The foundation for regulating high-efficiency cogeneration was first laid in 2021 by the Law of Ukraine “On Energy Efficiency”. It introduced key terminology and provided for an assessment of the potential for efficient district heating and high-efficiency cogeneration.
According to Article 1 of the aforementioned law, cogeneration is considered high-efficiency if it ensures primary energy savings compared to harmonized reference efficiency values for separate heat and electricity production at the following levels:
- Over 10% (for units with a capacity of 1 MW and above);
- More than 0% (for small cogeneration units from 50 kW to 1 MW and micro-cogeneration units up to 50 kW).
Under the new law, units producing combined electricity and heat can be classified as high-efficiency based on calculations performed according to the Methodology for Determining Cogeneration Efficiency, which will be developed by the SAEE.
Key Mechanisms of the New Law:
- Establishes the qualification of cogeneration units as a formal administrative service.
- Replaces the existing qualification mechanism with a new one based on EU Directive 2012/27/EU requirements.
- Provides consumers with Guarantees of Origin for electricity produced by high-efficiency units.
- Tasks the SAEE with performing qualifications and issuing these Guarantees of Origin.
Benefits of Cogeneration Technology:
- Increased fuel efficiency in power generation.
- Effective use of alternative fuels and waste energy resources (blast furnace, coke, converter gases, biogas, landfill gas, mine methane, etc.).
- Reduced energy losses in grids through decentralized energy sources.
- Lower greenhouse gas emissions.
- Creation of flexible maneuvering capacities as units can operate in “peak” mode.
Bylaws and Future Steps
Within six months of the law’s entry into force, several bylaws must be developed, including:
- Cabinet of Ministers Resolution on the procedure for issuing Guarantees of Origin and maintaining the register.
- Cabinet of Ministers Resolution on the procedure for qualifying cogeneration units.
- Ministry of Infrastructure Orders approving the Efficiency Methodology and Qualification Procedures.
The law will fully enter into force 12 months after its official publication.
European Integration Aspect
The SAEE developed this law to fulfill Ukraine’s obligations under the EU Association Agreement. The Action Plan for its implementation (Government Resolution No. 1106) includes:
- Creating favorable conditions for high-efficiency cogeneration technologies.
- Improving state policy to support these technologies.
A Guarantee of Origin for high-efficiency cogeneration must:
- Enable producers to prove their electricity is high-efficiency.
- Be accurate, reliable, and fraud-resistant.
- Be issued, transferred, and canceled electronically.
- Standardize the volume at 1 MWh (net volume delivered to the grid).
Incentives in Ukraine
In line with EU Directive 2012/27/EU, state incentives (including tax benefits) will only be available to high-efficiency units. Currently, qualified units benefit from an excise tax exemption (3.2%) on electricity sales, as defined in Article 213 of the Tax Code of Ukraine. Once the new law is active, this privilege will be restricted exclusively to high-efficiency installations.
Qualification of Units
In 2022, 39 cogeneration units were qualified, totaling:
- 3.4 GW of electrical capacity (~4.9 billion kWh).
- 12 GW of thermal capacity (~9.94 million Gcal).
The new qualification process will be free of charge and based on the owner’s application, technical data, and primary energy savings calculation. Successful applicants will receive an electronic certificate in accordance with the Law of Ukraine “On Electronic Documents and Electronic Document Management”.
Register of Guarantees of Origin
The law enables the receipt of Guarantees of Origin, allowing producers to prove a “lower carbon footprint.”
- Owners of high-efficiency units have the right to these guarantees.
- They are issued by the SAEE for the actual volume of electricity supplied to the grid.
- The SAEE is already working on an electronic register for these guarantees.
The ultimate goal is to create a unified platform for Guarantees of Origin for all energy types, developed in cooperation with the UNDP. This will drive competitiveness, decarbonization, and deeper integration with the EU market.