Serhii Kravchuk at the webinar ‘Corporate PPAs: mutually beneficial partnership for sustainable business and energy development’

Serhii Kravchuk, Director of Electricity Trading and Supply, KNESS, delivered a speech at the webinar ‘Corporate PPAs: mutually beneficial partnership for sustainable business and energy development’. The expert highlighted the topic from the practical perspective. The speech was about the work of renewable energy producers in terms of electricity sales in today’s realities. The speaker also shared his vision on promising models of cooperation between electricity market participants on the terms of corporate PPAs (power purchase agreements are long-term electricity purchase and sale agreements under which private companies act as buyers of electricity).

The key points from Serhii Kravchuk’s speech: 

• The situation on the renewable energy market in terms of electricity sales is as follows. Currently, about 400 MW of solar and 350 MW of wind power plants that have left the balancing group of SE ‘Guaranteed Buyer’ sell electricity at free prices. In fact, most of these power plants have signed contracts with SE ‘Guaranteed Buyer’ based on the feed-in premium mechanism and receive the difference between the market tariff and the feed-in tariff’ set for them.
• Nowadays, there is a certain difference between payments under the feed-in tariff and the feed-in premium mechanism. Under the feed-in premium mechanism, producers can receive payment only after the cost amount of service purchased by the SE ‘Guaranteed Buyer’ is approved. Recently, the Regulator (NEURC) has approved the cost amount of the service for the first three months since its implementation, meaning that such payments have already been unlocked. At the same time, market participants are actively developing mechanisms for receiving advance payments, which will be made by decades, without the need to approve the amount of the service. Thus, the suggested changes are expected to improve the liquidity situation for renewable energy producers selling electricity on market terms.
• However, in the current Ukrainian reality, even a legally flawless mechanism for selling electricity will not work due to the capacity deficit and regular power outages for consumers. Another challenge is the large distance between electricity producers and consumers, and the lack of direct connection between them via power grids, which becomes an obstacle in the face of power deficit. Currently, this issue can only be resolved by means of imported electricity. 
• The development of new generation facilities, including decentralized generation, which is critical in today’s circumstances, requires confidence in ensuring the electricity off-take. The implementation of corporate PPAs is one of the promising ways to achieve this. It is especially important that in case of prolonged power outages, the generation facility have a direct electrical connection with the consumer’s facility. Therefore, we see prospects in the implementation of renewable energy facilities with connection to the consumer’s internal grids and the conclusion of physical corporate PPAs. 
• At the legislative level, a similar possibility of implementing RES facilities with connection to the consumer’s internal grids is already provided (according to the Law of Ukraine No. 3220-IX). Consumers have the right to connect generating facilities owned by third parties and used to produce electricity from alternative energy sources to their own power grids, on condition that the entire volume of electricity produced by such generating facilities owned by third parties is purchased by the consumer. The relations between active consumers and third parties on the issues defined in this Article shall be regulated in accordance with the agreement concluded between them and civil law. The relations regarding the sale to the consumer of electricity generated by generating facilities and/or released by energy storage facilities owned by third parties and connected to the electricity grids of such consumer shall not be considered as the supply of electricity to the consumer and shall not require a license, and the active consumer shall not pay any fee for the distribution and transmission of such electricity.  

We thank the hosts and moderators (Vitalii Opryshko and Daria Orlova) of the event, which was held with the support of the UN Global Compact in Ukraine and ExPro as part of the Ukraine Energy Initiative. We highly appreciate the opportunity to share our vision of the RES sector development and to jointly seek solutions for qualitative changes in the current circumstances.