development “The green generation in Ukraine can become the most successful case in the state energy policy and significantly affect the increase in the investment attractiveness of the country. However, due to the failure of the state to fulfill its obligations to investors, this trend may turn out to be a failure.
The analysis of the situation is devoted to a new blog, which was published on December 17 on the Economic Truth portal, by Associate Professor of the State Tax University, Law Candidate Andrei Gmerin.
The author recently referred to one of the leading manufacturers “Ukraine’s green energy company, DTEK RES, announced that the international rating agency S&P Global Ratings has lowered its long-term rating from “B- “to” CCC + “. The company indicated that the agency’s decision “Affected by the actions of officials of state-owned enterprises, which led to the non-payment of historical debts of DTEK RES for producing “green” electricity. This example illustrates, says Andriy Gmyrin, the complex relationship between the Ukrainian state and investors working in “green energy.
He writes that simultaneously changes in the governing legislation “Green energy, almost caused an investment boom in the industry. In 2009, the Verkhovna Rada created a special (A “green”) tariff for electricity produced by RES (Renewable energy sources). The state also tied these tariffs to the euro and undertook to purchase 100% of this energy through it until 2030. At the same time, in order not to overburden the budget and assuming a gradual decrease in the cost of generating equipment, a gradual reduction was planned at the legislative level. “green tariff.
Experts note that businessmen are really interested in this case. First, Ukrainian companies launched solar panels during 2011-2012 (SES) and wind farms (WES). After that, foreign investors joined the local businessmen. To date, the share of foreign direct investment in the total volume of investments in renewable energy sources in Ukraine has reached 30%, that is, almost $12 billion. But at the end of 2014, the state suspended the amendment “Green tariff “according to the euro exchange rate. Added to this is a sharp depreciation of the hryvnia exchange rate. According to Andrei Gmirin, at the beginning of 2015, although the state adjusted tariffs, it lowered their rates in advance. (at 20% for SES). Entrepreneurs were saved by gradually reducing the cost of generating equipment and high (20-40%) profitability of this segment.
The capacity of renewable generation facilities in Ukraine has increased, according to NEURC, from 966 MW in 2014 to 7737 MW. (SPP – 6094 megawatts) in 2020. Renewable energy projects have created more than 30,000 jobs, modernized energy infrastructure, and increased revenues for local budgets and the state treasury. According to some estimates, the contribution “Budget green energy in the form of taxes in 2019 alone totaled more than $550 million.
However, the state was faced with the fact that very soon it will not be able to pay renewable energy generating companies at a price higher than the market tariff, the scientist writes. The situation escalated in the spring of 2020, when the payments were made “green electricity. Investors began to threaten international arbitration. Finally, the two parties signed a Memorandum of Understanding (On its basis, BP subsequently adopted a law), according to which investors agreed to a voluntary reduction “green tariffs (For WPP – 7.5%, SES – 15%), the Council of Ministers guaranteed to producers timely current payments, gradual repayment of debts, holding auctions from 2021 for the sale of electricity from renewable sources. According to Andrei Gmyrin, the government did not fulfill most of its promises or was late in implementing them. The expert wrote that as of October 11, 2021, the outstanding debt to generating companies amounted to 25.1 billion UAH. And only on November 15, the state, represented by the “secured buyer SE”, was able to return 16.3 billion hryvnias of debts of some market players with the exception of DTEK RES.
The scientist wrote that one of the largest creditors in 2015-2019 in building renewable energy generation capacity in Ukraine was the European Bank for Reconstruction and Development. (European Bank for Reconstruction and Development). But after some time, the bank had to finance the debtors and debtors so that they could return the loans they had previously taken. In November 2021, the European Bank for Reconstruction and Development invested $75 million in Eurobonds Oknergo issued to solve the debt problem in the green energy market.
The author of the blog also touched on the question “The green generation in private homes. He writes that today nearly 30,000 properties in Ukraine have switched to solar energy. (Its total capacity is about 800 MW), the total investment of Ukrainians over the entire period of operation “The green tariff amounted to $700 million, and the owners invest in “home” solar plants, consume part of the energy produced, sell the surplus to the grid, and pay taxes. True, many businessmen use shadow “Homeland generation for tax evasion, says Andrej Gmyrin. He believes that such deals distort the idea of supporting the younger generation distributed.
The author notes that the problem of the “green” tariff is not a purely Ukrainian problem. He gives many examples from the European experience. For example, in Sweden the owners “Green generation was given in 2003 the opportunity to sell electricity production certificates to consumers under certain quotas. For exceeding these quotas, a fine of 150% of the average annual rate is imposed. “Green certificate. Finland supports manufacturers “Feed tariffs and tax cuts on greenhouse gas emissions. The expert wrote that the situation in Spain was similar to that of Ukraine. Initially, the state subsidized manufacturers “Green generation with loans, tax breaks and feed tariffs. But due to the 2008 global financial crisis, the government changed its own. “The rules of the game “in the energy market. After foreign investors turned to arbitration panels, the state began to seek a compromise with companies.
“Of course, it can be said that in Ukraine, the major producers of green energy are trying to get “surplus profits” using the “highest in the world” feed-in tariff. Nevertheless, I am convinced that if the state had followed a consistent policy, calculated in advance the consequences of its decisions, fulfilled its obligations to investors, and conducted an open dialogue with them, many misunderstandings could have been avoided. In the meantime, we are in a situation where the state support system for the renewable energy sector in Ukraine has been endangered, billions of dollars of investments have been frozen, and the investment climate has worsened,” concludes Andrei Gmirin.
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