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Issues of Balancing Variable RES in Ukraine

In accordance with information at the website of PrJSC “NPC “Ukrenergo” (the “TSO”) (available in English at https://ua.energy/media-2/news/by-the-end-of-2020-res-electricity-generation-will-have-reached-13-of-npp-generation-and-24-of-tpp-generation/) by the end of 2020, RES electricity generation will reach 13% of nuclear power generation and 24% of thermal power generation.  The TSO also informed that from November 2019 to February 2020 (three months) RES curtailments were applied three times. In March 2020, wind power plants (WPPs) and solar power plants (SPPs) were curtailed four times. Alongside, daily power consumption at the beginning of March reduced from over 400 million kW∙h to 395 million kW∙h. In the first five days of April 2020, RES restrictions were applied almost on a daily basis, the duration and amount increased as well. The biggest curtailment took place on 5 April – the day when the general consumption level reached the lowest point from the beginning of the year – 344.2 million kW∙h (probably, due to warm weather and slowdown of the economy due to quarantine measures. RES restrictions amounted to 1656.7 МW and were applied from 10:41 a.m. to 17:00 p.m., that is in the middle of the day, when the consumption decreases compared to morning and evening peak hours, and on the contrary, RES generation is the highest due to the peak solar activity.

By the end of the year, the volumes of restriction will have increased due to power consumption reduction (natural seasonal  factors, consequences of the quarantine and lowering of economic activity), as well as due to growth of RES capacity in 2019 with increased amounts of RES power production. It may amount in total to 1 billion kW∙h as per the TSO.

The TSO suggests the following solutions for the situation based on Report on the estimation of sufficiency (adequacy) of generating capacities which was approved by National Commission On State Regulation in the Sphere of Energy and Utilities (the “Regulator”) on 13 March 2020 (I shared relevant information about the report recently):

  • to introduce commitments for investors in RES to ensure for their power stations the construction of high manoeuvring generation or energy storage of about 20% of the installed project capacity of RES power plant (as I understand, the requirement shall apply to new RES facilities awarded with state support as a result of auctions);
  • as soon as possible, introduce RES responsibility for imbalances;
  • to construct in 2021 2 GW of new manoeuvring capacity with quick launch and energy storages of 2 GW capacity;
  • the volumes of annual support quotas for RES auctions shall not exceed the capacity of the Ukrainian power system to fully integrate new facilities without limitations of power output.

Please note that currently curtailed RES power plants have no mechanism to claim compensation for curtailed electricity even though primary enabling legislation stipulates that they shall be compensated. The working group with the TSO have prepared proposals to the Regulator introducing changes to the number of legislative acts regarding mechanism of compensation. The proposals were sent to the Regulator last week and hope the Regulator will consider them as fast as possible so RES produces would be able to be compensated for curtailment.

Please note that private players have already started implementation of battery energy storages (BESS) in Ukraine. In accordance with information in mass media PrJSC “MHP HLIBOPRODUCT” has announced a tender for feasibility study to build the BESS with capacity of 25 MW (available in Ukrainian at https://www.epravda.com.ua/news/2020/04/9/659165/).

General Legislation on Introduced Quarantine Measures

As informed earlier the Cabinet of Ministers of Ukraine (the “CMU”) adopted Resolution No. 211 dated 11 March 2020 (restated based on Resolution No. 215 dated 16 March 2020) On Prevention of the Spread on the Territory of Ukraine of Acute Respiratory Disease COVID-19 Caused by Coronavirus SARS-CoV-2 (the “Quarantine Resolution”) which is available in Ukraine at https://ips.ligazakon.net/document/kp200211?an=27.  On 2 and 8 April 2020 the CMU has amended the Quarantine Resolution.

As of 11 April 2020,  the Quarantine Resolution sets forth the following key provisions:

1. The quarantine is established in the entire territory of Ukraine from 12 March 2020 until 24 April 2020.

2. The following activities have been prohibited:

  • attendance of educational establishments by students and pupils;
  • arrangement of mass (cultural, entertainment, sport, social, religious, advertising and other) events/activities (the threshold for 10 persons participating in the events to be qualified as mass events was removed on 2 April 2020 and now it is unclear what activities are considered mass ones), except for securing work of state authorities and self-governing authorities (please note that construction activities are expressly permitted and, thus, this prohibition most likely should not apply to any construction activities related to RES constructions);
  • operation of any business entities which envisage visitors, in particular various retail and entertainment activities, except for retail of food products, fuel, medical products and devices, etc.;
  • regular or irregular automobile transport of passengers by automobile in city, intercity or interregional transportations (except for cars and automobile vehicles for permitted works and services subject to approval of movement by the National Police, and public transportation for certain types of professions);
  • transport of passengers by metro as well as railway transport of any types with certain minor exceptions approved by relevant state authorities;

3. It was recommended to all state and local self-governing state authorities as well as any enterprises or establishments to organize work by shifts and subject to technical possibility – work over the Internet.

In addition, in accordance with Resolution of the CMU No. 287-р dated 14 March 2020 until 24 April 2020:

    • the border is closed for regular passengers’ transport (with minor exceptions);
    • prohibition for any entrance by foreign or stateless citizens to the territory of Ukraine, except for persons having residency in Ukraine, and at a separate decision of the Minister of Foreign Affairs of Ukraine by accredited employees of embassies, consulates, etc.

Updates on amendments to Labor and Employment Laws during the COVID-19 pandemic

Laws of Ukraine Adopted to Implement Quarantine Measures, Arrange Prevention of Spread of COVID-19 and Support Business

Please see our firm’s update at https://www.dentons.com/en/insights/alerts/2020/april/8/ukraine-amends-labor-and-employment-laws-during-the-covid-19-pandemic

Additional anti-crisis tax measures during the financial crisis caused by the Coronavirus pandemic

Please see our firm’s update at https://www.dentons.com/en/insights/alerts/2020/april/7/kyiv-tax-newsletter

Ukrainian parliament adopts legislative changes to address certain issues with legal proceedings caused by the COVID-19 quarantine

Please see our firm’s update at https://www.dentons.com/en/insights/alerts/2020/april/8/ukrainian-parliament-adopts-legislative-changes-to-address-certain-issues-with-legal-proceedings

Please note that our firm Dentons created COVID-19 (Coronavirus) hub, available at https://www.dentons.com/en/issues-and-opportunities/covid-19-coronavirus-hub for support of our clients in more than 70 countries. This source provides the following:

We will be happy to assist you!

I also whish happy Easter holidays for those who celebrate it this weekend despite all current difficulties you might face!

This information does not constitute legal advice and is merely the opinion of the author.

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