The lawsuit comes after a lack of payments to the green energy producers. It is the next step in a crisis that has been going on for more than a year.
Several solar and wind energy producers in Ukraine have taken legal actions against the country’s energy consulting company named Guaranteed Buyer for more than 66 million dollars. A total of 130 legal actions has been taken against the company.
It is the latest step in a crisis that has been going on for years. The problem started last year when the Ukrainian government, through the company Guaranteed Buyer, halted payments of the so-called green tariffs to the renewable energy producers in Ukraine, arguing that the tariffs were too high and needed to be reduced. It led to lengthy negotiations and a new deal, which reduced the green tariffs, and the Ukrainian government promising to pay its outstanding debt to the companies, but the green tariffs have still not been paid in full.
It is that situation that has made several companies deciding to sue the government’s company. Kyiv Post writes that the Guaranteed Buyer owes the producers of renewable energy around 700 million dollars for 2019-2020. In addition, some companies such as Swedish Vindkraft Ukraina have suspended investment plans due to concerns that the Ukrainian parliament now also wants to increase the excise tax on renewable energy.
“Nobody is funding; they are waiting for the law and the memorandum to be fulfilled. Everything is in limbo,” said Carl Sturen, company CEO, referring to how everyone is waiting and how the changing conditions continue to result in a difficult situation for the companies.
Vindkraft Ukraina is not the only company that has halted investments.
“Nefco had already in 2020 decided to stop investing in new projects in the renewable energy sector in Ukraine due to the green tariff situation, which hasn’t been solved yet,” wrote Nefco, the Helsinki-based Nordic Environment Finance Corp. in a statement.
“In addition, Nefco believes that introducing an excise tax on renewable energy is a step in the wrong direction. In fact, clean energy should be subsidized, whereas fossil energy should be subject to a CO2 tax. The reason for not investing in new renewable energy projects is, however, based on the green tariff agreements not being fulfilled,” Nefco wrote.
Taken to court
Kyiv Post writes that the Guaranteed Buyer is trying to reach a deal with its debtors to pay back its debt, but it is uncertain whether they intend to pay it back in full. There is speculation that the Guaranteed Buyer is trying to finance the payments by issuing energy bonds for around 600 million dollars, but that is not certain yet.
According to Unian, the green energy production in Ukraine has grown from two percent of the total energy production a couple of years ago to eight percent today. It was primarily due to the country’s substantial support for the production of green energy.
On the one hand, it quickly rose production on green energy, but it also took a toll on the government’s budget. It was this situation that led to the crisis last year. As a result, the green tariffs were reduced by 7,5 percent for wind power production and 15 percent for solar. In exchange, the government promised to pay its debt to the renewable energy producers by the end of 2020, which didn’t happen.
“Despite the ongoing challenges in the renewable energy industry in Ukraine, we believe that these growing pains will be successfully managed. Green energy is destined to play a growing role in the Ukrainian energy sector,” said Richard Deitz, President of VR Capital Group Ltd, according to UBN, back in May this year.
Ukrainian green energy is growing: But does not remove need for dirty energy
