New changes to power purchase agreements in Ukraine
Recently, Ukraine has pursued amendments to power purchase agreements (PPAs) between Energorynok (the national energy company) and alternative energy producers. These reforms represent significant progress toward aligning Ukrainian PPAs with international standards, though certain complications remain.
More options for producers
The modifications primarily centered on PPA termination procedures. Previously, termination required mutual written consent or court intervention. The updated framework now permits producers to independently terminate agreements under specific conditions and potentially claim compensation from Energorynok.
Qualifying circumstances include: “the insolvency or liquidation of Energorynok or the appointment of a liquidator for it; delays in payments of more than 90 calendar days; any other breach of substantial obligations by the purchaser for more than 120 calendar days” and several other factors.
Direct agreements with creditors
A tension exists between the producer’s new termination rights and Energorynok’s ability to negotiate direct financing agreements with creditors without producer consent. This creates ambiguity regarding PPA termination when producers breach obligations.
Not everyone can be a creditor
The amendments narrowly define eligible creditors as international financial institutions like the EBRD, IFC, and World Bank—excluding domestic creditors entirely.
Hard-to-get compensation
Compensation availability depends on approval from Ukraine’s Antimonopoly Committee, a process requiring “from three to six months,” which substantially delays proceedings.
Disputes can be different
The framework applies different dispute resolution methods based on investment status, potentially disadvantaging domestic enterprises.