On 13 December 2019, the National Energy and Utilities Regulatory Commission (the "NEURC") approved the form of the power purchase agreement (the "PPA") for auctions as well as amended Resolution No. 641 "On the Approval of the Normative Acts Governing the Activity of the Guaranteed Buyer and the Electricity Offtake under the Feed-in Tariff" (the "Resolution") introducing, inter alia, certain changes to the model form of a PPA under the feed-in tariff (the "FiT").
The key amendments are as follows:
Conditions for the PPA to take effect. A PPA will take effect on the date of its signing, except for most operative provisions, which will take effect on the first day of the month in which the latest of the following conditions occurs: a producer (i) obtains the electricity production licence and the FiT; (ii) concludes an imbalance settlement agreement with the transmission system operator (Ukrenergo); (iii) provides the list of commercial metering points, and a linear scheme indicating the commercial metering points and the balance sheet attribution of grid facilities; and (iv) agrees to join the balancing group led by the Guaranteed Buyer (the offtaker).
Assignment of rights under a PPA. Assignment of rights under a PPA is still possible only with the prior consent of the Guaranteed Buyer. However, the PPA now contains an extensive list of conditions under which such consent can be granted. These include, amongst others, the following noteworthy conditions:
- an assignable claim should relate to the undisputed final debt incurred by the Guaranteed Buyer to a renewable energy producer;
- an assignable claim should be sufficiently identified in terms of the amount and the calculation period, as well as the payment date;
- a producer should not have any undischarged monetary obligations owed to the Guaranteed Buyer; and
- the assignment should be accompanied by a statement of reconciliation of payments signed between a producer and the Guaranteed Buyer.
In light of the above conditions, it remains unclear how such consent can be provided for the assignment of future claims under a PPA at the stage when there is no actual indebtedness incurred.
Arbitration. When entering into a PPA, a producer (with at least 10% of foreign investment in its charter capital) can now opt for international commercial arbitration under the ICC Rules of Arbitration (with the place of arbitration in Paris), in which case the Guaranteed Buyer cannot refer a relevant dispute to the Ukrainian courts. Producers which opted for international arbitration should pay contributions to the special fund to cover the potential arbitration costs of the Guaranteed Buyer. The contributions to the fund should be made in the amount determined by the NEURC not less than once per quarter, and should not exceed 1% of the net profit of the relevant power plant for the preceding period.
Replacement of Energorynok with the Guaranteed Buyer. The deadline for signing tripartite amendment agreements to the existing PPAs to replace Energorynok (the previous offtaker) with the Guaranteed Buyer (the new offtaker) has been extended from 1 July 2019 until 31 December 2019.
The model form of the PPA at the auction price. NEURC approved the model form of the PPA to be used by renewable energy producers, which will obtain support through auctions.
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