Introducing competitive conditions to stimulate electricity - PowerPoint PPT Presentation

Translation into English was done by A7 CAPITAL Introducing competitive conditions to stimulate electricity production from the alternative energy Minecoenergo sources https://menr.gov.ua/news/34323.html December 27, 2019

Introduction of “green auctions” The Plan for Organizing the Within the framework of the working CMU Resolution “On Drafting of Acts Required to subgroups, a number of drafts of key Introducing Competitive Ensure the Implementation regulatory acts were developed, Conditions for Generation of Law No. 2712-VIII was including the draft resolution of the CMU of Electricity from approved by the Cabinet of “On introducing competitive conditions Alternative Energy Sources” Ministers of Ukraine for electricity production from was adopted at a (Minutes No. 24) alternative energy sources” Government meeting August- Dec 12, 2019 June’19 September’19 2020 October- March April 04, 2019 July’19 December’19 First auctions The Law of Ukraine “On The Ministry, by Order No. Sending a draft resolution for Amendments to Certain Laws of 308, created a Working approval by interested bodies Ukraine on Ensuring Competitive Group to prepare for the and conducting public Conditions for Generation of introduction of competitive consultations. Electricity from Alternative conditions for the Processing submitted Energy Sources” # 2712-VIII was production of electricity comments and suggestions. adopted by the Parliament of from alternative sources. Ukraine 2

Key provisions of the new RES support model 2020 The auctions will start in 2020 and will be held by 2030 2 Auctions will be held twice a year (spring, autumn) The quotas are approved by the CMU every 5 years Quotas are allocated by technology (technologically neutral auctions possible) 25% One beneficial owner cannot receive more than 25% of the annual quota 80% The quota allocated may not exceed 80% of the capacity declared by the participants SES participation> 1 MW, WPP> 5 MW - compulsory; Bio, MSPP - optional Features of quotas Transparent auction system (auctions will be conducted via ProZorro electronic system) The Bidder's price cannot be higher than the "green" rate at the auction date for the Feed-In Tariff respective RES type 2-3 years The term of construction of RES objects is: for SES - 2 years, other RES - 3 years 20 Winner receives support for 20 years at auction price (PPA) 3

CMU Resolution “On Introducing Competitive Conditions for Promotion of Electricity Generation from Alternative Energy Sources” was adopted at the Government meeting on December 27, 2019 By the resolution : The procedure for holding auctions for the allocation of support quota has been approved Approved Procedure for Selection of Electronic Operators for Auctioning of Allocation of Support Quota Основні розділи Порядку The state-owned enterprise "PROZORRO. SALES" has been appointed responsible for ensuring the functioning of the electronic trading system - the administrator of the electronic trading system

The procedure for holding auctions for the allocation of support quota Formation of annual support quotas for electricity producers from alternative energy sources Functioning of electronic trading system Preparing for the auction Auction Main sections Determining the winner by auction results Conclusion and publication of the contract of sale in the electronic trading of the system Resolution Deposit and refund of bank guarantee Requirements for banks providing bank guarantees Amount and procedure of payment of fees to operators of authorized electronic sites Other auction issues 5

Scheme of functioning of the system of "green" auctions Automatic holding SE "Prozorro. Sales" auction at ETC Selection of EM operators (ETC Administrator) Formation of the primary protocol (CMU Resolution on EM Ensuring the functioning of the ETC, CBD NPA is a legal act Participants disclosure Operators Selection ETC is an electronic trading system Procedure) EM is an electronic platform Conclusion of contracts with Fee for access to the CBD is the central database EM operators Given the decision of ETC is 0.4 Euro per 1 (Ministry of Energy and Energy TU - specifications kW the CMU Order Model agreement) BG is a bank guarantee The EM operator The EM operator Cabinet of Ministers of Ukraine Publication of the Accepting participants' Accepting participants' auction (Off-taker) statements, ensuring the statements, ensuring the Approval of Adoption of announcement Approval of annual Organization and functioning of EM functioning of EM amendments to quota holding of auctions quotas, conditions the NPA, M redistribution E and timing of submission of the e h for subsequent Submission of applications, Checking the documents of t draft law to the W auctions o r k t documents and BG of the Verkhovna Rada o auctions t all participants after the 1 t n a r e r participant e m e p auction. p y o s a (5 euros per 1 kW) o P r Formation of the final ETC u Closed information! e 8 . protocol 0 Analysis of Determination of Participant Participant results, support quota Participant Unused quota Participant preparation of parameters including Winner The loser Disqualified allocation Conclusion of the Winner land supply and TС (if changes to Purchase and Sale applicable) the NPA Agreement (NERC Decree ü Signing the protocol The participant The participant provided Model Contract) The loser returns ü BG comes back to the winner incorrect information. has refused to sign BG participant ü Bringing of BG 15 euro per 1 kW The application does not the contract and Auction Results Report ü Construction of the facility 2 years SES, 3 take into account when Information, quotas loses the years other, return BG determining the final quota (Statistics, Issues) participant's BG (+ 1 year - BG $ 30 per 1 kW) volume of 80% of all ü ü 20 years e / e sale at auction price applications. Other Market participants authorities 6 Article 9-3 of the Law of Ukraine "On Alternative Energy Sources"; CMU Resolution The procedure for holding auctions on the allocation of support quota

Administrator of electronic trading system - state auctions ProZorro.Sales is a state e-commerce system. It was initiated by the Ministry of Economic Development and Trade of Ukraine, Transparency International Ukraine, the Deposit Guarantee Fund, the National Bank of Ukraine and the Ukrainian electronic sites. The system has received international recognition. In 2017 in India, as part of the CitiT4IChallenge competition, it became one of the best anti-corruption startups in the world. And in 2018, it received an anticorruption award from C5 Accelerate and the USA Institute of Peace as part of The Shield in the Cloud Innovation Challenge. MAIN RESULTS Number of auctions: 249,65 thousand Bids: 2.55 trillion UAH Number of participants: 16,63 thousand Declared value: 1.15 Revenue: 22.12 billion UAH Minimum Price Increase: 21.64% https://prozorro.sale/ 7

Electronic Platforms Operators Electronic Platforms Operators “Prozorro.Sales” are an accredited independent legal entities that, after selection, will be connected to the electronic trading system and, on the one hand, will cooperate with the auctioneer and, on the other hand, with potential auction participants. The sites provide consultative support to both the Offtaker and potential bidders, help to register in the electronic trading system, properly place the auction announcement, apply for participation, provide access to the auction module and in general - provide the technical ability to organize and conduct electronic auctions for auctioning support quotas. 8

Off-taker and Auctions Organizer The State Enterprise “Guaranteed Buyer”, created by the Cabinet of Ministers of Ukraine by the Resolution №324 of 17.04.2019 Functions: purchase of electricity produced from alternative energy sources fulfillment of special responsibilities for security public interest in the functioning of the market electricity (PSO) organizing and conducting green auctions http://www.gpee.com.ua/ 9