energy.

The document reflects the goals of the European Green Deal and is based on the principles of an integrated approach to the formation and implementation of energy policy, creating conditions for sustainable development of the Ukrainian economy.

Minister of Energy of Ukraine, Herman Galushchenko, emphasized that the relevant goals will be achieved through the development of modern and safe nuclear generation, renewable energy sources, modernization and automation of transmission and distribution systems.

The Strategy envisages that Ukraine will achieve carbon neutrality in the energy sector by 2050.

The document itself has not been published yet. It is marked “For official use only” and is being circulated in paper form to government ministries and relevant state-owned companies, Forbes Ukraine reports.

From the mid-2030s, natural gas consumption is expected to decline to as low as 10.4 billion cubic meters by 2050. This is a realistic projection, according to
former Minister of Energy Ivan Plachkov. Private consumers will transition to electricity, he believes, as outlined in the government's strategy.

Industrial consumers are expected to replace natural gas with hydrogen, according to the Ukrainian government. The government has laid the foundation for hydrogen production to begin in 2032. It is expected that up to 1.65 million tonnes of hydrogen will be produced annually by 2050. Another substitute for natural gas that the government is banking on in its plans up to 2050 is biogas. In April 2023, Ukraine launched its first biomethane plant.

In other areas the Strategy foresees:

• the consequences of the full-scale war of the Russian Federation against Ukraine, strengthening the role of energy security and enhancing the resilience of the energy system
  
  
• the results of the IPS of Ukraine's accession to the European Network of Transmission System Operators for Electricity (ENTSO-E) and deepening the integration of Ukraine's energy system into the European one
  
  
• availability of the latest technologies (in particular, production and use of hydrogen for energy purposes, small modular nuclear reactors, energy storage facilities, etc.), technical changes in the energy sector, global trends and innovative solutions, environmental safety requirements in accordance with EU standards and Ukraine's commitments
  
  
• Ukraine's international commitments on energy efficiency and use of renewable energy sources, reduction of greenhouse gas emissions, etc.
  
  
• decentralization of electricity generation throughout the country to improve the sustainability and reliability of energy supply

NEURC and MPs of Ukraine discussed the implementation of the REMIT draft law 
 
On April 3, the NEURC held a working meeting with the Members of Parliament of Ukraine - members of the Verkhovna Rada Committee on Energy, Housing and Utilities to discuss the peculiarities of the implementation of the Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency.

The Draft Law no. 5322 implementing REMIT into Ukrainian legislation was first considered in Verkhovna Rada and supported by members of the parliament in September 2022. Since that time the Draft Law is being prepared for the second hearing in the Parliament.

At the meeting NEURC's representatives shared with the Members of Parliament of Ukraine their vision of the NEURC's powers and tasks under REMIT in terms of procedures, monitoring, and sanctions. A comprehensive presentation was made, including a comparative analysis of the current and future wholesale energy market monitoring system and investigation schemes, as well as information on the stages and steps of implementing the requirements set out in Draft Law No. 5322, etc.

Ukraine and Germany expand energy partnership for green recovery and rebuilding of the Ukrainian energy sector

On April 4, In Kyiv, Minister of Energy of Ukraine Herman Galushchenko and Vice Chancellor of Germany, Federal Minister for Economic Affairs and Climate Protection Robert Habeck signed a joint Statement of Intent expanding the scope of the German-Ukrainian Energy Partnership with a focus on green renewable energy and rebuilding Ukraine's energy sector.

In the signed document, the parties agreed to expand the Partnership in areas such as restoring energy infrastructure, promoting the sustainable resilience of the energy sector, and expanding the use of renewable energy sources, including wind, solar, biomass, hydropower and green hydrogen.

The Partnership also envisages cooperation in energy saving through energy efficiency; decarbonization and reduction of carbon dioxide emissions to accelerate the transition to clean energy; and support for structural change in Ukraine's coal regions, including the implementation of just transition and green projects in these regions.

The Prime Minister of Ukraine signed an agreement to raise additional USD 200 million for the restoration of the Ukrainian energy sector

On 12 April, during his working visit to Washington, DC, Prime Minister Denys Shmyhal met with the World Bank. The meeting was also attended by Governor of the National Bank of Ukraine Andriy Pyshnyi and Minister of Finance of Ukraine Sergii Marchenko. 

During the meeting, Denys Shmyhal and the World Bank's Managing Director for Operations Anna Bjerde signed an agreement on a grant from the Multi-Donor Trust Fund for the Renewal of Ukraine's Energy Sector. The grant will amount to USD 200 million.

According to Denys Shmyhal, Ukraine's recovery starts this year, and energy is one of the priorities.

"The funds raised from the World Bank will be used to rebuild the power grid and heat supply systems in Kyiv, Kharkiv, Mykolaiv, Sumy and the cities of Chernihiv region. This winter, we have defeated Russia in the battle for light and are already preparing for the next heating season," the Prime Minister of Ukraine stressed.

As part of the reconstruction programme, Ukraine and the World Bank are also intensifying three projects: the Re-Power project in the energy sector, the RELINC project in the transport infrastructure sector, and the Heal Ukraine project in the healthcare sector.

Export of Ukrainian electricity to the EU: What is going on? 
  
On April 7, Ukraine's Energy Minister Herman Galushchenko signed an executive order allowing the resumption of electricity exports to the EU in the face of a surplus of generating capacity. It allowed for the renewal of the export of electricity from Ukraine to Moldova (since April 11, 99-134 MW at different hours) and Poland (since April 12, 75 MW per hour), and export to Slovakia was renewed on April 17 (200 MW per hour).

Since April 21, electricity exports from Ukraine via the Slovak (key) route have been suspended. This was due to the insistence of the Slovak side on joint auctions that would allow it to receive half of the proceeds from the crossing. At the same time, the legal framework did not provide for joint auctions.

Ukrenergo (Ukrainian TSO) claims electricity exports to Europe are currently hampered by the lack of a procedure for holding joint auctions for access to cross-border crossings in Ukraine. At the same time, the company called NEURC to approve such a procedure.

At the same time, the NEURC accused Ukrenergo of disrupting the auctions for the allocation of cross-border capacity in the Ukraine-Slovakia direction.

According to Energoreforma, the NEURC claims that Ukrenergo failed to provide it with information within the deadline of 19 April set in the NEURC's request of 17 April in regard to organizational measures and processes taken by the company to ensure the holding of auctions for the allocation of cross-border capacity in the Ukraine-Slovakia direction.

At the same time, the NEURC, in a commentary distributed to journalists, voiced a similar position to that of the Ministry of Energy, adding that the issue of holding bilateral auctions with the participation of Ukrenergo and the Slovak TSO of the counterparty country should be resolved within the current regulatory framework.

The rule on the temporary mechanism for distributing Ukrenergo's revenues from cross-border transmission is under consideration to be reinstated

The government plans to reintroduce the rule under which Ukrenergo will be able to distribute the revenues received from the cross-border transmission to pay off debts to Guaranteed Buyer (for further settlements with renewable energy companies) and in the balancing market.

"This is currently being agreed upon at the level of bylaws. However, if we look at the overall picture, the possible revenues from the crossing are unfortunately small. However, future crossings may increase these amounts," Yuriy Kamelchuk, MP, member of the Verkhovna Rada Committee on Energy, Housing and Utilities said.

The distribution of Ukrenergo's revenues from the crossing in August-November 2022 was made in the proportion of 50/50 for payments to Guaranteed Buyer and repayment of debts on the balancing market.

On May 4, 2023, Ukrenergo officially revealed letters to NEURC, dated September, 8-9, 2022, which confirms that Ukrenergo fulfilled their obligations in a proper manner. Instead, NEURC is suspending adoption of EU Regulations.