Recent legislation of Ukraine in RE and EE (accepted from July 2014 till now)

Georgiy Geletukha, PhD

Head of the Board, Bioenergy Association of Ukraine Advisor of MP Olexander Dombrovskiy, Head of interfraction deputy members

group “For Energy Independence of Ukraine” Advisor of Head of the National Agency for Energy Efficiency and Energy Saving

We are greening the energy!

Recent legislation of Ukraine in RE and EE (accepted from July 2014 till now)

1 The Decree of the CMU

# 293 dated

09/07/2014 “About

facilitation of natural

gas substitution in

heat supply sector”

It is recommended for The National

Commission for State Energy and

Public Utilities Regulation to establish

tariff for heat generation for non-gas

generation facilities on the level of the

0.9 equivalent tariff for “baseline”

natural gas heat generation facilities

for population utilities, and in case of

absence of such “baseline” tariff on the

level of average weighted tariff for

population. Also the local

municipalities should facilitate the

implementation of the investment

projects aimed on non-gas generation

equipment installation, including the

utilization of renewable energy

sources.

09/07/2014

Decision of Cabinet of Ministers N293 from 9 July 2014 р “On stimulation of natural gas replacement in heat supply sector”

913

314

851 900

587

10% 822

-508

UAH/Gcal

Wood cheeps

-598

Straw pellets Wood pellets Natural gas (population)

Natural gas (industry)

For compensation of difference in tariffs for heat supply from natural gas to population in DH systems

Government allocates at the moment 598 UAH/Gcal.

For fuels and energy (other than gas) Government will allocate 508 UAH/Gcal from 1 October 2014

according this decision.

Gas cost:

5 241,37 UAH/th. m3

Gas cost:

1 091,2 UAH/th.m3

Tariff of 1 Gcal of heat energy for population in DH systems:

2 The Decree of Cabinet

of Ministers of

Ukraine # 453 “On

the stimulation of

natural gas

substitution in heat

generation for

budget state and

regional

organizations” under

edition dated 10th of

September 2014

It is recommended for The National

Commission for State Energy and Public

Utilities Regulation to establish tariff for

heat generation for non-gas generation

facilities on the level of the equivalent

tariff for “baseline” natural gas heat

generation facilities for public sector,

and in case of absence of such

“baseline” tariff on the level of average

weighted tariff for public sector.

10/09/2014

Recent legislation of Ukraine in RE and EE (continue)

3 The Decree of Cabinet

of Ministers of

Ukraine # 491 dated

01/10/2014 “About

amendments to the

Order of state

budget funds usage

for energy efficiency

and energy saving

measures

implementation”

Introduction of the incentives for population

for energy efficiency technologies

implementation by means of

reimbursement of the share of

primary loan (“credit body”), taken

for non-gas boilers purchasing. The

reimbursement of the credit body is

preformed once at the level of 20 % on

loan sum, taken according to the single

credit agreement in the designated bank

office for boiler purchase but not

exceeding 5 000 UAH per single credit

agreement.

01/10/2014

Recent legislation of Ukraine in RE and EE (continue)

4 The CMU Decree #902

“About National

Action Plan on

Renewable Energy

Sources till 2020”

dated 01/10/2014

has been made

publicly available.

The key principal aim of the plan is to

achieve 11 % of RES in gross final

energy consumption till 2020. The

detailed road map on the achieving of

the targets is represented.

01/10/2014

Recent legislation of Ukraine in RE and EE (continue)

National Renewable Energy Action Plan till 2020 (approved by Government)

Indexes 2009 2014 2015 2016 2017 2018 2019 2020

RE – heat, % 3,4 6,5 7,1 8,0 8,8 9,7 10,8 12,2

including biomass, th. toe 1433 2280 2700 3100 3580 4050 4525 5000

RE – electricity, % 7,1 7,6 8,3 8,7 9,4 10,2 10,9 11,5

biomass, MWe, including:

solid

biogas

0 40

28

12

250

175

75

380

260

120

520

360

160

650

455

195

780

540

240

950

660

290

RE – transport fuels, % 1,5 4,1 5,0 6,5 7,5 8,2 9,0 10,0

Including biomass, th. toe 0 110 150 220 265 300 340 390

TOTAL share of RE in grass final

energy consumption, %

3,8 6,1 6,8 7,5 8,2 9,0 9,9 11,0

5000 mill toe = 6,25 bill m3/year

660 MWe, 90% as CHP, 1780 MWth, replacement of natural gas - 0,95 bill m3/year.

6,25 + 0,95 – 1,67 = 5,53 bill m3/year (objective for 2020).

5 The CMU Decree

#1014-r “About the

adoption of the plan

of short-term and

mid-term measures

with respect to

reduction of natural

gas consumption till

2017” dated

16/10/2014

The Decree foresees the implementation of

the number of complex measures on

facilitation of the natural gas

consumption reduction till 2017, namely

liberalization of loan conditions

(reimbursement of the share of sum of

credit for population for purchasing of

energy efficient equipment and RES-

based generation equipment),

mechanism of acceleration of

amortization of equipment which reduce

natural gas consumption, simplification

of order of transfer for concession,

leasing and privatization of heat

generation objects of communal

property, correction and approximation

of term “biomass” to the international

standards, etc.

16/10/2014

Recent legislation of Ukraine in RE and EE (continue)

The CMU Decree #1014-r “About the adoption of the plan of short-term and mid-term measures with respect to reduction of natural gas consumption till

2017” dated 16/10/2014 )

• Priority Stutus to projects replacing natural gas by other fuels and energy. • Premium for replacement of natural gas to companies installing heat

supply equipment on other fuels and energy (than gas) in DH and public sector.

• Reimbursement of part of the credits provided by banks to population for installing of heat supply equipment on other fuels and energy (than gas).

• Improvement of methodology for calculation of “self cost” and tariff for production of heat from other fuels and energy (than gas):

- use of express amortization; - establishment of IRR for such projects not less than 25%. • Simplification of concession, rentals and lifting of tabu for privatization of

objects in communal property. • Synchronization of term of “biomass” in Ukrainian legislation with EU

Directive 2009/28/EC. • Development of technical specifications for injection of biomethane in gas

pipe system of Ukraine. Development of stimulation for production and utilization of biomethane.

Plan for replacement and reduction of consumption of natural gas till 2017 (continue)

• Changes in Energy Strategy of Ukraine till 2030 in particular in the reduction of gas consumption and increase of renewable energy share.

• Approval of National Action Plan on Energy Efficiency till 2020 as part of Ukraine obligations before Energy Community.

• Improvement of state purchase procedure for long term obligations (up to 5 years) in the projects replacing natural gas by other fuels and energy.

• Simplification of land allocation procedure for the projects replacing natural gas by other fuels and energy.

• Reduction of terms and numbers of permits for the projects replacing natural gas by other fuels and energy.

• Improvements of the Laws “On heat supply” and “On nature monopolies”, introduction of stimulating tariffs system.

• Broad information company for energy efficiency and renewables for replacement of natural gas.

Barriers to development of bioenergy created by the Law of Ukraine “On Electricity”

Power from biomass sector is in very slow progress at the moment due to some barriers in legislation. As illustration, installed capacity of power stations on RE in Ukraine (January 2014): solar photovoltaic - 807 MW; wind - 480 MW; small hydro - 77 MW; bioenergy - 25 MW. Why?

• Incorrect/narrow definition of "biomass"; • Unrealistically high requirement for "local content" of equipment, materials and

services: 50% for power stations on biomass from 01.07.2014 and 50% for power stations on biogas from 01.01.2015; • Low GT coefficient for power generated from biomass and biogas. Draft LAW OF UKRAINE «On amendments to certain laws of Ukraine regarding the

incentives for power production from alternative energy sources» has been developed recently by SAEE. This draft law is mentioned as priority law in coalition agreement of new Ukrainian Parliament.

N* Electricity from biomass

Green tariff

(max), Eurocents/ kWh

1 Italy 28

2 Germany 22,67

3 Check Republic 19

4 Spain 17,16

5 Austria 14,98

Ukraine (2,7) 14,54

6 Bulgaria 13,04

7 Ukraine (2,3) 12,39

8 France 11,9

http://www.res-legal.de/en/search-for-support-scheme.html

Green (feed in) tariff for biomass and biogas in EU countries and Ukraine, Eurocents/kWh

N* Electricity from biogas

Green tariff

(max), Eurocents/ kWh

1 Germany 28,67

2 Italy 28

3 Bulgaria 22,14

4 Austria 18,5

5 Check Republic 17

Ukraine (3,0)* 16,16

6 Spain 14,11

7 Ukraine (2,3) 12,39

8 UK 10,36

Conclusions

1. A number of stimulating decisions are already accepted by Ukrainian Government for

development of EE, RE and replacement of natural gas.

2. Last 3 months are the most effective for improvements of legislation for stimulation of

EE, RE and natural gas replacement in the history of Ukraine.

3. Next steps in the same direction are needed yet and they are already under

preparation.

Thank you for your attention!

Georgiy Geletukha, PhD

tel: +380 44 332 9140 geletukha@uabio.org

www.uabio.org