Amendments in the Energy Markets Regulation

On 10 February 2026, Parliament adopted a law based on Draft Law No. 13219 aimed at modernising Ukraine’s renewable electricity market. The law extends the "green” auction scheme until 2034, introduces special provisions for solar power plants combined with energy storage (PV + storage), simplifies grid connection procedures and reduces the financial burden on investors. A separate set of amendments addresses the settlement of payments for electricity generated in temporarily occupied territories. The law also clarifies the licensing framework for energy storage activities and expands the application of the cable pooling mechanism.

On 10 February, the Parliament of Ukraine adopted the Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine on Improvement of Energy Markets Functioning, Competitive Conditions for the Production of Electricity from Alternative Energy Sources, and Strengthening of Energy Resilience” (the "Law”), based on Draft Law No. 13219 dated 28 April 2025, which was signed by the President on 9 March 2026.

The key amendments in the electricity market concern the improvement of the "green” auctions model, the use of energy storage, and grid connection.

Amendments in Approaches to Organisation of Auctions for Allocation of Support Quotas

The period during which auctions shall be conducted has been extended from the end of 2029 to the end of 2034.

Approaches to the allocation of annual support quota depending on technology have been revised: the minimum share of the annual support quota for solar, wind, and other types of alternative energy source has been reduced from 10% to 5%. At the same time, a separate increased quota (not less than 10%) has been introduced for solar power plants equipped with storage, subject to defined requirements regarding their power capacity (80% or more of installed generating capacity) and usable energy storage capacity (2 kWh or more per each kW of installed generating capacity). Special auction conditions are provided for such projects, including, in particular, restriction of the support during certain daytime hours (two consecutive hours within the interval from 10:00 to 16:00). For such solar power plants with storage the price bid may be submitted within a cap of up to 12 euro cents per kWh.

In addition to the bank guarantee, a financial security instrument has been introduced to ensure the performance of obligations by auction participants and winners. It requires payment of a security deposit to a separate account of the Guaranteed Buyer or to an escrow account opened with a bank designated by the Guaranteed Buyer for the auction participant/winner.

The amount of performance security under a contract concluded based on auction has been reduced from EUR 15 to EUR 10 per kW of capacity. The amount of additional security required if the construction period is extended has been reduced from EUR 30 to EUR 10 per kW.

The list of obligations imposed on the auction winner has been expanded: the winner will be required not only to construct and put the facility into operation, but also to ensure its connection to the grid. At the same time, where an agreement with the auction winner is concluded during the period of martial law, the timeframe for the construction, commissioning, and grid connection of renewable energy facilities (except for solar installations) has been extended from 36 to 42 months.

The list of supporting documents and their timeframes for submission have been revised. Under amendments, the grid connection agreement (or capacity booking agreement) shall be submitted within 12 months (previously 6 months), while documents confirming title to land plots and/or real estate shall no longer be required.

A permissible capacity deviation has been introduced: amendments allow the actual capacity of the constructed facility to deviate by up to ±10% from the capacity awarded to the winner under the auction results. However, support (payment) shall be provided for the electricity actually supplied and sold within the capacity awarded to the winner under the auction results, i.e., without taking into account any capacity exceeding the awarded level within the 10% margin (if any).

The provision on the two-way market premium mechanism for projects implemented following "green” auctions has been removed. The Law abolishes the producer’s obligation to pay the Guaranteed Buyer the difference between the calculated market price and the auction price where the market price exceeds the auction price.

Improvement of Energy Storage Regulation

The payment for services rendered by network operators when a producer withdraws electricity from the grid via an energy storage facility is now clearly regulated. The rules apply to producers (i) receiving a feed-in tariff and having left the Guaranteed Buyer’s balancing group, (ii) with awarded support following an auction, and (iii) who are not qualified for support. In such cases, the producer shall pay for transmission, distribution, and dispatch (operational and technological) management services at the commercial metering point of the respective energy storage facility. The payment is calculated as the difference between the monthly grid electricity consumption and the volume returned to the grid after storage.

The Law clarifies licensing requirements for energy storage activities: a licence is required where the installed capacity of an energy storage facility at a single metering site exceeds 5 MW.

Injection and withdrawal of electricity by an energy storage facility are permitted only within the authorised capacity at the connection point.

The operator of an energy storage facility may use generating units without an electricity generation licence, provided that the total injection/withdrawal capacity does not exceed the authorised capacity at the connection point and a separate commercial metering of electricity flows is ensured.

The Law clarifies that payments for network operator services are calculated based only on the volumes of electricity actually taken from or supplied to the external grid by the energy storage facility at the connection point.

The Law provides that the operator of an energy storage facility has the right to supply electricity to a consumer, provided they share a common point of connection to the grid and proper commercial metering is ensured. In this case the sale of electricity to a consumer is performed under a purchase and sale agreement and does not require a license for electricity supply.

Amendments in Grid Connection Procedures

Legislation introduces a new flexible connection mechanism that allowslimiting the authorised capacity (under specified conditions and control), where the authorised capacity may also be partially guaranteed, i.e., available for use at any time.

A connection applicant may propose a flexible connection to a system operator as an alternative to constructing or upgrading the external networks required for grid connection. The system operator may not refuse this option. At the connection point, technical equipment shall be installed to automatically limit capacity or disconnect the facility from the grid if the approved parameters are exceeded. Detailed procedures and specific requirements for flexible connection shall be set out in the transmission and distribution system codes.

Cable pooling mechanism which allows generating facilities from any energy sources and equipment of different technologies to be connected at a single grid connection point, has been extended to applicants who not only generate (or plan to generate) electricity but also store and consume it (or plan to do so), as well as to the relevant facilities. However, the mechanism does not apply to additional generating units of producers operating under a feed-in tariff (whether they sell electricity to the Guaranteed Buyer under the feed-in tariff or under the market premium scheme) if the connection of such units increases the capacity covered by those state support schemes.

The Law regulates the issuance of a license for electricity generation or storage in cases when the relevant installations are connected to the grid of another entity. For this purpose, the total installed capacity of the installations located at a single metering site is taken into account, regardless of their ownership.

For electricity producers using biomass and biogas, the list of cases in which electricity supplied to their own facilities or to those of related parties is not treated as a direct line has been expanded. In particular, such producers may apply this mechanism even if the relevant installations are located not only on adjacent land plots (as required for other producers), but also on plots separated by roads, railways, pipelines, power lines or similar infrastructure.

During the period of martial law and for one year after its termination, construction, reconstruction, and equipping of transmission lines are permitted in protected natural areas of the Chornobyl exclusion zone and the zone of unconditional resettlement, provided that this is a part of a state-priority investment project in the energy sector.

The Law allows local authorities to arrange the free installation of cable lines from transformer substations to electric vehicle charging stations with a capacity of up to 200 kW and to prepare the required project documentation. These works can be funded from the local budget and carried out by municipal enterprises or city services. All necessary approvals and permits shall be issued by the local authorities within 15 business days of the application.

Other Amendments

For certain producers under the feed-in tariff and the market premium mechanism, time-based restrictions have been introduced: electricity generated from solar radiation is eligible for the feed-in tariff or market premium only:

These restrictions do not apply to electricity supplied from an energy storage facility within a solar power plant.

The Law now treats distributed generation producers the same as renewable energy producers with respect to the right to voluntary (rather than mandatory) participation in electronic auctions for bilateral agreements.

The Law regulates the specifics of using guarantees of origin for electricity produced from renewable energy sources. For these purposes, the Residual Energy Mix is used, which excludes the share covered by the cancelled guarantees of origin, shall be calculated by the National Energy and Utilities Regulatory Commission (NEURC) based on approved methodology and shall be published annually on NEURC’s website.

It should be noted that the Law uses the term "Residual Energy Mix” but does not define it. The respective definition is set out in the Draft Law No. 14271 dated 3 December 2025, which defines the "Residual Energy Mix” as the composition of energy sources in the annual volume of electricity supplied within Ukraine, excluding volumes of electricity from renewable energy sources confirmed by cancelled guarantees of origin.

The Law also allows Ukraine to recognise, on a reciprocal basis, guarantees of origin for electricity from renewable sources issued by EU Member States or Energy Community Contracting Parties. For guarantees of origin from other countries, recognition by Ukraine depends on whether they are recognised by the European Union and/or the Energy Community. If NEURC does not recognise a guarantee of origin from the EU country or a Contracting Party to the Energy Community, it shall notify the European Commission or the Energy Community Secretariat accordingly, providing respective justification.

To enable Ukraine to obtain full membership in the Association of Issuing Bodies, NEURC has been granted the authority to approve and amend the Ukraine domain protocol – the document that sets out procedures for issuing, trading, and cancelling guarantees of origin for electricity produced from renewable energy sources in Ukraine.

The provision exempting importers from the minimum (10%) mandatory volume of electricity sales on the Day-Ahead Market has been extended until 1 April 2026.

A special regime has been established for the allocation of funds received by the Transmission System Operator (the "TSO”) from cross-border capacity allocation in 2025. The funds will be distributed as follows:

The Law on the Electricity Market has been supplemented with temporary provisions (applicable during martial law and for one year after its end) regulating the purchase and sale of electricity generated at facilities located in temporarily occupied territories. The TSO, together with a special commission, is responsible for creating and maintaining a register of renewable energy facilities in these territories, including the periods of occupation and the suspension and resumption of electricity supply to the part of Ukraine’s integrated power system under government control. Electricity not supplied from these facilities to the controlled part of the system is not subject to purchase by market participants, and no corresponding payments are due. Accordingly, settlements must be adjusted, and producers are required to return any funds previously paid for these periods.

If the Guaranteed Buyer owes a producer any outstanding payments, it may unilaterally offset these amounts against funds that the producer must return for electricity generated in temporarily occupied territories. Any compensation for losses suffered by producers is the responsibility of the occupying state.

This mechanism also enables the settlement of payments to producers that delivered electricity to the grid in the government-controlled territory.

The period during which electricity suppliers that previously operated as regional energy companies can perform the functions of universal service suppliers has been extended until 1 January 2029. The deadline for holding a competition to select universal service suppliers has been extended until 1 July 2028. The designation of a state-owned electricity supplier as the "supplier of last resort” without competition has been extended until 31 December 2029.

The Law on the Natural Gas Market has been supplemented with rules for determining natural gas quality, to be approved by the Ministry of Energy. These rules shall set out the requirements that gas shall meet before transportation, distribution, storage, or liquefaction, including its allowable physicochemical parameters. They also regulate how gas flow routes are determined, the method and frequency of quality control, the parties responsible, and the documentation of inspection results. In addition, the rules shall define the rights and obligations of market participants to maintain proper gas quality, the procedure for resolving disputes in the event of non-compliance, and the liability for violations.

The Law on Alternative Fuels has been revised regarding the mandatory share of liquid biofuels (biocomponents), which will apply from 1 July 2026 to gasoline sold at wholesale and retail fuel outlets (except for gasoline with an octane rating of 98 or higher). The total bioethanol content in such gasoline must exceed 7%, while the oxygen content must not exceed 3.7% by mass. This requirement does not apply to gasoline supplied for the needs of the Ministry of Defence or the State Reserve. Liability for non-compliance with this standard is deferred until 1 July 2026.

Conclusions

The Law aims to improve the "green” auction scheme to increase interest and attract investors to the development of renewable energy generation. In addition, it clarifies the provisions governing how market participants may use energy storage facilities. Notably, the Law now regulates at the legislative level the payment for electricity generated at facilities that were or remain located in temporarily occupied territories.

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Information contained in this legal alert is for general informational purposes only, does not constitute legal or other professional advice and should not be relied upon as a substitute for specific professional advice adapted to the specific circumstances.