The development of decentralized generation, including increasing the production of electricity from renewable sources, has been identified by the state as a key focus area for the restoration of the energy system. However, court practice shows that declarations and reality differ slightly. In particular, the main issue for the development of the industry – debt repayment – has not been resolved for three years, and new disputes in other matters, such as imbalances, occupied territories, etc. are emerging. So, here is the latest court practice on all issues of “green” energy.
1. Debt under the “green” tariff
According to clause 11.4. of the Procedure for the Purchase by the Guaranteed Buyer of Electricity Produced from Renewable Energy Sources, approved by NEURC Resolution No. 641 of 26.04.2019 (hereinafter – Procedure 641), the guaranteed buyer ensures the calculation and payment for the electricity supplied by the seller at the “green” tariff in the previous billing period (month) within five business days from the date of publication of the Regulator’s decision to approve the amount of the service cost to ensure an increase in the share of electricity production from renewable energy sources.
Consequently, producers of electricity from renewable sources file claims for debt collection for the periods in respect of which the Regulator approved the amount of the service to ensure an increase in the share of electricity production under the “green” tariff provided by the SE Guaranteed Buyer (hereinafter – Guaranteed Buyer).
In this category of disputes, the Guaranteed Buyer appeals to NPC Ukrenergo’s failure to make full payment for the service to ensure an increase in the share of electricity production from alternative sources and to the special mode introduced by Orders of the Ministry of Energy of Ukraine No. 140 of March 28, 2022, and No. 206 of June 15, 2022.
Nevertheless, the arguments of the Guaranteed Buyer are not accepted by the courts as substantiated, which was facilitated by the established case law.
Specifically, the interpretation of the Orders of the Ministry of Energy of Ukraine No. 140 “On Settlements in the Electricity Market” dated 28.03.2022 and paragraphs 2, 3 of the Order of the Ministry of Energy No. 206 “On Settlements with Producers under the ‘Green Tariff’ dated 15.06.2022, which established certain peculiarities of settlements during martial law, was rather controversial until the Supreme Court finally resolved the issue. According to the results of the review by the Joint Chamber of the Commercial Court of Cassation of the Supreme Court in cassation of the court decisions in case No. 910/4439/23, the legal opinion on the application of the Orders of the Ministry of Energy of Ukraine No. 140 dated 28.03.2022 and No. 206 dated 15.06.2022 in relations with RES electricity producers was given, and it was found that:
“Orders No. 140 and No. 206 do not restrict in any way the right of the electricity producer under the ‘green’ tariff to receive the full cost of the sold electricity established by the agreement concluded by the parties and do not change the terms of occurrence and fulfillment of the guaranteed buyer’s monetary obligations to make final payments under the contract and by paragraph 10.4 of Procedure No. 641.
The orders do not relieve the SE “Guaranteed Buyer” from the obligation to fully pay for the goods received. Therefore, the above orders are not a basis for the Guaranteed Buyer not to fulfill the monetary obligation under the terms of the contract”.
Accordingly, the decision of the Joint Chamber of the Commercial Court of Cassation in case No. 910/4439/23 put the final point on the application of Orders of the Ministry of Energy of Ukraine No. 140 and No. 206, which do not release the Guaranteed Buyer from the obligation to make full payment to RES producers for electricity.
Similar legal conclusions are set out in the resolutions of the Supreme Court of 21.03.2024 in case No. 910/6185/23, of 11.04.2024 in case No. 910/9100/22.
2. Recovery of penalties from electricity market participants during martial law
According to Subpara. 16, para. 1 of the NEURC Resolution No. 332 dated February 25, 2022, for the period of martial law in Ukraine and within 30 days after its termination or cancellation, the accrual and collection of penalties provided for in the agreements concluded by the Law of Ukraine “On the Electricity Market” between electricity market participants was suspended (this paragraph came into force on April 26, 2022).
Thus, for the period of the moratorium, starting from April 26, 2022, no penalties may be collected from electricity market participants, including the Guaranteed Buyer.
However, until 2024, the possibility of collecting a penalty for a delay that occurred before the implementation of the moratorium was controversial.
Therefore, the Resolution of the Supreme Court as part of the Joint Chamber of the Commercial Court of Cassation dated 19.04.2024 in case No. 911/1359/22 concluded that the NEURC Resolution No. 332 dated 25.02.2022, which suspends the accrual and collection of penalties, does not contradict the provisions of the civil legislation of Ukraine and is binding.
Meanwhile, the Supreme Court in its decision dated 02.10.2024 in case No. 910/4273/22 provided clarification on the possibility of collecting penalties accrued for the period before the adoption of NEURC Resolution No. 332 dated 25.02.2022:
“ Hence, given the specificity and focus of this NEURC Resolution No. 332, which refers specifically to the period of martial law and 30 days after its termination or cancellation, there are no grounds for unjustified expansion of the interpretation of NEURC Resolution No. 332 of 25.02.2022 to extend its effect to legal relations that occurred in previous periods. Thus, considering the above provisions of the law, based on a systematic analysis of the legal regulation of the disputed legal relations, the court of cassation notes that the provisions of subparagraph 16 of paragraph 1 of the NEURC Resolution of 25.02. 2022 No. 332 regarding the order to suspend martial law for the period of martial law in Ukraine and within 30 days after its termination or cancellation relate exclusively to the accrual and collection of penalties for this period and, accordingly, their effect cannot be extended to penalties for which the right to accrual arose earlier.
Similar legal conclusions are outlined in the resolutions of the Supreme Court dated 26.06.2024 in case No. 908/818/22, dated 02.07.2024 in case No. 908/815/22, dated 03.07.2024 in case No. 908/816/22, dated 03.07.2024 in case No. 908/817/22, dated 12.09.2024 in case No. 910/4264/22, etc.
In sum, the Supreme Court’s ruling of 02.10.2024 in case No. 910/4273/22 clearly established that NEURC Resolution No. 332 of 25.02.2022 does not apply to legal relations that arose before its adoption and cannot be applied to the calculation and collection of penalties for the period preceding its entry into force.
3. Recovery of inflationary losses and 3% per annum in connection with overdue debt
The courts satisfy claims for the recovery of 3% per annum and inflationary losses from SE Guaranteed Buyer regardless of the NEURC Resolution No. 332 of 25.02.2022, as they are not like penalties and are not subject to the moratorium.
This is confirmed by numerous cases in the courts of first instance and appellate courts (No. 910/7158/24, No. 910/4081/24, No. 910/16712/23, No. 910/9028/24, etc.) and in the aforementioned rulings of the Supreme Court in cases No. 910/4439/23 and No. 910/6185/23.
Along with this, the Guaranteed Buyer in cases of debt collection for electricity is filing massive petitions to reduce the amount of 3% per annum calculated following Article 625 of the Civil Code of Ukraine.
The Grand Chamber of the Supreme Court in its decision of 18.03. 2020 in case No. 902/417/18, when deciding on the reduction of the amount of both penalties, fines, and interest per annum for late payment based on Article 625 of the Civil Code of Ukraine, proceeded from the obvious disproportion of the amounts of sanctions claimed for recovery in the form of fines, penalties and interest per annum, given that it is unfair when the consequences of the debtor’s failure to fulfill an obligation are more favorable to the creditor than the proper fulfillment of such an obligation.
As a result, taking into account the specific circumstances of the case, which have legal significance, and, in particular, the above criteria, the court may reduce the total amount of interest per annum as liability for the period of delay in the monetary obligation.
However, the courts refuse to reduce the 3% per annum interest due to the absence of reasonable grounds confirming the overstatement of such interest or the debtor’s difficult financial situation.
4. Market premium mechanism and first decisions
On January 24, 2024, the NEURC adopted Resolution No. 178 “On Amendments to Certain Resolutions of the National Energy and Utilities Regulatory Commission”, which introduced changes related to Law No. 3220-IX “On Amendments to Certain Laws of Ukraine on Restoration and Green Transformation of the Energy System of Ukraine” and introduced the sale of electricity on the market at market prices on the basis of a service agreement to support the production of electricity from RES under the market premium mechanism as an alternative to the “green” tariff.
At the same time, the first payment by the Guaranteed Buyer to producers operating under the market premium mechanism in 2024 took place only on December 24, which forced producers to file lawsuits to recover overdue debts.
As of 18.02.2025, the first court decisions of the first instance were issued following the consideration of claims for the recovery of debts from the Guaranteed Buyer for services to support the production of electricity from alternative sources under the market premium mechanism. In particular, the Commercial Court of Kyiv in cases No. 910/11863/24 (decision of 26.11.2024) and No. 910/12633/24 (decision of 30.01.2025) satisfied the producers’ claims. These cases are pending before the Northern Commercial Court of Appeal as part of the appeal process.
The problem with considering this category of cases is that the Guaranteed Buyer emphasizes that based on clause 12, part 9, Article 65 of the Law of Ukraine “On the Electricity Market”, the obligation to timely and fully pay for the market premium service provided by producers who have been set a feed-in tariff or who have acquired the right to support based on the results of the auction occurs only after the Regulator approves the amount of such service.
The Law of Ukraine “On the Electricity Market” does not contain any details on the terms of the obligation to pay for services under the market premium mechanism, but only provides for the general obligation of the Guaranteed Buyer to pay for such services.
On the other hand, clause 12.20. of Procedure 641 stipulates that the Guaranteed Buyer shall pay 100% of the cost of the market premium service provided by the sellers under the market premium mechanism every month no later than the 25th calendar day of the month following the settlement period (month).
Thus, the absence of the Regulator’s approval of the cost of the service does not relieve the Guaranteed Buyer from the obligation to pay for the services actually provided and accepted within the time period specified in Procedure 641, as agreed by the Kyiv Commercial Court in cases No. 910/11863/24 and No. 910/12633/24.
5. Disputes regarding reimbursement of the cost of settling the imbalance of electricity of the guaranteed buyer
The decision of the Supreme Court in case No. 640/4069/21 of September 8, 2022, on the technical formula for calculating imbalances in the electricity market, which declared unlawful and canceled subparagraph 8 of paragraph 1 of the Amendments to NEURC Resolution No. 641 of 26.04.2019, approved by NEURC Resolution No. 46 of 15.01.2021, led to a situation where RES producers acquired the right to a refund of funds overpaid according to the formula approved by the regulator.
Therefore, renewable energy producers launched lawsuits against the NEURC and the Guaranteed Buyer to recover the funds paid under the unlawful formula.
The position of the first instance and appellate courts is ambiguous, so it was essential to obtain the Supreme Court’s conclusions in this category of disputes.
The Supreme Court composed of the panel of judges of the Commercial Court of Cassation considered case No. 910/9184/23 and confirmed the conclusions of the courts of previous instances:
– subparagraph 8 of paragraph 1 of the Amendments to the Resolution of the National Energy and Utilities Regulatory Commission of 26.04.2019 No. 641, approved by the Resolution of the National Energy and Utilities Regulatory Commission of 15.01.2021 No. 46, in terms of the new wording of paragraph 9.3 of Chapter 9 of the Procedure for the purchase by the guaranteed buyer of electricity generated from alternative energy sources, cannot be applied when calculating the share of the cost of settling the electricity imbalance
– the conclusions about the impossibility of applying a regulatory act that is unlawful from the moment of its adoption also indicate that there are no grounds to consider the funds paid to another person in the amount determined based on such a regulatory act as losses caused by the person who adopted such a regulatory act, which excludes the presence of a determining element of legal liability, in particular, the fact of confirmed damage;
– in fact, the claims for damages from the NEURC stated in this case do not correspond to the essence of the violated right protected by the plaintiff in this case, since such a right can be protected by applying to the State Enterprise “Guaranteed Buyer” with claims for the recovery of unjustifiably retained funds under Article 1212 of the Civil Code of Ukraine.
In this way, the Supreme Court confirmed that the violated right of renewable energy producers may be protected by applying to the State Enterprise “Guaranteed Buyer” with claims for the recovery of unjustifiably retained funds under Article 1212 of the Civil Code of Ukraine, received in excess of the statutory value of imbalances.
The first instance and appellate courts came to similar conclusions in cases No. 910/8819/23, No. 910/8823/23, No. 910/9297/23, No. 910/10395/23, No. 910/12777/23.
Given the above-mentioned conclusions, we expect lawsuits from RES producers against the Guaranteed Buyer demanding to recover unjustifiably retained funds under Article 1212 of the Civil Code of Ukraine, which were obtained due to the application of the unlawful imbalance calculation formula.
An outstanding case for this category of disputes is Case No. 910/15990/23, in which a dispute was considered under the claim of Sanvin 13 Limited Liability Company against the State Enterprise Guaranteed Buyer on the recognition of unlawful and cancellation of the acts of acceptance and transfer of the share of reimbursement of the cost of settling the imbalance of electricity for the period February 2022–September 2022, together with the acts of adjustment, the obligation of SE Guaranteed Buyer to recalculate the debt for reimbursement of the cost of settling the electricity imbalance under the agreement for the period February-September 2022 using a different calculation formula and to provide new acts.
Based on the outcome of the cassation proceedings in case No. 910/15990/23, the Supreme Court issued its conclusions in the ruling dated 20.11.2024, which are extremely important for this category of cases, namely:
“68. …
– when deciding on the possibility of applying a provision of an unlawful regulatory act to legal relations that existed in the period before its repeal, the specific grounds on which it was recognized as illegal must be established;
– the unlawfulness of a legal act due to 1) violation of the procedure for its adoption and 2) due to inconsistency with the Constitution of Ukraine and/or other legal acts of higher legal force have different legal consequences.
69. In this case, the Supreme Court once again emphasizes that the provisions of legal acts that do not comply with the Constitution and laws of Ukraine, regardless of whether such acts have been challenged in court and whether they are in force at the time of the case, should not be applied by the courts.
70. Thus, the courts of previous instances erroneously applied clause 9.3. of Chapter 9 of the Procedure as amended on January 16, 2021, in the periods February 2022–September 2022 to the legal relations between Sanvin 13 LLC and SE Guaranteed Buyer on reimbursement of a share of the cost of imbalance settlement.
………..
89. The subject of the claim cannot be the establishment of a circumstance, in particular, the obligation to execute documents that are evidence in the case. Acceptance certificates confirm the presence or absence of legal facts that are part of the grounds for the claim.
90. However, in terms of the obligation of SE Guaranteed Buyer to transfer the debt of Sanvin 13 LLC for reimbursement of the cost of settling the imbalance of electricity according to the Agreement for the period February-September 2022, the claims meet the requirements of efficiency.”
As a result, the Supreme Court has come to an unequivocal conclusion that the abolished formula for determining imbalances cannot be applied at any time and that it is impossible to oblige the Guaranteed Buyer to recalculate the debt, which may lead to an increase in claims with similar subjects and grounds.
6. Disputes over electricity generation from renewable sources in the temporarily occupied territories
In late 2023 and early 2024, the Guaranteed Buyer began filing lawsuits against renewable energy producers with installed generating facilities in the temporarily occupied territories, demanding the return of the money paid for the purchased electricity.
The Guaranteed Buyer claims that as a result of updates (zeroing) of commercial metering data by NPC Ukrenergo, RES producers in the temporarily occupied territories did not supply electricity. At the same time, such data updates were carried out by NPC Ukrenergo after a significant period from the date of fixing the initial commercial metering data, which created a strange situation regarding the legality of such adjustments and the existence of grounds for refunding the Guaranteed Buyer.
The courts dismissed the claims of RES producers against NPC Ukrenergo demanding to restore the commercial electricity metering data that had been reset to zero, citing the fact that the plaintiffs had chosen an inappropriate remedy (No. 910/1497/24, No. 910/1523/24).
Meanwhile, the courts of first instance and appellate courts have formed an ambiguous position when considering the claims of the Guaranteed Buyer for the recovery of funds paid for the purchase of electricity: there are cases in which the courts satisfy the claims (No. 910/19646/23, No. 916/5633/23, No. 910/19769/23) and cases in which the courts dismiss the claim (No. 910/19641/23, No. 910/19642/23).
As usual, the Supreme Court’s conclusions on disputes with similar subjects and causes of action are crucial for court practice.
Nowadays, the Supreme Court composed of the panel of judges of the Commercial Court of Cassation, having considered case No. 910/19641/23 (resolution of 12.02.2025), sided with RES producers and dismissed the Guaranteed Buyer’s claims. The ground for this was that NPC Ukrenergo, as the commercial metering administrator, did not have the legal authority to cancel already validated and certified data.
Moreover, the Supreme Court rejected the reference to the NEURC Resolution No. 759 of 19.04.2024, which provides for the determination of zero indicators for electrical installations in the occupied territories in the absence of access to metering devices. The court emphasized that the relevant regulatory act was adopted almost a year after the actual data adjustment, and therefore cannot regulate legal relations that arose before its adoption.
It is expected that this ruling of the Supreme Court will lead to the protection of producers’ rights and the formation of a consistent court practice in courts of all instances.
7. Depreciation of fixed assets included in a solar power plant
The issue of depreciation of solar power plant equipment remains relevant for companies operating in the field of “green” energy. Although companies usually allocate the cost of the plant into separate components (modules, inverters, mounts) with different useful lives, the tax authorities often seek to qualify the entire plant as a single property with a useful life of 15 years or more (under clause 138.3.3 of Article 138 of the Tax Code). This leads to an additional income tax liability, as the amount of the negative value of the taxable object (losses) is reduced.
The Supreme Court in cases No. 560/853/20 (resolution dated 10.02.2023) and No. 640/13827/20 (resolution dated 21.12.2022) confirmed the possibility of differentiated accounting for different elements of the station, noting that the “one station = one structure” approach is not mandatory and contradicts the requirements of UAS 7. In addition, in its ruling of 21.12.2022 in case No. 640/13827/20, the Supreme Court stressed that companies have the right to account for individual components as different items of property, plant, and equipment.
The Sixth Administrative Court of Appeal (Resolution dated 02.04.2024 in case No. 320/2500/23) took a similar position, stating that the Tax Code of Ukraine only defines minimum useful lives and does not contain strict requirements for a “single” classification of equipment.
Following the new consideration of case No. 560/853/20, the courts of first instance and appeal sided with the tax authority and stated that the solar power plant is an integral real estate object. The Supreme Court in its decision of 19.12.2024 in this case did not provide a detailed opinion on the issue of depreciation.
In addition, a new consideration of case No. 640/13827/20 continues, the conclusions of which should form the final practice.
Thus, despite the existence of decisions in which the courts recognize the right of taxpayers to divide a solar power plant into components with different useful lives, there are also opposite examples when the courts conclude that the solar power plant is a single real estate object. This means that the final unanimity in court opinions has not yet been achieved, and consequently, business entities should take into account the possibility of different interpretations of the provisions of the Tax Code of Ukraine by the courts when choosing a depreciation model and be prepared to defend their positions in case of disputes with the tax authorities.
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