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RES investors agreed to the government memorandum because of Guaranteed Buyer’s debts

12 June 2020
RES investors agreed to the government memorandum because of Guaranteed Buyer’s debts

On June 10, 2020, the European-Ukrainian Energy Agency and the Ukrainian Wind Energy Association signed a compromise memorandum with the Government of Ukraine

 

RES investors agreed to a memorandum on the “green” tariff restructuring, because there was a risk of bankruptcy through non-payments by Guaranteed Buyer.

This was announced by a member of the Board of the European-Ukrainian Energy Agency Yurii Kubrushko. The full text of the application of RES investors is at the disposal of Ukrayinska Energetyka.

The state and time played against investors, and this greatly weakened their negotiating position. In a situation of Guaranteed Buyer’s 90% failures to pay for several months, many investors simply cannot afford the luxury of waiting until the fall. Until then, they will simply go bankrupt. Not everyone will have the resources to support their business for three to four years, until they receive compensation through arbitration. EUEA member companies faced a difficult choice. Each made it on their own, based on the understanding what will do less harm to his/her company and the sector in general,” Kubrushko said.

In general, the statement of the European-Ukrainian Energy Agency notes that the signing of the memorandum is a responsible, albeit forced, step on the part of a group of investors.

“Understanding of responsibility for the general context of the sector, as well as the support of the majority of members of the association allowed the EUEA to sign a memorandum,” investors say.

We remind that the terms of the signed Memorandum provide for a reduction of the “green” tariff for solar power plants (SPPs) built in 2015-2019 by 15%, for wind power plants (WPPs) built in 2015-2019 - by 7.5 %; abolition of the green tariff for SPPs, which came into force after July 31, 2020; reduction of the green tariff by 2.5% for WPPs and SPPs, which will be commissioned from January 1, 2020. The most important are the state guarantees to ensure the full current payment for RES by Guaranteed Buyer, as well as the approved schedule of repayment of debts to producers of electricity of RES.

“The memorandum is not an end point, but rather a starting point for power plant workers to receive a salary, for investors to continue to operate their facilities and serve communities, to complete the construction of their projects. The EUEA will work with the government and the Verkhovna Rada to implement the provisions of the Memorandum and, if possible, to achieve more to address the outstanding issues of all our members,” the Chairman of the Board of the EUEA Mats Lundin said.

It will be recalled that the Ministry of Energy and Environmental Protection in negotiations with investors in renewable energy sources (RES) has repeatedly stated its intention to reach agreements on restructuring the “green” tariff without extending the payment period.

Acting Minister Olha Buslavets stressed that the restructuring options include reducing the “green” tariff, introducing full financial responsibility for imbalances, stopping the construction of new facilities within the existing system to support the development of green generation, giving the system operator the right to limit the production of “green” electricity free of charge for a certain amount of hours. She also added that there are several scenarios for restructuring - medium, hard, less hard.

The issues of the memorandum were discussed at the second Anti-Crisis Energy Headquarters. According to the information on the website, almost all key provisions of the memorandum have been agreed within the framework of negotiations with investors in the field of RES.

However, Prime Minister Denis Shmygal said during a press conference dedicated to the 100 days of the Government, the Cabinet of Ministers has begun the process of signing a memorandum with renewable energy investors, but the process is not yet complete.


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