Recent legislation of Ukraine in RE and EE (accepted from July 2014 till now) Georgiy Geletukha, PhD Head of the Board, Bioenergy Association of Ukraine Advisor of MP Olexander Dombrovskiy, Head of interfraction deputy members group “For Energy Independence of Ukraine” Advisor of Head of the National Agency for Energy Efficiency and Energy Saving We are greening the energy!

Recent legislation of Ukraine in RE and EE (accepted from July 2014 till now) 1The Decree of the CMU # 293 dated 09/07/2014 “About facilitation of natural gas substitution in heat supply sector” It is recommended for The National Commission for State Energy and Public Utilities Regulation to establish tariff for heat generation for non-gas generation facilities on the level of the 0.9 equivalent tariff for “baseline” natural gas heat generation facilities for population utilities, and in case of absence of such “baseline” tariff on the level of average weighted tariff for population. Also the local municipalities should facilitate the implementation of the investment projects aimed on non-gas generation equipment installation, including the utilization of renewable energy sources. 09/07/2014

Decision of Cabinet of Ministers N293 from 9 July 2014 р “On stimulation of natural gas replacement in heat supply sector” 10% UAH/Gcal Wood cheeps -598 Straw pelletsWood pelletsNatural gas (population) Natural gas (industry) For compensation of difference in tariffs for heat supply from natural gas to population in DH systems Government allocates at the moment 598 UAH/Gcal. For fuels and energy (other than gas) Government will allocate 508 UAH/Gcal from 1 October 2014 according this decision. Gas cost: 5 241,37 UAH/th. m 3 Gas cost: 1 091,2 UAH/th.m 3 Tariff of 1 Gcal of heat energy for population in DH systems:

2The Decree of Cabinet of Ministers of Ukraine # 453 “On the stimulation of natural gas substitution in heat generation for budget state and regional organizations” under edition dated 10 th of September 2014 It is recommended for The National Commission for State Energy and Public Utilities Regulation to establish tariff for heat generation for non-gas generation facilities on the level of the equivalent tariff for “baseline” natural gas heat generation facilities for public sector, and in case of absence of such “baseline” tariff on the level of average weighted tariff for public sector. 10/09/2014 Recent legislation of Ukraine in RE and EE (continue)

3The Decree of Cabinet of Ministers of Ukraine # 491 dated 01/10/2014 “About amendments to the Order of state budget funds usage for energy efficiency and energy saving measures implementation” Introduction of the incentives for population for energy efficiency technologies implementation by means of reimbursement of the share of primary loan (“credit body”), taken for non-gas boilers purchasing. The reimbursement of the credit body is preformed once at the level of 20 % on loan sum, taken according to the single credit agreement in the designated bank office for boiler purchase but not exceeding UAH per single credit agreement. 01/10/2014 Recent legislation of Ukraine in RE and EE (continue)

4The CMU Decree #902 “About National Action Plan on Renewable Energy Sources till 2020” dated 01/10/2014 has been made publicly available. The key principal aim of the plan is to achieve 11 % of RES in gross final energy consumption till The detailed road map on the achieving of the targets is represented. 01/10/2014 Recent legislation of Ukraine in RE and EE (continue)

National Renewable Energy Action Plan till 2020 (approved by Government) Indexes RE – heat, %3,46,57,18,08,89,710,812,2 including biomass, th. toe RE – electricity, %7,17,68,38,79,410,210,911,5 biomass, MWe, including: solid biogas RE – transport fuels, %1,54,15,06,57,58,29,010,0 Including biomass, th. toe TOTAL share of RE in grass final energy consumption, % 3,86,16,87,58,29,09,911, mill toe = 6,25 bill m3/year 660 MWe, 90% as CHP, 1780 MWth, replacement of natural gas - 0,95 bill m3/year. 6,25 + 0,95 – 1,67 = 5,53 bill m3/year (objective for 2020).

5The CMU Decree #1014-r “About the adoption of the plan of short-term and mid-term measures with respect to reduction of natural gas consumption till 2017” dated 16/10/2014 The Decree foresees the implementation of the number of complex measures on facilitation of the natural gas consumption reduction till 2017, namely liberalization of loan conditions (reimbursement of the share of sum of credit for population for purchasing of energy efficient equipment and RES- based generation equipment), mechanism of acceleration of amortization of equipment which reduce natural gas consumption, simplification of order of transfer for concession, leasing and privatization of heat generation objects of communal property, correction and approximation of term “biomass” to the international standards, etc. 16/10/2014 Recent legislation of Ukraine in RE and EE (continue)

The CMU Decree #1014-r “About the adoption of the plan of short-term and mid-term measures with respect to reduction of natural gas consumption till 2017” dated 16/10/2014 ) Priority Stutus to projects replacing natural gas by other fuels and energy. Premium for replacement of natural gas to companies installing heat supply equipment on other fuels and energy (than gas) in DH and public sector. Reimbursement of part of the credits provided by banks to population for installing of heat supply equipment on other fuels and energy (than gas). Improvement of methodology for calculation of “self cost” and tariff for production of heat from other fuels and energy (than gas): - use of express amortization; - establishment of IRR for such projects not less than 25%. Simplification of concession, rentals and lifting of tabu for privatization of objects in communal property. Synchronization of term of “biomass” in Ukrainian legislation with EU Directive 2009/28/EC. Development of technical specifications for injection of biomethane in gas pipe system of Ukraine. Development of stimulation for production and utilization of biomethane.

Plan for replacement and reduction of consumption of natural gas till 2017 (continue) Changes in Energy Strategy of Ukraine till 2030 in particular in the reduction of gas consumption and increase of renewable energy share. Approval of National Action Plan on Energy Efficiency till 2020 as part of Ukraine obligations before Energy Community. Improvement of state purchase procedure for long term obligations (up to 5 years) in the projects replacing natural gas by other fuels and energy. Simplification of land allocation procedure for the projects replacing natural gas by other fuels and energy. Reduction of terms and numbers of permits for the projects replacing natural gas by other fuels and energy. Improvements of the Laws “On heat supply” and “On nature monopolies”, introduction of stimulating tariffs system. Broad information company for energy efficiency and renewables for replacement of natural gas.

Barriers to development of bioenergy created by the Law of Ukraine “On Electricity” Power from biomass sector is in very slow progress at the moment due to some barriers in legislation. As illustration, installed capacity of power stations on RE in Ukraine (January 2014): solar photovoltaic MW; wind MW; small hydro - 77 MW; bioenergy - 25 MW. Why? Incorrect/narrow definition of "biomass"; Unrealistically high requirement for "local content" of equipment, materials and services: 50% for power stations on biomass from and 50% for power stations on biogas from ; Low GT coefficient for power generated from biomass and biogas. Draft LAW OF UKRAINE «On amendments to certain laws of Ukraine regarding the incentives for power production from alternative energy sources» has been developed recently by SAEE. This draft law is mentioned as priority law in coalition agreement of new Ukrainian Parliament.

N* Electricity from biomass Green tariff ( max), Eurocents/ kWh 1Italy28 2Germany22,67 3Check Republic19 4Spain17,16 5Austria14,98 Ukraine (2,7)14,54 6Bulgaria13,04 7Ukraine (2,3)12,39 8France11,9 Green (feed in) tariff for biomass and biogas in EU countries and Ukraine, Eurocents/kWh N* Electricity from biogas Green tariff ( max), Eurocents/ kWh 1 Germany 28,67 2 Italy 28 3 Bulgaria 22,14 4 Austria 18,5 5 Check Republic 17 Ukraine (3,0)* 16,16 6 Spain 14,11 7 Ukraine (2,3) 12,39 8 UK 10,36

Conclusions 1.A number of stimulating decisions are already accepted by Ukrainian Government for development of EE, RE and replacement of natural gas. 2.Last 3 months are the most effective for improvements of legislation for stimulation of EE, RE and natural gas replacement in the history of Ukraine. 3.Next steps in the same direction are needed yet and they are already under preparation.

Thank you for your attention! Georgiy Geletukha, PhD tel: