Please be informed that on 25 July 2017 National Commission on State Regulation of Energy and Utilities in Ukraine (the “Regulator”) has adopted the draft changes to the template (prymirnyy) PPA between producers of electricity from renewables and State Enterprise “Energorynok” (the “Energorynok”) (the “Draft Changes”) for the purpose of placing at the Regulator’s website in order to receive comments and suggestions (information about the Regulator’s decision is available in Ukrainian here. The text of the Draft Changes is available here)
In accordance with the Draft Changes:
- A PPA on the basis of the template PPA shall be signed by Energorynok with a validity period of up to 1 January 2030 and Energorynok will not be able to deviate from this provision unilaterally. This change to a long term PPA is long awaited by market players and reflects the approach in the recently entered into force Law of Ukraine on Electricity Market.
- The parties to PPA agree that Energorynok’s obligations to purchase electricity under “green” tariff shall cease from the date when the new electricity market starts its operation. The parties also confirm that producers of electricity will have to sign a new PPA with a guaranteed purchaser (Energorynok’s successor for obligations under PPA) from the date of the new market operation in accordance with a model (typovyy) agreement as approved by the Regulator. Please note that in the past the Regulator suggested that the guaranteed purchaser shall sign an additional agreement to replace Energorynok. The current approach leaves uncertainty as to what terms and conditions will be approved by the Regulator in the standard PPA for the guaranteed purchaser at the moment of signature. It is also unclear what will happen if for some reasons the new electricity market starts its operation but the guaranteed purchaser for some reasons will not be established. Please note that under Article 65 of Law of Ukraine On the Market of Electricity the model PPA with producers under “green” tariff shall be approved by the Regulator. It appears that because the guaranteed purchaser has not been established, the Regulator at the moment appears to be reluctant to approve the model PPA.
- The Template PPA will require parties to PPA to sign an additional agreement to amend the PPA in accordance with the Procedure for Commercial Metering of Electricity Producers at Power Plants from Renewables adopted Regulator’s Resolution No. 472 of 4 April 2017 (the “Resolution”). It is unclear what exact changes should be introduced.
- Starting with 1 January 2018 all payments for electricity produced under teh “green” tariff will be made after provision of the certificate on output of electricity which is submitted by the producers to Energorynok not later than 12.00 on the 5th date of the following month and confirmation (not later than 10.00 of the 7th day of the following month) of certificate on sale and purchase of electricity issued by Energorynok (by the 6th day of the following month). In any case all settlements shall be made by the 15th day of the following month (inclusively).
It cannot be excluded that the Regulator changes its approach and approve a standard PPA instead of changes to the template PPA because at the moment it considers suggestions from certain market players in this regard.