Statement of the Solar Energy Association of Ukraine on the additional reduction of 60% of the “feed-in” tariff for solar power plant projects under construction in 2020

On July 3, 2020, the Verkhovna Rada adopted in the first reading the draft law № 3658.
In particular, this draft law limits the terms of commissioning of new SPP, by reducing the “feed-in” tariff for such projects by an additional 60% from 01.08.2020.
We note that the above provisions of the draft law contradict the principle of legal certainty, which is part of the rule of law enshrined in Article 8 of the Constitution of Ukraine, as well as Art. 1 of the First Protocol to the European Convention on Human Rights on the Peaceful Possession of Property.
Yes, Art. 1 of the First Protocol to the European Convention on Human Rights stipulates that every natural or legal person is entitled to the peaceful enjoyment of his possessions. The concept of “property” within the meaning of Article 1 of Protocol No. 1 has an autonomous interpretation, i.e. it is not limited to ownership of tangible property and does not depend on a formal classification in domestic law. Individual rights and interests that constitute assets can also be considered property rights and, consequently, “property” (Supreme Court decision of 03.06.2020 in case № 369/4085/16-c).
The law must be accessible and predictable, i.e. expressed with sufficient precision to enable a person to regulate his conduct if necessary (decision of December 13, 2001, in the case of the Church of the Bessarabian Metropolitanate v. Moldova).
In turn, the current provisions of national law need to be formulated in such a way that they are sufficiently accessible, transparent and predictable in practice. The quality of the law requires that it be available to the person and that he or she be able to foresee the consequences of its application to him or her and that the law not be contrary to the rule of law (Gavenda v. Poland, March 14 2002).
Thus, the reduction of the commissioning of new SPP violates the principle of legal certainty, thereby levelling the predictability of the law. After all, relying on this principle and investing in the construction of SPP, investors received two years to order equipment, installation of the station, regulatory procedures and commissioning of solar power plants with the right to sell electricity at a “green” rate. However, if the bill is passed, investors will lose investment and will not receive the expected return. At the same time, from January 1, 2020, the “feed-in” tariff for SPP was already reduced by 25% according to the Law of April 2019, so no investor could have predicted that the “green” tariff could be reduced again by another 60%.
Part 1 of Art. 18 of the Law of Ukraine “On Investment Activity” it is determined that “the state guarantees the stability of the conditions of investment activity, observance of the rights and legitimate interests of its subjects.”.
While Art. 19 of the Law of Ukraine “On Investment Activity” defines the following:
“Investment protection is a set of organizational, technical and legal measures aimed at creating conditions conducive to maintaining investment, achieving the goal of investment… The state guarantees the protection of investment regardless of ownership, as well as foreign investment. Protection of investments is provided by the legislation of Ukraine, and also by the international agreements of Ukraine…»
Article 10 of the European Energy Charter stipulates that “in no case shall such investments be accorded treatment less favourable than that required by international law, including treaty obligations. Each Contracting Party shall comply with any obligations it has entered into with respect to the investor or the investment of the investor of any other Contracting Party. ”
At the same time, if draft law #3658 will be adopted in the second reading and in general without changing this norm on the dramatic reduction of the “feed-in” tariff, the guarantees provided by the state to investors will be levelled, and international legislation will be violated. The obligation of investors to complete the construction of SPP and put them into operation in just two weeks is a priori unrealistic, especially since our country and the whole world have been fighting the coronavirus pandemic for five months, which in itself hinders SES projects. Realizing this, the French government has already extended the prePPA agreements on the construction of the SES for the duration of the pandemic.
It should also be noted that many investors are now building relatively small solar power plants with a capacity of 5-10 MW. They invested their own and borrowed funds. Many of them do not have time to complete the station by 01.08.2020 and accordingly receive a “feed-in” tariff, as required by current legislation. In addition to hitting medium-sized businesses, this will prevent the construction of a more balanced energy system based on distributed generation, as provided for in the Fourth Energy Package of the European Union.

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