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RES Producers Shall Renew Contracts with the Guaranteed Buyer

Ukraine
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On 26 July 2024, the National Energy and Utilities Regulatory Commission (NEURC) adopted Resolution 1381, amending key provisions of the following agreements:

  • Agreement for the purchase and sale of electricity under the "green" tariff
  • Agreement on the provision of services to support electricity production from alternative sources under the market premium mechanism
  • Agreement on participation in the balancing group of the Guaranteed buyer
  • Procedure for purchasing electricity generated from renewable energy sources by the Guaranteed buyer

Producers should until 1 October 2024 align their agreements with the adopted amendments.

The new form of the additional agreements can be downloaded from the Guaranteed buyer's website:

  • Link to the forms for the additional agreements to the agreement for the purchase and sale of electricity under the "green" tariff and agreement on participation in the balancing group of the Guaranteed buyer
  • Link to the form for the additional agreement to the agreement on the provision of services to support electricity production from alternative sources under the market premium mechanism

The adopted amendments address two main areas:

  1. Penalty amounts for failure to meet monetary obligations under the agreements
  2. Introduction of conditions for guarantees of origin

Regarding penalties

Changes to the application of penalties have been made to all three of the agreements mentioned above.

Under the previous version of these agreements, the following penalties were stipulated for the Guaranteed buyer in the event of late or incomplete payments for electricity:

  • a payment penalty of 0.1% for each day of delay
  • a penalty of 7% for failure to pay the producer for more than 30 days

The agreement on participation in the balancing group of the Guaranteed buyer contains corresponding provisions, applying penalties to RES producers if they miss payment deadlines for their share of the cost of settling electricity imbalances with the Guaranteed buyer.

According to the NEURC's amendments, the penalty that may be imposed on both the Guaranteed buyer and RES producers is now set at 1% of the unpaid amount, replacing the previous rate of 7%.

However, according to NEURC Resolution No. 332 dated 25 February 2022, the accrual and collection of penalties under contracts concluded under the Law of Ukraine "On the Electricity Market" have been suspended for the duration of martial law in Ukraine and 30 days following its termination.

Regarding Guarantees of Origin

Amendments regarding guarantees of origin have been incorporated into the following agreements:

  • Agreement for the purchase and sale of electricity under the "green" tariff
  • Agreement on the provision of services to support electricity production from alternative sources under the market premium mechanism
  • Agreement on participation in the balancing group of the guaranteed buyer

The amendments expanded the range of obligations of RES producers, requiring them to obtain monthly guarantees of electricity origin from the register and transfer them to the Guaranteed buyer. Additionally, the amendments stipulate that RES producers should acquire user status in the register of guarantees of origin and register their installations in accordance with procedures established by the Government and the NEURC.

If these obligations are not met, the Guaranteed buyer excludes the seller's generating units from the balancing group, and the agreements are suspended until the RES producer complies with these requirements.

Furthermore, the formula for calculating the cost of services to support electricity production from alternative sources has been revised. The cost of these services will be reduced by the total payments related to income from the sale of guarantees of electricity origin.

By Yaroslav Petrov, Partner, and Kateryna Andarak, Associate, Asters

Asters at a Glance

Founded in 1995, Asters is the largest Ukrainian law firm with offices in Kyiv, Washington D.C., Brussels and London.

The Firm provides efficient transactional legal advice and represents clients on a broad spectrum of matters arising in the course of doing business in Ukraine. Asters has extensive industry-specific experience and plays a leading role in advising clients in various market sectors.

Asters’ 130-strong legal team combines world-class professionalism and quality with clear understanding of local realities so that our clients receive practically oriented advice in the most client-friendly manner. Asters’ lawyers received law degrees from the best European, Ukrainian and US law schools, including Yale, Harvard, Chicago University.

Asters has consistently remained at the top of the Ukrainian legal market throughout its history being acknowledged as Ukraine Law Firm of the Year by Who's Who Legal (2018-2022), The Lawyer European Awards (2020-2021), Chambers Europe Awards 2020 and holds top positions in the most authoritative international market reviews: The Legal 500, Chambers Global and Chambers Europe, IFLR 1000, Who's Who Legal, Best Lawyers.

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