Production of electricity from renewable sources: changes in the support scheme and financial challenges (POSITION PAPER)
Ukraine must ensure compliance with international legal obligations in the energy sector. In particular, the obligation to support the development of “green” energy and the transition to a low-carbon economy arises from the provisions of relevant agreements (the EU-Ukraine Association Agreement, the Treaty establishing the Energy Community and the Paris Agreement). Directive 2009/28/EC on the promotion of the use of energy from renewable sources requires the development of RES support schemes based on transparency, non-discrimination, competition and cost-effectiveness. Thus, support for RES should not be a tribute to vogue trends or a benefit for certain interest groups, but a priority of national energy policy.
The situation that emerged in the electricity market in autumn 2019 was caused by a number of decisions of the previous government and parliament. These decisions created a feed-in tariff system, which the government was unable to support through existing mechanisms, and slowed down the implementation of a more competitive and efficient auction system.
As a result, there are both technical and financial imbalances in the market. A current system of RES support has led to distortions both in technology (rapid construction of solar facilities as opposed to bioenergy ones, which lack regulatory incentives) and in the system of balancing variable RES generation. Due to the ill-conceived system of compensation for the feed-in tariff, Guaranteed Buyer has a debt to RES producers of over 26.7 bn UAH (as of October 23, 2020). As a result, many operating companies are at risk of bankruptcy…