Paritet presentation gt_ renewable energy projects_nucc
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Paritet presentation gt_ renewable energy projects_nucc Presentation Transcript

  • 1. Legal aspects of implementation of projects under “green” tariff NUCC MEETING 19.01.2012 Borys Danevych, attorney-at-Law, Partner at PARITET law firm
  • 2. Content
    • Incentives
    • Rates change/decrease in the future
    • Ukrainian content
    • Getting “green” tariff
  • 3. Potential
    • NAER (the National Agency for Efficient Use of Energy Resources) estimate of the renewable energy potential
    Types of renewable energy sources Annual energy potential Theoretically possible Technically achievable billion kWh million  tce billion kWh million  tce Wind Power 270.0 97.2 41.7 15.0 Small Hydro Power 12.5 4.5 8.3 3.0 Biomass 407.0 50.0 162.8 20.0
  • 4. Actual statistics
    • In the middle of 2009 the core legislation on the current feed-in tariff scheme (GT) was enacted
    • GT is currently approved for:
      • 8 companies operating 8 wind farms
      • 2 companies operating 2 biomass power plants
      • 17 companies operating 17 solar power plants
      • 31 companies operating 73 small hydro power stations
  • 5. 1. Incentives for development of projects under GT
      • exemption from import VAT and customs duties
      • exemption from corporate profit tax of profit derived from sales of electricity produced from renewables till 2021
      • decrease of land tax for renewable energy power plants by 75%
      • etc.
    • Tax incentives under the Tax Code
    • Feed-in tariff scheme or high “green” tariff (GT)
  • 6. 2. Minimal fixed GT rates Type of energy Power station capacity and other factors influencing the rate of GT Rate of the tariff (€ / kW) Wind less 600 kW* 0,0646 600-2000 kW* 0,0754 more 2000 kW* 0,1131 Solar energy     Power plants on ground surface 0,4653 Power plants on the roofs of buildings with power capacity exceeding 100 kW   0,4459 Power plants on the roofs of buildings with power capacity of up to 100 kW 0,4265 Biomass Should be at least partially of plant origin to be eligible 0,1239 Small hydropower plants not more than 10000 kW 0,0775
  • 7. 2. Rates of “green” for other alternative energy sources
    • Rates for all other alternative energy sources (including biomass with 100% of animal origin and biogas), are not legislatively established
    • NERC may approve rates of “green” tariff for them on the case by case basis based on economic substantiation
    • However, there are no actual examples of “green” tariff approved for such other alternative energy sources
  • 8. 2. Coverage of minimal fixed GT rate for biomass *Under Draft Law No. 8028 of 28.01.2011 all types of biomass expected to have the same legal status in terms of eligibility but not biogas and gasification processes Types of biomass (biogas) Process of electricity generation Eligibility to minimal fixed GT Biomass of plant or at least partially of plant origin* Steam turbine process Yes Gasification and other processes where biomass is not used directly as a fuel No Biomass of animal origin* Any processes No Biogas, including landfill gas, waste gas similar biogases Any processes No
  • 9. 2. Change/Decrease of GT in the future
    • “ Green” tariff is established until 2030 (grounds for termination are also established by a Decree of NERC )
    2014 – by 10% 2019 – by 20% 2024 – by 30%
    • Decrease of the current rates of “green” tariff for power plants commissioned (significantly upgraded) after:
  • 10.
    • GT rates are ≠ retail or average rates for producers of electricity
    • Fixed as of 01.01.2009 in EUR and linked to EUR/UAH exchange rate
    • Ukraine guarantees GT to commissioned power plants and purchase of all electricity produced by them
    2. Change/Decrease of GT in the future
  • 11. 3. Ukrainian content requirement
    • The share (materials, works, services) in the total value of construction (if started after 2011) shall be at least:
        • if commissioned till 201 3 – 15 %
        • if commissioned till 201 4 – 30%
        • if commissioned in 2014 and later – 50 %
        • For solar power projects value of Ukrainian materials in production of solar modules should be also at least
        • since 2013 – 30%
        • since 2014 – 50 %
  • 12. 4. Approval of GT
    • NERC approves GT rates based on application and the package of documents regarding the constructed, commissioned and connected power plant
    • Terms for passing a decision by NERC:
      • Consideration of documents – 30 calendar days
      • Approval – 15 calendar days
    GOOD NEWS! No Approval Fee
  • 13. Conditions for Implementation of GT Projects
      • Set up a company
      • Electricity producer license
      • Connection to the grid ( compensation of expenses related to grid connection )
      • Participation in WEM and signing WEM Agreement
      • Conclusion of agreement for sales of electricity with State Enterprise “Energorynok”
      • Execution of documentation for power plants construction ( documents on the use of land plots, project documentation, commissioning etc .)
  • 14. Conditions for Implementation of GT Projects Connection of cogeneration power plants Set up of a company (charter shall provide that the company produces electricity) Acquisition of rights in land Construction Registration of ownership Registration of leases Registration of easements and superficies Change of designated purpose License for electricity production Joining WEM and Signing WEM Agreement Conclusion of agreement with Energorynok GT approval by NERC Sale of electricity at GT Tax and customs duties breaks Exemption from import VAT and customs duties 25% of required land tax Maximal annual lease payments – 3% of appraisal value Exemption from corporate profit tax till 2011 Receipt of initial data Receipt of technical conditions Development of project documentation Examination of PD, if necessary Registration of declaration re preparatory works, if necessary Registration of declaration re beginning of construction Receipt of permission r e construction works Issue of Certificate on readiness for exploitation Registration of declaration on readiness Registration of ownership Connection to the grid Connection of certain types of wind farms Connection of other power plants
  • 15.
    • 14 years in the Ukrainian market
    • Strong international focus
    • Actively involved into green energy legal environment for last 2 years
    • IFC expert on “green” tariff mapping in Ukraine
    • We are proud to provide Clients with services which make the environment better and the economy of Ukraine stronger
    PARITET law firm
  • 16. Thank you for your attention !