Scatec Solar is pausing construction on a 65-megawatt solar plant in Kherson Oblast, because legislative changes might interfere with its ability to secure a renewable feed-in tariff before the project is finished.
Alina Sviderska, the Norwegian company’s head of business development in Ukraine told the Kyiv Post that active work on the project will be halted until the renewable market situation becomes clearer in the Verkhovna Rada. However, she refuted some media sources’ reporting that the project has been stopped entirely.
So far, between 2 and 3 million euros have been invested in the project, according to Scatec.
A slew of legislation pending in parliament may restructure the renewable tariffs upon which renewable energy developers have been counting. The bills are the latest attempts to combat high energy costs, which have been a priority for lawmakers since August lawmakers in the Rada committee on energy and utilities had previously told the Kyiv Post.
Renewables excluding large hydropower account for more than 3% of all energy in Ukraine but represent more than 8% of total energy costs, thanks to a generous feed-in tariff that has stimulated large-scale investment and extremely fast growth in the sector.
The European-Ukrainian Energy Agency, an industry group representing renewable developers including Scatec, told the Kyiv Post that some currently pending legislation may shorten the length of existing pre-power purchase agreements (PPAs). Scatec’s own pre-PPA could run out before the company can finish the Kherson solar plant.
Sviderska said the company is also looking at what will happen with feed-in tariff restructuring. Two draft laws in parliament propose to restructure existing feed-in tariffs to a lower late, with a longer term. The restructuring is voluntary and must take place by April 1.
A draft law introduced last month by the energy ministry would create lower rates for restructured tariffs, with more limited terms and more balancing responsibilities for companies that did not agree to restructuring. Wind plants would see their tariffs reduced by 10%, operating solar plants, by 17% and solar plants to be commissioned in 2020 by 15%. Operating facilities’ tariff term would run until 2035. For facilities yet to built, the term would last 15 years from the date when the tariff was set by the energy regulator.
A compromise bill introduced on Dec. 6 is less exacting and has much of the renewable industry’s support. Operational wind plants would see their tariffs reduced by 5% and wind plants to be commissioned in 2020-2022 by 7.5%. Operating solar plants’ tariffs would decrease by 10% and solar plants commissioned in 2020, by 15%. The term would run 15 years from the date of the commissioning of the facility. This bill also sets a more gradual balancing requirement.
The EUEA sent a letter of support to energy officials and lawmakers responsible for the compromise bill.
Sviderska also confirmed to the Kyiv Post that the company plans to participate in renewable auctions, which are supposed to replace feed-in tariffs next year.
Even though auctions had been planned for April and a pilot auction was planned for December, the plans have run into delays. The government has yet to set any energy quotas that would dictate how the auctions are conducted. Companies expect auctions to arrive no earlier than fall 2020.
