February, 2020

Future alternative electricity producers were awaiting a regulatory framework for the holding of auctions since the enactment of Ukrainian Law No. 2712-VIII of 25 April 2019, introducing amendments to certain Ukrainian Laws to provide competition in the alternative electricity production. The Law changed the ‘feed-in’ tariff regime and introduced a system of auctions in the Ukrainian renewable energy sector. The regulatory framework was expected to be adopted by 22 August 2019, with the first auction scheduled to take place in the rest of 2019. Further, the Cabinet of Ministers of Ukraine should have determined, before the end of 2019, the volume of quotas for the next five-year period.

With some delay — on 27 December 2019 — the Cabinet of Ministers of Ukraine passed its Resolution No. 1175, dated 27 December 2019 and providing competitive conditions to promote alternative electricity production (‘Resolution No. 1175’). Resolution No. 1175 prescribes the manner for holding auctions for allocation of support quotas (the ‘Auction Procedures’) and for selecting electronic platform operators to hold such auctions (the ‘Operator Selection Procedures’).

The Auction Procedures govern (1) the setting of annual quotas to support business entities engaged in the alternative electricity production; (2) the operation of the electronic trading system; (3) the matters of preparation for an auction; (4) the holding of auction; (5) the determination of the winning bidder following the auction; (6) the conclusion and publication of a power purchase agreement in the electronic trading system; (7) the provision and refund of a bank guarantee; (8) the requirements for guarantor banks, (9) the amount and manner of payment of remuneration to authorised electronic platform operators, and other aspects of the holding of auctions.

In particular, the Auction Procedures provide that land plots can be included in an auction for the purposes of construction of renewable energy facilities meeting certain technical specifications and conditions for connection to the grid (‘Land Plot Auction’). A Land Plot Auction is held separately from a general auction.

The Auction Procedures outline the rules of provision and refund of bank guarantees of a bidder and winning bidder. In accordance with the Procedures, there are three types of bank guarantees to be provided by the bidders and winning bidders:

  • an irrevocable bank guarantee for participation in the auction;
  • an irrevocable bank guarantee securing the performance of contractual obligations; and
  • an additional, irrevocable bank guarantee securing the performance of contractual obligations.

Operator Selection Procedures set out a mechanism for selecting electronic platform operators to hold auctions for allocation of support quotas, authorising electronic platforms, and providing authorised electronic platforms with access to the electronic trading system; and determine the amount and manner of payment of the fee charged for such access. Resolution No. 1175 defines State Enterprise ProZorro.Sales as the administrator of the electronic trading system for the purposes of holding of auctions allocating support quotas.

The text of Resolution No. 1175 was published on 31 January 2020 in the Uriadovyi Kurier newspaper. The Resolution has therefore become effective.

 

For additional information, please contact the Asters Partner Yaroslav Petrov or Senior Associate This email address is being protected from spambots. You need JavaScript enabled to view it..

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