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Parliament adopts law increasing ‘local content’ for renewable energy plants

December 27, 2012


In an Oct. 16 interview with the Kyiv Post, Mykola Romaniuk, the pro-presidential Party of Regions lawmaker who proposed the law, argued the bill would stimulate the development of the renewable energy sector in Ukraine.

But the draft law was amended before the second reading. Initially, the law stipulated that all wind farms launched after Jan. 1, 2013 will have to have 30 percent of local content and those launched from Jan. 1, 2014 should have at least 50 percent of domestic goods and services used to develop their facilities.

The version approved by parliament, however, notes that the 30 percent local content rule will apply only to those wind farms whose construction started after Jan. 1, 2012 and that will be launched after July 1, 2013.
Meanwhile, the 50 percent local content rule will be applied to those power generating facilities, whose construction started after Jan. 1, 2012 and that will be commissioned after July 1, 2014.
Yuri Kubrushko, co-chair of Wind Working Group of the European Ukrainian Energy Agency, which represents numerous foreign investors in the sector, says this legislation did not address foreign investors’ earlier concerns about the law.
“The international community had a negative attitude towards these proposals. I am sure there will be many letters sent by international financial institutions and associations to President in the coming days asking for veto,” he said.
As many as 280 out of 450 lawmakers voted in favor of the law in the second reading. The legislation was overwhelmingly supported by the pro-presidential Party of Regions, the communists and the Reforms for the Future parliamentary group. A handful of opposition lawmakers also voted in favor of the law.
President Viktor Yanukovych now has two weeks to sign the bill for the legislation to take effect.
At present, DTEK, Activ Solar and Donetsk-based Wind Parks of Ukraine are the most active market participants. DTEK, which recently launched a 60 megawatt capacity wind park, is owned by Ukrainian billionaire and President Yanukovych ally Rinat Akhmetov.
Solar energy developer Activ Solar is allegedly connected to Ukraine’s Security and Defense Council Head Andriy Klyuyev, a claim the company has repeatedly denied. In recent years it launched some of Europe’s biggest solar farms for a total capacity of 270 megawatts.
Wind Parks of Ukraine reportedly has ties to Anatoliy Blyzniuk, minister of building and housing, an allegation the company’s management denies. Wind Parks of Ukraine has a 200 megawatt wind power electricity generating capacity.
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