Projects

General government authorisation

What government authorisations must investors or owners obtain prior to constructing or directly or indirectly transferring or acquiring a renewable energy project?

Government authorisations to be obtained differ depending on the capacity and method of acquiring a renewable energy project. The main authorisations and permits include:

  • an approval of the Anti-Monopoly Committee if the assets value threshold or the market share held by owners of energy facilities is exceeded;
  • a licence for carrying out power generation business activities (an application for such a licence may be filed along with the application for the feed-in tariff);
  • setting the feed-in tariff, which shall be granted by the NEURC based on the producer’s application (see question 27);
  • commissioning the newly constructed renewable energy facility; and
  • technical conditions for connection to the electrical grid.

For economic entities that will construct renewable energy facilities with the intention of receiving state support after 1 January 2020, where the installed capacity is more than 5 MW for wind energy facilities and more than 1MW for solar energy facilities, the participation in the auctions shall be mandatory. For more details regarding the conditions of participation in the auctions, see question 6.

The legislation does not contain any other special requirements in relation to renewable energy projects.

It should be noted that, apart from the aforesaid documents, there are also national requirements for business registration, land lease and construction.

Offtake arrangements

What type of offtake arrangements are available and typically used for utility-scale renewables projects?

The laws provide for special operation conditions for producers for which the feed-in tariff is set.

Hence, the balancing group of feed-in tariff electricity producers is a balancing group where the guaranteed buyer is the party responsible for settling imbalances within such a balancing group.

At the same time, while for ‘non-green’ electricity generation the role of the party responsible for balancing is performed by a market participant who is obliged to report and fulfill its hourly electricity schedules (or those of the balancing group) based on the volumes of purchased or sold electricity and is financially liable to the transmission system operator for its imbalances (or imbalances of the balancing group); conversely, for ‘green’ electricity generation, it is determined in advance that the guaranteed buyer should perform the role of such a party.

The guaranteed electricity buyer is a business entity that must, in accordance with the law, buy the electricity from the producers, for which the feed-in tariff was set, as well as from the auction winners and perform other functions provided for by the law.

This means that the state guarantees (must guarantee) the purchase of electricity from the producers, for which the feed-in tariff was set, as well as from the business entities, which received support based on the auction results.

The guaranteed buyer is obliged to buy all the electricity generated by the energy facilities from renewable energy sources from the business entities, for which the feed-in tariff was set, or from the auction winners at the feed-in tariff or auction prices, taking into account the premium paid on top of the feed-in tariff, during the entire term of the feed-in tariff or the duration of the agreement entered into based on the auction results, if such business entities belong to the balancing group of feed-in tariff producers. At the same time, the output volume of electricity generated from renewable energy sources shall, in each accounting period (month), be determined by deducting the volume of electricity consumed for own needs based on the metering data of electricity consumption for own needs.

The sale and purchase of such power at the feed-in tariff prices or based on the auction results shall be carried out on the basis of a bilateral agreement between the producer, for whom the feed-in tariff is set, or the auction winner and the guaranteed buyer.

The power purchase agreement with the feed-in tariff between the guaranteed buyer and the business entity generating electricity from renewable energy sources shall last for the full term of the feed-in tariff or for the duration of the agreement entered into based on the auction results (20 years).

To be able to sell power at the feed-in tariff prices, the producer must:

  • become a market participant in the manner prescribed by the law;
  • enter into a bilateral agreement with the guaranteed buyer and join the special balancing group of feed-in tariff electricity producers based on that agreement; and
  • on a daily basis, provide the guaranteed buyer with its daily power output charts for the next 24 hours in the manner and form provided for in the bilateral agreement with the guaranteed buyer.

The guaranteed buyer must, at the request of the business entities intending to generate electricity from renewable energy sources, enter into a power purchase agreement at any time before the construction commences or the respective facilities are commissioned to generate power from renewable energy sources and before the regulator sets the feed-in tariff.

If the energy facility for which the power purchase agreement was concluded under the feed-in tariff is not commissioned within three years from the date of registration of the respective declaration of construction works commencement or receipt of the permit for the construction works performance the concluded agreement shall become invalid.

In order to be able to sell power based on the auction results, the producer must:

  • become an auction participant;
  • win the auction;
  • become a market participant in the manner prescribed by the law;
  • enter into a bilateral agreement with the guaranteed buyer; and
  • on a daily basis, provide the guaranteed buyer with its daily power output charts for the next 24 hours in the manner and form provided for in the bilateral agreement with the guaranteed buyer.
Procurement of offtaker agreements

How are long-term power purchase agreements procured by the offtakers in your jurisdiction? Are they the subject of feed-in tariffs, the subject of multi-project competitive tenders, or are they typically developed through the submission of unsolicited tenders?

Agreements on the supply of electricity generated from renewable energy sources may be concluded both directly with consumers, and with Energorynok (a guaranteed buyer).

The conclusion of long-term agreements with the guaranteed buyer is provided for by the Law On the Electricity Market and by Resolution of the NEURC No. 641 dated 26 April 2019, approving the model agreements with producers generating electricity from renewable energy sources.

The guaranteed buyer must, at the request of the business entities that will generate electricity from renewable sources, enter into a power purchase agreement at any time before the construction commences orthe respective facilities are commissioned and before the regulator sets the feed-in tariff.

Operational authorisation

What government authorisations are required to operate a renewable energy project and sell electricity from renewable energy projects?

To be able to operate a renewable energy project and obtain the feed-in tariff, the following is required:

  • a calculation of the cost of production of electricity generated by the renewable energy facility;
  • an itemisation of the costs of production of electricity generated by the renewable energy facility (copies of contracts for the purchase of goods, works and services, a statement on the number of employees, a certificate on the book value of fixed assets with a breakdown by groups as at the date of filing the application for the feed-in tariff);
  • a registered declaration of construction works commencement or a permit for the construction works performance;
  • technical conditions for connection of renewable energy facilities to the electrical grid;
  • a registered declaration of the facility (or launch complex) readiness for operation or an equivalent certificate; and
  • the project documentation estimates for the renewable energy facility construction.

Moreover, renewable energy producers must obtain a licence to carry out power generation business activities (an application for such a licence may be filed along with the application for the feed-in tariff).

It is also desirable to obtain a guarantee of the origin of electricity, a document issued by the state authority at the request of the electricity producer, confirming that a portion or a certain volume of electricity is generated from renewable energy sources.

Once the feed-in tariff is set or the auction is won, the producer must connect to the electrical grid to supply electricity and enter into an agreement with Energorynok.

Decommissioning

Are there legal requirements for the decommissioning of renewable energy projects? Must these requirements be funded by a sinking fund or through other credit enhancements during the operational phase of a renewable energy project?

Currently, the legislation does not provide for such requirements and opportunities.