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Legal challenge to Ukraine’s retroactive FIT cuts

The Ukrainian government has reportedly moved to take legal representation after receiving notice of a challenge to last year’s decision to retroactively reduce the feed-in tariff (FIT) payments made to renewable energy generators.

A rising national FIT bill prompted Kiev to last year pass a law which reduced the amounts payable to clean power generators, including reductions ranging between 2.5% and 15% for developers holding signed FIT payment contracts.

A newsletter produced by the Kiev office of London-based legal and tax advisory CMS Cameron McKenna Nabarro Olswang LLP has referred to a document produced by the Ukrainian Cabinet of Ministers last Wednesday, which mentioned the need for legal representation due to a challenge posted to the FIT-reduction legislation, by renewables developer Modus Energy International BV, part of Lithuanian business Modus Group.

The minutes of the cabinet meeting explain Modus, which owns three Ukrainian solar plants with a combined generation capacity of around 47 MW, have claimed the FIT cuts breach the Energy Charter Treaty international agreement which governs the energy sector, and to which Lithuania and Ukraine are signatories.

The legal firm’s newsletter states local media ran with the story after the cabinet minutes were published and an article on Russian news service Interfax reported the Modus plants have suffered a 15% drop in the FIT payments they will be due to the end of 2029. The reduced payment levels came into effect from August.

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Both the newsletter and the agency state Modus is seeking €11.5 million in damages, interest and legal costs, with Interfax reporting that figure was an estimate made in the government minutes.

Numerous renewables developers signed up to the government’s proposed revision of the incentives program in June, in a bid to reduce the backlog in overdue FIT payments, and in return for curtailment being compensated for. An initial suggestion, by the government, that FIT contracts could be extended as a further pay-off for reduced payments did not materialize in the legislation adopted by parliament.

The law firm and Interfax reported Modus was not among the signatories to the FIT-reduction law.

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Source: pv magazine