Business does not support a retrospective review of green tariff

26/ 11/ 2019

The European Business Association does not support the retrospective review of the green tariff to support already operating renewable energy producers. As a result of the meeting on 20 November, chaired by the Ministry of energy and environment protection of Ukraine, with the participation of the VRU Committee on Energy and Housing and Communal Services, the business community would like to stress once more on the inadmissibility of this approach. The retrospective reduction of the green electricity tariff will violate one of the most important generally recognized law principles - laws and other regulations may not be retroactive in effect. In addition, the revision of the tariff will violate Ukraines international commitments to investors (1994 Energy Charter Treaty) – regarding the stability and protection of their investments. At the same time, retrospective changes to the green tariff could lead to a loss of funds for investors who financed Ukrainian projects and were effectively deprived of the ability to adequately assess the risks and payback periods of projects given the retrospective change in legislation. Moreover, as the experience of Spain on the implementation of retrospective changes shows, the state will anyway be obliged to compensate for lower than expected economic based on court and arbitration awards. The business community believes that changing the rules will significantly reduce the investment attractiveness of Ukraine. At the same time, uncertainties and expectations of unpredictable changes in the legislation can lead to an outflow of foreign investors in the RES sector, which is one of the possibilities of increasing the countrys energy independence. Therefore, EBA member companies emphasize that inconsistent policies will be a negative signal for investors who have already started operations in Ukraine, as well as for future investors, that the regulation of the Ukrainian economy and investment promotion is unstable and may change unexpectedly and unpredictably towards the deterioration of business conditions. So, hopefully, a retrospective review of the green tariff will not take place in Ukraine.

The European Business Association does not support the retrospective review of the green tariff to support already operating renewable energy producers.

As a result of the meeting on 20 November, chaired by the Ministry of energy and environment protection of Ukraine, with the participation of the VRU Committee on Energy and Housing and Communal Services, the business community would like to stress once more on the inadmissibility of this approach.

The retrospective reduction of the green electricity tariff will violate one of the most important generally recognized law principles – laws and other regulations may not be retroactive in effect. In addition, the revision of the tariff will violate Ukraine’s international commitments to investors (1994 Energy Charter Treaty) – regarding the stability and protection of their investments.

At the same time, retrospective changes to the green tariff could lead to a loss of funds for investors who financed Ukrainian projects and were effectively deprived of the ability to adequately assess the risks and payback periods of projects given the retrospective change in legislation.

Moreover, as the experience of Spain on the implementation of retrospective changes shows, the state will anyway be obliged to compensate for lower than expected economic based on court and arbitration awards.

The business community believes that changing the rules will significantly reduce the investment attractiveness of Ukraine. At the same time, uncertainties and expectations of unpredictable changes in the legislation can lead to an outflow of foreign investors in the RES sector, which is one of the possibilities of increasing the country’s energy independence.

Therefore, EBA member companies emphasize that inconsistent policies will be a negative signal for investors who have already started operations in Ukraine, as well as for future investors, that the regulation of the Ukrainian economy and investment promotion is unstable and may change unexpectedly and unpredictably towards the deterioration of business conditions. So, hopefully, a retrospective review of the “green” tariff will not take place in Ukraine.