Solar eclipse

At the end of June 2014 between Ukraine and the EU signed an economic part of the Association Agreement and the transaction as a whole. But why strategic direction for energy independence are reflected in it, do not correlate with existing government action?

Section IV of the Agreement in the art. 293 contains a paragraph that "Parties shall endeavor to promote and encourage trade and foreign direct investment in ... the balanced use of renewable energy sources ...".
Section V of the Agreement contains a chapter on cooperation in the energy sector. Thus, in Art. 337 stating that "cooperation is based on a comprehensive partnership based on the principles of mutual interests, reciprocity, transparency and predictability that meet a market economy, the Energy Charter Treaty 1994 ...".
Article 338 says that mutual cooperation between Ukraine and the EU include, inter alia, "develop and promote renewable energy ..."; "The development of competitive, transparent and non-discriminatory energy market based on the rules and standards of the EU ..."; "Progress towards establishing an attractive and stable investment climate by providing institutional, legal, fiscal and other conditions, as well as through the promotion of mutual investment in the energy sector on a nondiscriminatory basis."
10 days before the signing of the Agreement Cabinet issued a recommendation (Resolution № 589-r of 06.18.2014 y.) National Commission for State Regulation of Energy (NERC) while establishing green tariff for producers of electricity from alternative energy sources, except entities that operate micro, mini or small hydro power plants, apply new tariff rates (for three-zone tariff classification). Peak factor (ie it is used to calculate the green tariffs for solar and micro, mini or small hydro power plants) offered at 1.01. Given that until recently was used by NERC peak ratio at 1.8, the value of green tariff can be reduced by 43.9%, which negatively affect the investment attractiveness of solar power projects.
In mid-July (ie, after the signing of the Association Agreement) NERC published on its website a draft resolution "On Amendments to the Procedure for the establishment, review and termination of the green tariff for business entities", which refers to the adoption of the recommendations of the Cabinet.
In addition to evidence of anticompetitive actions of the government in the sense of Art. 15 Law of Ukraine "On Protection of Economic Competition" the question arises: how does the above rules of the Association Agreement and Declaration of Ukrainian authorities to relate to energy independence and initiative Cabinet NERC? How to explain the government's actions, which will have negative consequences for the most developed segment of renewable energy in Ukraine?
Also do not understand the actions NERC belonging to the President, who had just put his own signature on the Association Agreement.
Segment of solar power in the world on the basis of 2013 recorded a record of development: in China during the year were more than 12 GW of installations, while no country in the world had not added more than 8 GW for one year. Total new capacity in 2013 worldwide was 38 GW, bringing the global average to 137 GW. The top three leading countries in the number added during 2013 in addition to the capacity of China is Japan (6.9 GW) and the USA (4.7 GW). United States last year installed 40% more solar generating capacity than in 2012 with $ 270 billion. Invested in renewable energy facilities in the world $ 120 billion. Falls on the solar power industry.
The project also provides NERC change approaches to a minimum fixed amount of green tariff. It is proposed to remove the reference to the Green Tariff calculated according to the Law of Ukraine "On Electricity" and bind to the settlement date green tariff - January 1, 2009
Binding to the settlement date green tariff - January 1, 2009 - means, including the following: even change factor applied for peak hours, has no influence on the value of the green tariff.
Trying to remove the binding to give the draft NERC will be negligible, as this would be contrary to the legislative Decree act of higher legal force - the Law "On Electric Power Industry".
Law "On Electric Power Industry" state ensures that the production of electricity from alternative sources in order to be applied to stimulate the production of electricity is set at the date of commissioning of the power plants that generate electricity from alternative sources.
Draft NERC, in fact, violate the rules of state guarantees, as offers reduced green tariff for all objects in the solar energy sector, including those commissioned. It appears negatively not only on the development of alternative energy market, but also ruin the investment image of Ukraine as a whole. Against the backdrop of the current economic situation, alternative energy sector remains one of the few where investors are willing to invest.
The cabinet promulgated in violation of the Law of Ukraine "On Principles of Regulatory Policy in Economic Activity" as draft Order was to receive comments and suggestions from individuals, legal entities and their associations.
Ministry of Justice in its Opinion on 06.13.2014. According to the result of legal expertise Project The cabinet noted the discrepancy document acts of legislation that have supreme legal force (Law "On Electric Power Industry").
Ukraine's legislation does not contain clear rules as to which state is the central regulator of alternative energy: the Law of Ukraine "On Alternative Energy Sources" say that this body is the Cabinet, while the Law "On Electric Power Industry" refers to NERC. Thus, NERC maynot perform above-mentioned Resolution of the Cabinet.
Supporters of reducing green tariffs in Ukraine operate their high comparative values. Indeed, in Ukraine the green tariffs, particularly for solar energy are among the highest in the world. On the other hand, an investor in the decision will be guided not only by comparing the Green Tariff in Ukraine, such as Germany, but comparing credit ratings of countries that affect the risks of investing. And that is a superposition of two parameters determine where to invest. Due to low ratings Ukraine (CAS stable outlook - from S & P), the country has to compensate for this high value green tariff.
Opponents stimulate solar power argue their position high cost of generating electricity, which as of July ranged from 5.49 to 7.54 USD. 1 kWh. compared to 1.19 USD. electricity generated from conventional sources. But you can not compare the traditional and alternative sources as manufacturers of traditional electricity tariff does not include return on investment (facilities built 30-50 years ago), while in the case of alternative energy tariff determines the return on capital investytsiy.Takozh not taken into account the environmental arguments. Therefore, you can only compare comparable size.
Nuclear generation at all assurances are not safe and environmentally. Apart from the Chernobyl tragedy, there are more recent examples - AS "Fukushima" in Japan. By the way, after problems with the station, the country has stepped up construction of renewable energy sources.
Thermal power plants using coal and natural gas. Both energy resources are exhaustible, and their value over time will only increase as conditions deteriorate extraction. Burning energy has an environmental and climate damage.
Wear and tear on the traditional objects of power in Ukraine is essential and maximum 50 years the question of building new generating facilities. And if we compare the effectiveness of investment in a new facility for traditional energy and new renewable energy facility, then after 3-5 years be more profitable to invest in alternative energy.
With solar power generation can solve problems enerhodefitsytnyh local areas, for example, of Odessa and Mykolaiv region., Crimea.
The gradual reduction of incentives for alternative energy - it is normal practice for civilized countries, including Germany and the United States. But such a reduction should be reasonable and give market players time to prepare for change.
At the end of 2012 green tariff has experienced significant decline. For example, for terrestrial solar power plants commissioned in the period from 04.01.2013 y. District on 31.12.2014., The rate was reduced from 46.53 cents per 1 kWh. to 33.93 (27%).
Thus, investors were at least a little more than 4 months to respond to the changing rules of the game, either to make it to be operational by the time the tariff reduction or transfer and take impaired the effectiveness of investment projects or abandon projects.
In the case of the draft NERC is a retrospective risk deterioration of investment projects that entail a loss of investor lawsuits in Ukraine and the risk of deterioration of the investment attractiveness of the country for many years. Amount of additional revenue to the wholesale electricity market in the amount of 500-600 million. UAH. per year, as described in the explanatory note to the CMU, definitely not worth stagnant industry, which has attracted more than $ 1.5 billion. investment in the development of solar energy, can in the next 1-2 years to attract the same amount and has created more than 10 thousand. new jobs. Also worth considering the amount of possible lawsuits to Ukraine at the same $ 1.5 billion. Retrospective reduction in the case of the green tariff.
NERC has planned to hold a series of meetings on the implementation of Resolution of Cabinet of Ministers № 589-p, which invited market participants alternative energy. We can only hope that constructive dialogue will win and eventually Ukraine will clear perspective of the industry.

Taras Kushnir, AVE "Alternative"

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