A competitive market instead of the “Green Tariff”: what should entrepreneurs do?
The system, which was designed to promote the energy decentralization of the country, encourage the transition to alternative energy sources, and also become a passive income for Ukrainians, after a few years, has fulfilled part of its tasks and will completely stop its operation by the end of 2029. Why is it currently not profitable to build solar stations under the “Green” tariff and why build for own consumption or sale of electricity to the system?
What happened to the “Green Tariff”?
It makes no sense to encourage entrepreneurs to install solar power plant which was the primary task of the “Green Tariff”.
Over the period of its operation, the technology of installation of solar power plant and generation has become cheaper, and electricity prices continue to rise. At the same time, renewable energy has become attractive for private and commercial consumers. Then the state undertook to pay a tariff that significantly exceeded current market prices for electricity.
Therefore, it was possible to return the money invested in solar power plant in 5-6 years.
And until the end of 2029, that is, until the end of the tariff, they expected to receive a stable income. Not everything happened as expected. Currently, owners of solar plants connected to the “Green Tariff” are faced with the problem of delayed payments or their absence. The state is in constant debt to electricity producers. One of the reasons is attacks on the country’s energy system and a shortage of funds for payments.
Businesses need to function and this system currently does not meet either business demands or market conditions. But the construction of the SPP continues under new terms that are more profitable.
Should we build SPP for enterprises under new conditions?
Installation of SES is an additional resource for business. At the very least, it reduces energy costs and affects the cost of production. To this can be added greater autonomy from monopolists-suppliers and quick adaptability to market changes. 27 липня 2023 року набув чинності Закон України «Про внесення змін до деяких законів України щодо відновлення та “зеленої” трансформації енергетичної системи України», який змінює умови на ринку, з’являється система Net billing. And from now on, enterprises will be able to sell surplus energy generated for their own consumption and receive funds for it. And not to lose them due to the lack of a legal transfer mechanism. Businesses can cover their own electricity needs and save money to pay their electricity bills during periods of low solar activity.
What advantages will the business have?
Self-sufficiency. Legal entities receive a profitable investment even without selling energy to the state, but only on the mechanism of self-sufficiency. Because commercial consumption, as well as the tariff, are higher than the household consumer. The system is simple: you generate your own electricity, reduce dependence on the electricity supplier, and cut costs.
Quick payback. If under the “Green Tariff” the payback of installing the station was 5-6 years, then under the current electricity tariff, the investor will return the invested funds in 2-2.5 years. And the rise in electricity prices will only speed up payback. The term of operation of the SPP is 25-30 years, so each kilowatt of generated electricity will cost the investor approximately UAH 0.7-0.8. Estimated savings over a quarter of a century thanks to solar, calculated according to the specific business, but at least 10 times cheaper than the final price for the business from the electricity supplier.
Guarantees of origin. If the generating plant produces energy from renewable sources, the consumer can obtain guarantees of the origin of the electricity. They improve the access of Ukrainian goods to the EU market. Exporters will be able to certify that the goods are made from clean energy and that the company has reduced its carbon footprint. This will reduce excessive taxation of goods. The system is relevant, because EU countries have implemented a carbon regulation mechanism at the border.
Features of Net billing are that active manufacturers do not need to obtain licenses, become market participants or pay additional payments. Surpluses are purchased without complicated procedures and charges for electricity transmission and distribution services. The electricity settlement price will be based on the tariff for a day in advance, from the moment of transmission. And it is available to all market participants: households, entrepreneurs or structures.
Solar power plants for commerce were and remain the most profitable, because the cost of energy resources will increase annually. A sustainable energy system will contribute to transparent pricing and electricity will become more affordable. Therefore, the end of the era of the “Green” tariff is not a catastrophe for entrepreneurs, but a new impetus for the development of the industry.
