Incentives for renewable energy: what has already been adopted and what needs to be adopted

The business welcomes the adopted benefits for the restoration of energy infrastructure, but also emphasizes the need to develop Ukraine's wind energy sector.

The Verkhovna Radaregistered a number ofdraftlaws(in particular, No. 11343, No. 11344 , No. 11343-1, No. 11344-1) aimed at introducing preferential regimes for the restoration of Ukraine's energy infrastructure .

Thus, thedocumentspropose to amend the Tax Code of Ukraine and the Customs Code of Ukraine. In particular, the documents provide for the abolition of import duties and VAT on energy equipment by 2025. This is certainly an important initiative.

However,having analyzed these draftlaws, theEBA experts emphasized that the norms set forth in these draft laws still do not fully address the issue of energy infrastructure restoration for a number of reasons. In particular, because of the need to expand the list of equipment and business entities that can benefit from import privileges, which would significantly speed up the process of restoring energy infrastructure. In turn, this would also reduce the financial burden on businesses, save time and resources, and help restore energy facilities faster and stabilize energy supply in the country.

Moreover, creating favorable conditions for the importation of goods needed for the construction of energy facilities but not produced in Ukraine will attract additional investment in the energy sector, which has significantly lost its investment attractiveness due to the change in the rules of the game regarding the "green" tariff and military risks due to a full-scale invasion. Investors will be more interested in investing in projects that have preferential conditions for the import of materials and equipment, which will reduce the overall cost of project implementation and increase their attractiveness, in particular, the amount of investment required and payback periods, as well as speed up the commissioning of new generation facilities, which is an urgent problem in Ukraine today - in the context of the destroyed generation and the urgent need for its restoration and decentralization.

At the same time, it is necessary to extend the tax exemption period for business entities until January 1, 2027, or 1 year after the end of martial law in Ukraine. The draft laws do not yet contain such an initiative. This is based on the actual duration of organizing the logistics of equipment procurement and should facilitate the unimpeded import of the necessary goods and technologies for the active period of recovery, post-war reconstruction and development. In addition, given the long delivery times for this equipment from the EU and the People's Republic of China, as well as the queues for the production of sophisticated equipment due to its limited supply, the extension of the tax exemption period will ensure a steady flow of necessary resources and will help to restore damaged energy infrastructure faster and accelerate the construction of new generation facilities.

At the sametime, the MPs decided to transfer the provisions on benefits for alternative energy generation to other draft laws, No. 11258 and No. 11259 (on demining), and on July 16, 2024, they were voted as a whole.

Despite the fact that the adoption of these draft laws had an important goal of strengthening the country's energy security and stimulating the development of renewable energy sources, the adopted texts do not contain relevant provisions for the development of the wind energy industry, in particular, provisions on the code 8502 31 00 00 (Electric generating sets and rotating electric converters: - other electric generating sets: - wind power) and, accordingly, the main equipment required for the construction of wind power plants will not be exempt from taxation, as required by the current situation in the country's energy sector.

It is worth noting that by their nature and construction technology, wind farms are decentralized power generation facilities. The distance between the wind turbines of one power plant is usually 800 meters, which makes such power plants a difficult and expensive target for the enemy, as the damage to one wind turbine can lead to the loss of up to 8 MW of power, unlike thermal power plants, where the damage to one facility often means the loss of 200 MW.

Thus, the construction of wind power plants is in line with the country's strategy to build a decentralized energy system from renewable energy sources, is a safer and harder target for the enemy, and at the same time brings Ukraine closer to fulfilling its obligations to the European Union regarding the goals of green transition and decarbonization.

In view of theabove, theEBA business community emphasizes the need to introduce inc entivesfor thedevelopment of wind energy in Ukraine. In particular, it is necessary to provide for the possibility of stimulating the construction of wind power plants and the development of wind generation in the country by including the relevant codes in other, alternatively, alternative draft laws (blades, gearboxes, frequency converters, generators, equipment for monitoring and distributing electricity have the following codes, respectively: 8483 4021 00, 8501 64 0000, 8503 00 99 00, 8504 40 90 00, 8537, 8502 31 00 00).