On 27 February 2024, the Cabinet of Ministers of Ukraine approved the Procedure for Issuing, Circulating and Redeeming Guarantees of Origin for Electricity Generated from Renewable Energy Sources and the Procedure for Determining the Environmental Value of Electricity Generated from Renewable Energy Sources.
Guarantees of origin certify its holder's rights to the environmental value, i.e., the amount of avoided CO2 emissions and the positive effect of electricity production from renewable energy sources ("RES").
The Procedure for guarantees of origin regulates:
- Functioning of the register of guarantees of origin (the "Register")
- Procedure and requirements for registration in the Register
- Procedure for issuance, circulation and redemption of guarantees of origin
- Procedure for inspecting generating facilities and consumers
Functioning of the Register
The issuance, circulation and redemption of guarantees of origin shall be carried out exclusively between users of the Register. Guarantees of origin are issued, transferred or redeemed by submitting electronic requests in the Register.
Access to the register for applicants and users shall be provided by the administrator of the Register and open and free of charge.
Interaction between the administrator of the Register and users occurs through the created accounts.
The Procedure and requirements for registration in the Register
There are two categories of registered users: those required to register and those for whom registration is optional.
The persons obliged to register are:
- Business entities that sell electricity to the guaranteed buyer at a feed-in tariff or provide a service to the guaranteed buyer using a market premium mechanism
- Universal service providers
- The guaranteed buyer
Other entities and consumers register voluntarily.
The guaranteed buyer will hold guarantees of origin for the "green" electricity produced by RES producers benefiting from state support.
Registration in the Register is carried out based on a relevant application.
The Procedure also outlines the right of registered users to register their installations in the system. These installations must be commissioned and connected to the grid. The owner of such guarantees of origin will be the guaranteed buyer.
The Procedure for issuing, circulating and redeeming guarantees of origin
The guarantee of origin is issued for the amount of electricity injected into the grid, which amounts to 1 MWh, during the operating period (calendar month in which the electricity was generated).
The guarantee of origin is freely tradable within 12 months from the date of electricity generation, and the redemption of the guarantee is carried out within 18 months from that date.
In case the guarantee is not redeemed within 18 months, such guarantee is annulled.
Regarding the redemption of the guarantee of origin, the Procedure defines:
- Confirmation that goods, works, or services were sold partially or entirely using electricity generated from RES
- Confirmation that the electricity generated by the generating unit and consumed for own needs originates from RES
- Disclosure of information to the electricity consumer about energy sources in accordance with the Procedure for Disclosure of Information to Electricity Consumers on Energy Sources in the General Structure of the Electricity Balance Purchased by the Electricity Supplier and/or Generated at its Own Power Plants, approved by NEURC Resolution No. 2626 of 27 December 2023
The Procedure also stipulates that a guarantee of origin is not issued for electricity supplied from an energy storage facility unless such a facility is used at facilities generating electricity from RES without obtaining a license for energy storage.
The Procedure for redeeming guarantees of origin outside the customs territory of Ukraine is determined by international agreements.
The Procedure for inspections of consumer's generating facility
The Procedure stipulates that inspections of power generation facilities or construction stages of a power plant generating electricity from RES are carried out in accordance with the inspection procedure approved by the NEURC.
The inspection of the consumer's generating facility (including an active consumer) is carried out by the NEURC through an on-site inspection.
The grounds for inspecting the consumer's generating facility (including an active consumer) registered in the register of guarantees of origin are as follows:
- Substantiated, not anonymous, request from an individual or legal entity about a consumer's violation of the law
- Submission by the consumer of an application for an inspection
- Information on the production of electricity by the consumer's generating facility not from RES
- Need to verify the accuracy of the information entered in the Register established by the NEURC.
The Procedure for determining the environmental value of electricity generated from RES
The Cabinet of Ministers also approved the Procedure for determining the environmental value of electricity generated from RES, i.e. the amount of CO2 emissions that avoided.
The environmental value is measured in kilograms of CO2 equivalent per 1 MWh of electricity and represents the average volume of greenhouse gases that would have been emitted by electricity producers using thermal power plants in the process of generating electricity from fossil fuels, in the event of replacing electricity generated from RES.
The Ministry of Energy of Ukraine ("Minenergo") determines the environmental value of electricity generated from RES. For this purpose, Minenergo uses two main sources of information:
- Public information on annual greenhouse gas emissions in the energy sector, contained in the National Inventory of Anthropogenic Emissions and Absorption of Greenhouse Gases, compiled by the Ministry of Environmental Protection and Natural Resources ("Ministry of Environment") in accordance with international climate change agreements.
- Data on the production of electricity from traditional fuel sources obtained from the actual electricity balance in the Ukrainian energy system for the last five years, including data for two years prior to the issuance of the electricity origin guarantee. If this information is not publicly available, the Ministry of Environment provides it to Minenergo within five working days upon request to ensure correct calculation of the environmental value.
By Yaroslav Petrov, Partner, Marta Halabala, Counsel, and Kateryna Andarak, Associate, Asters