On 4 September 2018, the Ukrainian parliament passed the law “On Amendments of Certain Legislative Acts of Ukraine (in Relation to Investment Attractiveness of Construction of Renewable Energy Objects)” (the “New Law”). It will enter into force the next day after signing by the President (unless vetoed) and official publishing. The New Law is likely to accelerate the development of new renewable power plants by simplifying regulatory requirements.
All constructions are classified in Ukraine at the designing stage in three consequence classes: objects with insignificant (CC1), medium (CC2), and significant (CC3) consequences. Ukrainian law has different regulatory requirements for each consequence class. For example, as opposed to CC2 and CC3 objects, CC1 objects:
- are exempt from expert examination of design documentation;
- do not require construction permits and commissioning certificates, but follow simpler procedures that only require submission of a notification on commencement of construction works (prior to commencement of the construction) and a declaration of readiness of the object for operation (after completion of the construction);
- are allowed to be constructed by contractors who do not have construction licenses.
The New Law lowers the threshold for classification of construction projects so that they can be considered as CC1 objects.
In particular, the New Law changes one of the main requirements for classification – the amount of material and social damages that can be caused by the breakdown of the object that is classified. At the moment, for a construction project to be classified as CC1 object, the outlay must not exceed 2,500 statutory minimal wages (currently UAH 9,307,500 or approximately EUR 284,000).
Under the New Law, construction projects are still subject to EUR 284,000 damages threshold, but the damages of the customer (that include the cost of the project construction) are not included in this amount if no state funds or guarantees are involved in the project. Considering that the customer’s damages (that include the cost of the project construction) usually amount to the majority of the material and social damages that can be caused by the breakdown of the object that is classified, it will be much easier for construction projects to be classified as CC1 objects, and enjoy benefits listed above as cost of their construction will not be taken into account.
With respect to solar and other renewable power projects that usually don’t have any other material or social damages that can be caused by their breakdown except for customer’s damages this means that they will be usually considered as CC1 objects irrespective the cost of the project, if no state funds or guarantees are involved.
In relation to wind power projects, the New Law also:
- allows existing wind power projects classified with a level III complexity category (see the table below) to be classified as CC1 objects;
- establishes that wind power projects subject to an environmental impact assessment (the “EIA”) can be classified as CC1 objects, if they receive a positive expert view by an authorised environmental body; and
- clarifies that expert examination of the designing documentation of a CC1 classified wind power project is performed only in relation to its compliance with expert view of an authorised environmental body and with the results of an EIA.
Construction projects, however, can be still classified as CC2 or CC3 objects on the basis of other requirements to consequence classes established by Ukrainian law (for instance, if they require an EIA).
The following table briefly outlines the requirements for each consequence class under the existing legal regime and lists (in yellow) the changes to be introduced by the New Law.
| Com-plexity category | Consequence class | Requirements to each class* |
| Number of individuals whose life and health may be endangered due to breakdown of the object | Amount of material and social damages that may arise due to breakdown of the object (approximately in EUR) | Whether the object is constructed on cultural heritage sites or within their protection zone | Whether breakdown of the object may result in the breakdown of engineering-transport infrastructure | Other character-istics that determine the con-sequence level for an object |
| individuals permanent-ly on the object | Individ-uals on the object from time to time | individuals outside of the object |
| V | CC3 | more than 400 | more than 1,000 | more than 50,000 | more than EUR 17,000,000*** | Con-struction works on cultural heritage sites of national import-ance or in their protection zone | Breakdown on state wide level | - residential, public and multi-functional buildings with height exceeding 100 m; - highly hazardous objects; or - objects that require EIA |
| IV | CC2 | 50-400 | 100-1,000 | 100-50,000 | EUR 284,000-EUR 17,000,000*** | Con-struction works on cultural heritage sites of local importance or in their protection zone | Breakdown on local or regional level | - objects that require EIA |
| III** |
| II | CC1 | up to 50 | up to 100 | up to 100 | up to EUR 284,000*** | Construct-ion works are not performed on any cultural heritage sites or within their protection zone | Breakdown of engineering-transport infrastructure is not foreseen | -**** |
| I |
* The project is classified in the highest class with its characteristics. For example, if the project in general meets the requirements for CC1 class, but requires an EIA, it will be classified as CC2 object
** The New Law allows existing wind power projects classified in the III complexity category to be considered as CC1 objects
*** The damages of the customer, which executes the project without state funds or guarantees, will be excluded from this amount (as described above) after the New Law enters into force
**** Under the New Law wind power projects can be classified CC1 objects even if they are subject to an EIA if they receive a positive expert view by an authorized environmental body
For more information on this law and the regulatory environment for renewable energy in Ukraine, please feel free to contact:
Vitaliy Radchenko, Anna Pogrebna, and Tetiana Mylenka
Social Media cookies collect information about you sharing information from our website via social media tools, or analytics to understand your browsing between social media tools or our Social Media campaigns and our own websites. We do this to optimise the mix of channels to provide you with our content. Details concerning the tools in use are in our privacy policy.