The resolution of the renewables dispute in Ukraine – an update

At today’s session of the Verkhovna Rada of Ukraine, the Energy and Utilities Committee will review drafts aimed at implementing the Memorandum of Understanding developed in the mediation process under the Energy Community Dispute Resolution and Negotiation Centre. The signature of the Memorandum ending the dispute between two main associations of renewable investors and the Ukrainian Government on 10 June 2020 within the mediation process is an important achievement. It is now important to transpose correctly the Memorandum on terms agreed with the investors into a legislative act still before the summer break.

At the same time, it is regrettable that a large part of the investors was not able to join the Memorandum. According to Dirk Buschle, the mediator of this dispute, “the Ministry of Energy, together with the remaining investors, should continue and not cease their efforts to include as many investors as possible in the Memorandum. This is the best way to ensure support of those concerned about the feed-in tariff restructuring and to avoid protracted law suits against Ukraine.”

In any event, restructuring must not undermine the financial viability of projects in accordance with the general principles of predictability of the regulatory environment, necessity and proportionality of measures which also apply under the Association Agreement with the European Union. The international obligations of Ukraine regarding investment protection and non-discriminatory treatment of investors are key pillars of political feasibility and economic viability of investments in the country. It is true that the current financial problems of the electricity market in Ukraine require solutions. In this respect, the costs of renewables represent only one part of the problem, and a solution cannot be found without addressing the structural deficiencies of the market design.

Together with the European Union, the Energy Community Secretariat will continue to support Ukraine in its efforts to ensure a balance between cost-efficiency and investment protection in the energy sector. As long as the remaining parties are still interested in amicable solutions, the mediation process remains open for this purpose.