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He was born in 1969 in Boyarka, Kyiv Region. In 1996 he graduated from International Relations Institute at Taras Shevchenko National University with a degree in international law. He earned an LLM degree at the John Marshall Law School (Chicago, USA). He has been senior partner of GOLAW since 2006. He is one of the best lawyers in Ukraine in banking and financial law, corporate law and M&A, real estate and construction according to the Legal 500 EMEA 2014. He was recognized as one of the best lawyers in Ukraine in investment practice, corporate law and M&A, in court practice, banking and financial law, tax law, land law and real estate by the Best Lawyers in Ukraine 2018. He is a member of the National Bar Association of Ukraine, the Federal Chamber of Lawyers of Germany and International Bar Association.

Energy field

How to make investment conditions in the alternative energy sector appropriate to the investor

— The energy industry of Ukraine has gained considerable momentum for the development of renewable energy sources; however, it cannot do without significant cash infusions. How great is this field of interest to investors?

— The constant increase in demand for alternative energy sources can be observed all over the world. Since 2015, global investment in “green” energy has exceeded investment in conventional sources; the technologies have become more productive and their cost has fallen.

Following global trends, Ukraine has declared the goal of attaining an 11% share of “green” energy in its final energy consumption by 2020, 25% by 2035 and 91% by 2050. Today, according to analysts, our country does not have even half of the energy amount planned by 2020. Therefore, the investment opportunities are still sufficient even in conditions of rapid growth. And we really are seeing an increase in interest on the part of investors in this market sector. Today, legislation provides convenient mechanisms for the successful implementation and development of such projects.

Investors are mostly attracted by one of the highest “green” tariffs in Europe on almost all types of renewable energy, which is set by 2030. And for electricity generation facilities commissioned up to December 2024, there are also surcharges in the amount of 5% and 10% for compliance with a certain level of use of equipment made in Ukraine.

In addition, Ukraine has assumed the obligation to buy all “green” electricity from producers, and it makes complete payment without delay.


— Why are foreign investors cautious about investing in “green” energy in Ukraine?

— Based on our experience, I think that big investors are deterred primarily by the absence of their rights. The legislation declares guarantees of immutability of rights of investors but, at the same time, there is a high risk that the provisions and guarantees can be changed. We remember how the ratio of “green” tariff for solar energy was reduced by almost half a few years ago, and the National Bank of Ukraine imposed restrictions on the repatriation of dividends, and various established currency restrictions.

In addition, the war in eastern Ukraine, political instability, corruption and bureaucracy are factors that are still in effect and generally have a direct impact on attracting foreign investment into the Ukrainian economy.

The situation could, to some extent, be resolved by an investment-attractive and binding power purchase agreement (hereinafter - the PPA) that ensures the guarantees required by investors at contractual level.


— Can a domestic investor compensate the lack of foreign financing?

— According to recent data from the State Agency on Energy Efficiency, Ukraine has attracted more than EUR 700 million to the development of alternative energy sources over the past three years. This was mainly foreign investment. Major projects in this field are often funded by several foreign investors using funds of the EBRD and IFC.

It is difficult for Ukrainian investors to implement such projects, mainly because of the lack of technology. At the same time, local players find it much easier to understand the requirements of local legislation and adapt to the Ukrainian realities.


— Today, all over the world people rely on alternative energy sources. How is this process generally regulated abroad?

— Various incentive mechanisms introduced by the state are the engine for the development of “green” technologies. There is no single approach to the definition of such mechanisms either in the world or in Europe.

For example, in Germany electricity production from renewable sources is mainly supported by a bonus system. The remuneration and premium level are determined by tenders. However, small power plants with a capacity of up to 100 kW are supported by a “green” tariff. In addition, low interest loans are provided for investment in new power facilities. “Green” manufacturers have the advantage of grid connection, and network operators are obliged to give priority to electricity from renewable sources with the purchase and transmission of electricity.

In the UK, producers are supported by a combination of “green” tariffs, contracts for the difference, quota systems and tax mechanisms. “Green” tariffs are provided only in England, Wales and Scotland for facilities with a capacity of less than 5 MW. And a tax on greenhouse gases has been in place since 2013 that was introduced for stations that use fossil fuels.


— Do the recent changes in the standard PPA correspond to world practices?

— Each country has its own practices, but it can be safely said that investors have finally been heard: the adopted changes do, to some extent, take into account the requirements of the EBRD and IFC.

Undoubtedly, the most important change is the possibility to conclude so-called Pre-PPA and establish the validity period of the PPA by 2030. In other words, it is possible to conclude an agreement on the sale and purchase of electricity even prior to a station’s construction. It is interesting that the obligation of the guaranteed buyer to conclude the main agreement prior to the end of construction and commissioning of the facility will occur only in July 2019. So, it is still unclear whether the Pre-PPA will be concluded prior to this date.

An equally important addition consists in the provisions for dispute settlement, including arbitration, and expansion of the list of force majeure circumstances.


— What does the agreement lack to attract the interest of the EBRD and IFC?

— Unfortunately, the NEURC did not take into account a number of important proposals put forward by the EBRD and IFC: for example, an important condition for creditors on the transfer of rights to claims under an agreement. In a standard PPA, it has acquired a form that is difficult to implement to get access to the funds of a debtor in a bank account and even the right to dispose of them. In order to fully implement this right, this issue should be regulated not by the PPA, but at the legislative level or by specific agreements.

It would be nice to see a more detailed procedure for amending the PPA in case of changes to legislation, which can protect investors from instability in the Ukrainian legal field. The agreement shall be an independent document that, in the event of changes to legislation, will guarantee the investor the right to protect its interests in court.

In addition, I would like to draw your attention to the fact that the Law of Ukraine On the Electricity Market provides the use of a model agreement rather than the standard one that exists now. According to our data, a model contract has not been developed yet, but it will  definitely be developed soon. We hope that it will reflect all the preferences of international financial institutions.


— What terms and conditions of the PPA agreements of other countries are appropriate to be borrowed by Ukraine?

— It should be understood that the “green” energy market of each country is unique due to the nature of legal systems, as well as climatic and geographical conditions of any state. Unfortunately, it is impossible just to adopt the best practices, and such adoption may not have a positive effect. At the same time, it is worth to follow the recommendations of the EBRD and IFC, because today these organizations accumulate the knowledge and experience of conventional approaches to agreements of sale and purchase of alternative energy in the world. It is also important to consider that such projects are not only “net” electricity, but also a common business that creates jobs, develops rural areas and finally it pays taxes.