Ukraine: the green tariff for biogas under Law 810-IX and the 2020 memorandum

The Ukrainian green tariff is a system of guaranteed prices for renewable energy in which the rate is linked to the euro exchange rate and recalculated every quarter. In 2020 the system underwent a reform, and biogas and biomass were given a clear cut-off date: 1 January 2023.

The memorandum of 10 June 2020

On 10 June 2020 the Ukrainian government signed a memorandum with green energy producers, intended to stabilise a market that was in debt to the Guaranteed Buyer (the state enterprise purchasing energy under the green tariff). The government's statement speaks of a 15% cut in tariffs for photovoltaic plants and 7.5% for wind plants, and of a commitment to timely payments and to repaying debts to the participants in the agreement. From 1 August 2020 new solar plants above 1 MW can receive support only through auctions. The statement makes no mention of biogas or biomass.

Law 810-IX and the date of 1 January 2023

The memorandum was given legal effect by Law No. 810-IX. According to UABIO, its transitional provision (point 3) limits the green tariff for producers of energy from biomass and biogas to installations commissioned before 1 January 2023. In the association's view this conflicts with Article 9-1 of the Law on Alternative Energy Sources, which grants the right to the tariff also to installations commissioned after 1 January 2020, even if they take part in auctions. In letter No. 497 of 17 September 2020 to the chair of the energy committee of the Verkhovna Rada, UABIO asked for this provision to be repealed, because it treats biomass and biogas worse than other sources.

Scale of the sector

According to UABIO, biogas and biomass accounted for about 7% of green tariff payments in 2019, while 89% went to solar and wind plants. The industry also reported that in recent months the Guaranteed Buyer had been paying biomass and biogas producers on average about 5% of what was owed each month. In 2020 UABIO described about 50 installations with a green tariff, including 27 on landfill gas and 20 on agricultural feedstocks; the total electrical capacity of biogas cogeneration was about 105 MW. These figures come from various industry studies and may count facilities differently, so treat them as an order of magnitude.

Why it matters

For an investor it is not only the level of the rate that counts but also the deadline: an installation that failed to be commissioned before the end of 2022 could lose access to the tariff. The rates in euro cents per kWh are set by the regulator in separate decisions and are not given here.