They believe that Ukrenergo has illegally restricted the generation of renewable energy sources, which has deprived them of compensation.
Members of the Solar Energy Association of Ukraine, ASEU, are threatening to file claims against the energy transmission system operator in Ukraine, state-run Ukrenergo. The companies claim that Ukrenergo has deprived them of the opportunity of receiving compensation for green energy production by putting – what they call – illegal restrictions on the generation of renewable energy sources, reports reform.energy.
“(Ukrenergo) systematically applies commands to restrict the production of green energy… This will not allow market participants to receive compensation for these restrictions. According to the norms of the Economic Code of Ukraine, the deliberately incurred losses must be compensated in full by the guilty party. Therefore, the producers of electricity from renewable energy sources are already preparing to recover the losses incurred from the PCB in court,” said Artem Semenishin, head of the Solar Energy Association of Ukraine.
Semenishin and several renewable power producers believe that the government has restricted their wind and solar power production on several occasions this spring to save money. The governments support green energy production in Ukraine, and the companies have experienced their production halted on several occasions because of what Ukrenergo claim is due to operational security. However, the companies say that these claims are unfounded and just an excuse to save money.
“The PCB must prevent and eliminate violations of operational security, including through corrective actions, which include, in particular, restrictions on the production of electricity by the dispatcher’s command,” Ukrenergo commented to reform.energy, denying any wrongdoing and pointing out that the halting of production is expected.
Yet another crisis in the sector
The current crisis between renewable energy producers and Ukrenergo comes after another big turmoil in Spring 2020. Several companies threatened the Ukrainian state and Ukrenergo with lawsuits as the government had stopped paying support to the renewable energy sector in Ukraine for several months, owing around one billion dollars in green tariffs. The Ukrainian government argued that the current green tariffs were too high and not sustainable for the sector, while the renewable energy producers claimed their right to receive the compensation owed to them.
The crisis ended with a new deal about the green tariffs. 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, but that money has still not been paid in full.
According to Kyiv Post, foreign investment in Ukraine’s renewables was reduced to 1.2 billion euros in 2020, about a third of 2019. The government’s change in green tariffs and the uncertainty is said to have a negative influence. Still, the economic crisis due to Covid-19 have played a part in the considerable decline in foreign investments.
Several companies are still threatening the Ukrainian government with lawsuits due to the lack of green tariff payments. UBN writes that the Lithuanian company Modus Energy International has started arbitration against Ukraine. They claim 11.5 million euros is compensation for damages due to the cut in green tariffs.
The Norwegian company Scatec has recently informed that they have to default on a loan agreement because Ukrenergo still hasn’t paid their debt to the company, writes UBN. Scatec is owned for 111.4 million dollars by Ukrenergo.
Some companies still invest
Ukrenergo itself reported a loss of one billion dollars last year, which is in sharp contrast to the profit of 70 million that the company made in 2019. UBN writes that the losses come from subsidizing electricity to low-income households.
Despite the ongoing uncertainty in the renewable energy sector in Ukraine, some companies continue to invest in the country. Among them is Elementum Energy, owned by VR Capital. They recently started operations of its 40MW wind park in Dnistrovska near Odesa, and the company is planning to build a second next year.
“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.