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BDO in Ukraine – Overview of Legislative Changes and Prospects for RES Development in the Green Energy Market

BDO in Ukraine – Overview of Legislative Changes and Prospects for RES Development in the Green Energy Market

Ukraine has taken an important step in the development of green energy by implementing guarantees of origin for electricity generated from renewable energy sources (RES).

This step is important both for the domestic market and for increasing Ukraine’s export potential. Despite the heavy losses and damage caused by the war, Ukraine kept on expanding its “green” capacity, adding more than 650 MW of new RES capacities in 2022-2023.

The new implemented guarantees of origin for electricity generated from renewable sources will allow to confirm its “green” nature and environmental value, including the amount of CO2 emissions avoided. This opportunity is especially important for industrial enterprises to prove they produce their products using clean energy, which increases the competitiveness of Ukrainian goods in the European market.

Adopting such legislative changes is vitally important for Ukraine given the need to transition to low-carbon technologies. Apart from reducing environmental impacts, it also paves the way for economic growth through the development of green energy. Laws providing guarantees of origin serve as incentives for producers and provide consumers with conscious choices for clean energy.

Experts of the Natural Resources and Energy industry group of BDO in Ukraine, the audit company, analyzed the new Resolution to identify significant changes and predict their impact on the green energy market in Ukraine.

The scope of the Resolution of the Cabinet of Ministers of Ukraine No. 771 dated 24.07.2013 “On Approval of the Procedure for Issuance, Use and Termination of the Guarantee of Origin of Electricity for Business Entities Producing Electricity from Alternative Energy Sources” was limited to issuing guarantees of origin only for entities producing electricity from alternative energy sources. The Resolution No. 227 adopted on 27.02.2024 expands the scope of application to renewable energy sources, which may include a wider range of technologies and sources.

Even terminology has undergone changes — new definitions have been introduced, such as aggregated generating unit, revocation of the guarantee of origin, responsible person, which expands the understanding of processes related to guarantees of origin.

Also, according to the expired Resolution, the registration process for generating units and keeping the register was not well detailed, which has changed radically this year, when a more complicated and detailed system of accounts in the register of guarantees of origin was implemented, providing details on the registration of users, responsible persons, and conditions for access to information. It established clear duties and responsibilities for market participants with respect to registration, commercial accounting, and the issuance and circulation of guarantees, thus ensuring transparency and control. The procedure for canceling guarantees of origin began to be regulated thoroughly, setting a period of 18 months for their repayment or cancellation.

The Procedures approved by the Cabinet of Ministers of Ukraine introduce a procedure for verifying the compliance of generating facilities with the declared parameters and electricity production from RES, aimed at ensuring the veracity of the information entered in the register of guarantees of origin. Along with this, it introduces the concept of the environmental value of electricity generated from RES, establishing a framework for determining and using this value as part of the environmental contribution of generating facilities, and provides an opportunity for its use in monitoring reporting and verification of greenhouse gas emissions. The Resolution highlights the importance of international cooperation and the recognition of guarantees of origin outside of Ukraine, facilitating the integration of the Ukrainian RES market with European markets.

According to the experts of BDO in Ukraine, the implementation of new guarantees of origin for electricity produced from renewable energy sources is a significant step forward for Ukraine in ensuring sustainable development and green energy. Apart from increasing transparency and control in this area, it also provides new opportunities for economic growth through export potential and increased international competitiveness of Ukrainian goods.

Updated legislation that extends the scope of guarantees of origin to a wider range of renewable energy technologies and sources, together with the introduction of a more closely regulated register of guarantees, provides better control, reduces environmental impacts and promotes the use of clean technologies. The introduction of the concept of the environmental value of electricity is particularly important for attracting investment in green projects and raising environmental awareness among consumers.

Changes in the legislation governing the issuance and circulation of guarantees of origin reflect Ukraine’s strategic directions as part of European integration and commitment to a sustainable energy future.

According to the experts of BDO in Ukraine, this demonstrates Ukraine's commitment to international climate and energy commitments, as well as its desire to strengthen energy security and independence through the development of renewable energy sources.

If you have any additional questions on this topic, please contact BDO in Ukraine.

The material was prepared at the request of Liga:Zakon.

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