Analysis of the situation and legal assessment of debt under contracts for solar power plant owners

Growing interest in solar energy and the problem of debt

In recent years, Ukraine has seen a growing interest in renewable energy, particularly in solar power plants (SPPs). The green tariff support program has become an important stimulus for the sector’s development. However, due to economic challenges and changes in energy sector funding, the state has accumulated significant debts to electricity producers under the green tariff.

This article provides a legal analysis of the debt issue, an overview of the regulatory framework, and recommendations for debt recovery.

Assessment of the electricity purchase agreement under the green tariff

The electricity purchase agreement under the green tariff is concluded between the electricity producer (SPP owner) and the SE “Guaranteed Buyer”. It is bilateral, compensated, and time-limited. Key provisions of the agreement include:

• Obligation of the SE “Guaranteed Buyer” to purchase electricity at the set tariff

• Obligation of the state to ensure appropriate funding for these payments

• Possibility for the producer to protect their rights in case of contract violation

Assessment of the agreement should include checking its compliance with current legislation and the possibility of using legal protection mechanisms in case of debt.

Analysis of legislation and regulatory acts governing payments

Payments under the green tariff are regulated by the following acts:

• Law of Ukraine “On the Electricity Market” No. 2019-VIII

• CMU Resolution No. 1175 on the functioning mechanism of SE “Guaranteed Buyer”

• Law of Ukraine “On Alternative Energy Sources”

• Civil Protection Code regarding investor rights in critical situations

According to current legislation, the state must make payments in accordance with signed agreements. At the same time, financial difficulties and budget non-fulfillment lead to the accumulation of debts to electricity producers.

Determining the grounds for debt recovery claims

Legal grounds for debt collection may include:

• Breach of contract – failure to pay for delivered electricity

• Improper performance by the state – the debts of the SE may be viewed as state budget liabilities

• Court practice – existing precedents of court rulings in favor of SPP owners

• European law and Ukraine’s international obligations – possible application of international law for foreign investors

Conclusions and recommendations

Solar power plant owners facing debt issues may use the following protection mechanisms:

• Out-of-court settlement – sending official claims and negotiating with the SE

• Judicial proceedings – filing lawsuits in Ukrainian commercial courts

• International arbitration – for foreign investors, cases can be considered in international courts

• Engaging lawyers and legal firms – for effective case management and negotiations

The legal community, realtors, and SPP owners should join efforts to defend their rights and financial interests in the renewable energy sector.

If your green energy business needs legal support or court protection, contact the specialists of the Legal and Real Estate Association of Ukraine, who specialize in energy law