2. Main legislative acts governing the sphere of alternative Energy
Main legislative acts governing the sphere of alternative energy in Ukraine are the
following:
•Law of Ukraine “On Electric Power Industry” (regulates competencies of
authorities, ownership right in the sphere of electric power industry, management of the
unified power system, functioning of the wholesale market of electrical power, labour
and environment protection in the electrical power industry)
•Law of Ukraine “On Alternative Energy Sources” (regulates state management in the
sphere of alternative energy sources, procedure of utilization of alternative energy
sources)
•Law of Ukraine “On Alternative Types of Fuel” (regulates grounds for production and
consumption of alternative types of liquid and gas fuel on the basis of involving
untraditional
sources and types of energy raw materials)
Since 1.02.2011 Ukraine is the Member of Energy Community
3. Why investing in alternative energy in Ukraine?
The current legislation of Ukraine contains privileges for investors in alternative
energy:
Green tariff
Complete buy-out of produced energy
Evasion from participation in the Electricity Wholesale
Market
Guaranties for the investor
Tax preferences
4. Green tariff and buy-out of the produced energy
According to the Law of Ukraine “On Electric Power Industry” green tariff is a
special tariff for purchase of electricity produced at power plants using alternative
energy sources.
The Electricity Wholesale Market is obliged to pay green tariff for electricity
produced in such way and not sold at contractual prices directly to consumers or
energy supplying companies, which conduct economic activity in sphere of
electricity supply as per regulated tariff.
•Green tariff is determined by the National Commission on Regulation of Power
Industry
•Green tariff is foreseen until 2030
•Green tariff is determined for each power station separately
•Green tariff is calculated according to the formula, determined by the Law of
Ukraine “On Electric Power Industry” (solar, wind, biomass energy, energy of small
hydroelectric plants)
•The green tariff is gradually decreasing in 2015, 2020, 2025 for 10%, 20% and
30% from the initial tariff
5. Evasion from participation in the Electricity Wholesale Market
According to the Law of Ukraine “On Electric Power Industry” electricity produced at
power
plants using alternative energy sources can be sold
•directly to the consumers or energy supplying companies, which conduct economic
activity in sphere of electricity supply as per regulated tariff or
•at green tariff on the Electricity Wholesale Market
6. Guaranties for the investor
According to the Law of Ukraine “On Electric Power Industry” the state guarantees:
•Stimulation of alternative energy sphere (by means of use of green tariff)
•Legislative regulation of obligatory buy-out of produced energy at green tariff
•Calculation of green tariff tied to the exchange rate of hryvnya (UAH) to euro (EUR)
7. Tax preferences (1). Company’s Profit Tax
The legislation of Ukraine provides a number of preferences as to taxation of activity
connected to development, implementation and use of alternative energy.
Company’s Profit Tax. No income tax for 10 years for:
•Income of enterprises of the electric power industry gained out of sale of the electricity
produced with the use of renewable energy sources;
•Income of biofuel producers from sales of biofuel;
•Income of mechanisms and equipment producers as determined by Article 7 of the Law
of
Ukraine “On Alternative Types of Fuel” intended for production and reconstruction of
technical and transport means, electrical devices which consume biofuel gained out of
sale of such mechanisms and equipment produced in Ukraine;
•Income of enterprises exercising co-generation activity and/or producing heat energy
using
biofuel;
•Income of enterprises gained out of extraction and use of coalbed methane.
8. Tax preferences (2). Value Added Tax
Value Added Tax. No Value Added Tax is applied to the import of:
•Equipment consuming renewable energy sources, equipment and materials for production
of
alternative fuel types or for production of energy out of renewable energy sources;
•Materials, equipment, components used for production of:
•Equipment consuming renewable energy sources;
•Materials, raw materials, equipment and components which shall be used for production of
alternative fuel types or for production of energy out of renewable energy sources.
Temporarily, till January 1, 2019 no Value Added Tax shall be applied to the import of:
•mechanisms and equipment intended for reconstruction of existing and construction of new
enterprises for production of biofuel and for production and reconstruction of technical and
transport means consuming biofuel, if such goods are not produced and have no equivalent
in
Ukraine,
•technical and transport means, including self-moving agricultural machinery consuming
biofuel,
if such goods are not produced in Ukraine.
9. Tax preferences (3). Customs Duty
Customs Duty. No Customs Duty is applied to the import of following equipment and
materials,
provided they are used by the taxpayer for its own production and if identical goods of
equivalent
quality are not produced in Ukraine:
•Equipment working on non-conventional and renewable energy sources;
•Equipment and materials for production of alternative fuel types imported to the customs
territory of Ukraine by national companies.
