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Energy cooperatives to enhance green energy development and resolve systematic problems – experts, MPs

Kyiv, February 23, 2017.

Experts and MPs present the draft law that sets framework for energy cooperatives in Ukraine. The step is in line with the country’s commitments under the Paris Agreement as well as with the intention to develop green energy. 

A group of experts and MPs prepared a draft law “On energy cooperation” that will regulate setup and activities of energy cooperatives. Its main aim is to support small producers of green energy, explained co-authors of the draft law at a press-briefing at Ukraine Crisis Media Center. According to them the law will simplify the procedure for establishing of energy cooperatives and will allow them to get access to the market. It will help to not only increase the share of green energy in the energy balance, but to also resolve such issues as consumers’ dependency on the monopolist, problems when connecting to the network, peaks and failures in the network.

“No one questions the need to develop renewable energy sources, co-generation and our commitments in the framework of the Paris Agreement. It is beneficial, it introduces market relations, it also supports self-organizing forms of active citizens who wish not to depend on the state and on the monopolist,” said Oleksiy Ryabchyn, MP of the Batkivshyna faction, member of the parliamentary committee on fuel and energy system and nuclear security.

“These are the right steps that will increase the use of renewable energy sources and will enhance economic development,” said Yuriy Shafarenko, head of department for replacing traditional types of fuel of the State agency for energy efficiency and energy saving of Ukraine.

What the draft law suggests

Under the current legislation, the cooperative, that both produces energy and distributes it for its members, has to get three licenses and three tariffs approved. These are the tariffs for energy production, transportation and supply. The cooperative also needs to comply with the criteria designed for natural monopolies. It makes organizing of the cooperative more expensive and makes it dependent on local authorities. It is expected that the draft law will remove these obstacles.

“Main aim of the draft law is to introduce the term ‘consumer energy cooperative’. […] Its primary task is to satisfy own energy needs. If the cooperative is consuming 80 per cent of the produced energy for the needs of its members, it needs to be made exempt from the natural monopoly status, and thus from compulsory licensing and forming of tariffs. However, the cooperative has the right to supply power based on the green tariff, based on the same procedures as separate households of its members,” explained Ivan Bondarchuk, lawyer of the ILF legal firm. Deregulation of the land use is also foreseen for energy cooperatives. “We are saying that the state strives to support these organizations, because it understands their social role,” the expert added.

Experts called upon their colleagues and persons who have already set up their energy cooperatives to join the work over the project.

International experience

The principle “locally produced – locally consumed” is widespread in developed countries. Moreover, the basics of energy decentralization are stipulated by the EU strategic documents, the experts said. In Germany, 46 per cent of solar energy is produced by energy cooperatives. There are about 800 working energy cooperatives, 150 thousand people are participating in their work. “At first big energy group of companies was not happy […], these companies are now benefiting from existence of a large number of small players. In particular, they now smoothen the peaks and failures with production from renewable sources,” said Andriy Zinchenko, expert of Greencubator NGO.

There are currently 903 distribution cooperatives in the US. Their networks cover 75 per cent of the country’s surface and supply power to 42 million consumers in rural areas. Cooperatives supply about 11 per cent of power that consumers require as well as generate five per cent of all energy produced in the US. Overall capitalization rate of these cooperatives is higher than that of the biggest energy producer.

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