13.03.2026
Law No. 4777-IX is already being called one of the most comprehensive energy market reforms of recent years. The document changes the rules for supporting renewable generation, opens new opportunities for energy storage, active consumers, and corporate microgrids, and lays the foundation for integrating the Ukrainian market into European mechanisms. At the same time, the real scale of these changes will become clear only after the implementation of bylaws and the practice of their application.
What exactly the law changes for business today and how it may affect the architecture of the energy system in the future was explained by Oleksiy Hnatenko, a partner in the dispute resolution practice of the law firm Juscutum:
The Law of Ukraine dated February 10, 2026, No. 4777-IX, adopted on the basis of draft law No. 13219, should be interpreted not as another package of point amendments to profile acts, but as an attempt to change the very logic of the Ukrainian energy market. The trajectory of the law’s adoption indicates that it was not a technical document, but an act in which they tried to combine investment, network, security, and Euro-integration interests of the country into one construction.
That is why it is advisable to evaluate this law in at least two planes. The first, tactical, concerns what the market, business, active consumers, and developers of new projects are getting right now: easier conditions for participating in auctions, new configurations of projects with storage systems, wider space for own generation, flexible connection models, and the ability to more rationally organize energy supply at the enterprise or local node level. The second, strategic, is related to why the state actually needs such a package of changes: to gradually move away from administratively rigid structures to more market-based support models, increase the flexibility of the energy system, legalize decentralized generation, develop BESS, and bring the Ukrainian model closer to European rules for the circulation of guarantees of origin of electricity from renewable sources, as well as to the principles of functioning of a competitive electricity market. The relevant parliamentary committee explicitly formulated these goals as increasing the efficiency of energy markets, developing RES, stimulating investment, implementing energy storage solutions, and strengthening energy resilience.
At the tactical level, the most important thing is that the law tries to make entry into new projects less burdensome, but at the same time does not turn the market into a simplified support mode without conditions. The key novelty here is the transition of auction support to the market premium mechanism. The Committee explicitly states that support based on the results of auctions will be provided precisely under this mechanism, and the Ministry of Energy will annually approve the schedule for conducting auctions, annual support quotas, and indicative indicators for the next four years, taking into account the National Energy and Climate Plan. For the investor and the creditor, this is important not only as a change in terminology but as a change in the cash flow profile: the market premium, by official regulatory definition, is a system under which the guaranteed buyer pays the difference between the amount of the “green” tariff or auction price and the estimated market price. In other words, the law moves the support mechanism into the plane of greater market integration of the producer, rather than maintaining a model in which the project’s economy is maximally isolated from market fluctuations. This approach corresponds to the logic of the development of a competitive market. However, for financing purposes, the key importance is not the name of the support instrument, but whether its legal construction ensures cash flow predictability, certainty of the calculation formula, stability of the regulatory environment, proper fulfillment of payment obligations by the counterparty, a clear model for settling imbalances, and proper protection of the investor from regulatory review of conditions during the project’s payback period. Therefore, the assessment of the new mechanism from the position of bankability cannot be unequivocally positive: although the law brings the support model closer to a more mature market construction, it does not in itself eliminate those basic regulatory, payment, and contractual risks that banks and other financing entities traditionally consider when evaluating Ukrainian RES projects.
The second group of tactical changes concerns storage, and this is where the law becomes much more practical than it might seem at first glance. First, it forms a separate category for solar power plants implemented together with storage systems and reserves for them a minimum share of the support quota at the level of 10 percent. Second, it raises the capacity threshold at which storage activity does not require a license to 5 MW and introduces a netting mechanism when paying transmission and distribution tariffs for the “producer + BESS” configuration. In parallel, the current version of the Law of Ukraine “On the Electricity Market” already allows an active consumer to use storage systems without a license, participate in the ancillary services market, provide balancing services, and within Article 58-1 of the aforementioned law, provides for license-free production and storage for own needs, provided that the capacity at one measurement site does not exceed 5 MW. Collectively, this means that the law does not just recognize storage as a separate element of the market but moves it from the category of an exception to the category of a real infrastructure tool. At the same time, in the part of auction projects with SPP+ESS, the state simultaneously sets a technical filter, and this is where the main legal and economic ambiguity arises: formally, the requirements are neutral, but in fact, they can cut off those projects that are capable of working technically but do not withstand the capital-intensive standard set by the regulator. This is not yet a legal ban, but it is already a normative way of selecting market participants.
Even more indicative are the changes related to the active consumer, self-production, and what is already habitually called microgrid logic in business language. The current Law of Ukraine “On the Electricity Market” defines an active consumer very broadly. This is not only a consumer or a household but also an energy cooperative, as well as an energy service customer, both before and after the transfer of ownership of property created under an energy service contract. The law directly allows the consumer to connect generating units and storage systems belonging to third parties to their own networks, provided that all generated or released electricity is purchased or sold by such a consumer; the relationship between the active consumer and the third party is regulated by a contract and civil law, is not considered electricity supply within the meaning of the Law, and does not require a separate license, and the transmission and distribution fee for such an internal configuration is not paid. Additionally, the law allows for combining electrical installations for electricity production from different sources at one connection point, even if their installed capacity exceeds the contractual capacity, provided that the supply to the grid does not exceed the permitted capacity at the connection point. For industry and infrastructure projects, this is of fundamental importance, as it moves those configurations of consumption, generation, and storage of electricity, which were previously often formalized through individual contractual modeling, network compromises, and practical adaptation to regulatory uncertainty, into the plane of models directly permitted by law. It is from such conditions that a real base for corporate microgrids, onsite generation, energy service models without full upfront CAPEX by the customer, and more complex structures of internal energy supply of the enterprise emerges. Whether this will be a boom depends no longer on the norm itself, but on the market’s ability to standardize contracts, credit products, technical solutions, and the tax treatment of such constructions.
At the strategic level, this law is even more important than at the tactical level, because its true meaning lies in changing the system’s architecture. The introduction of flexible connection, which is directly described as a mechanism of partially guaranteed and partially non-guaranteed capacity, should be understood not only as a way to quickly connect a new project where the grid is overloaded but as an attempt to legalize a different model of working with scarce transmission capacity. In a country living in conditions of military damage to infrastructure, delays in grid construction, and the need to quickly introduce new facilities, this solution looks inevitable. But this is where the greatest potential for future disputes lies. If non-guaranteed capacity is not balanced by transparent criteria for dispatch restrictions, a predictable curtailment regime, proper accounting of DSO or TSO commands, and a clear risk-sharing mechanism, flexible connection will easily turn from a development tool into a tool of administrative dominance by the grid operator. That is why the legal quality of secondary regulation here will be more important than the very fact of the appearance of a new legislative category. The same applies to the classification of gas turbine and cogeneration units as distributed generation objects with the right to sell electricity under bilateral agreements. This is no longer just a commercial relaxation, but a recognition that the transitional architecture of the Ukrainian energy system will for a long time rely on maneuvering and quick-to-install capacities, without which a high level of RES and real system stability cannot coexist.
The Euro-integration dimension of this law has not only political but also practical legal significance, as it concerns an instrument without which the full integration of the Ukrainian renewable electricity segment into European market mechanisms is incomplete, namely – guarantees of origin. The current version of Article 9-7 of the Law of Ukraine “On Alternative Energy Sources” explicitly establishes that a guarantee of origin for electricity produced from renewable energy sources is an attribute of such electricity, while ownership of it can be transferred separately from the electricity itself, and its circulation can be carried out separately from the relevant volumes of supply. The same norm defines NEURC as the authorized body for the issuance, circulation, and cancellation of guarantees of origin on the territory of Ukraine. At the same time, paragraph 3 of the Procedure for Introducing Guarantees of Origin for Electricity Produced from RES, approved by Resolution of the Cabinet of Ministers of Ukraine dated February 27, 2024, No. 227, clarifies the institutional role of NEURC, securing its status as the holder and administrator of the registry of guarantees of origin. Consequently, in the current regulation, the guarantee of origin is already formalized not as a technical attachment to electricity, but as a separate object of legal circulation with a defined regime for issuance, transfer, circulation, and cancellation. Legislation also directly records the free circulation of guarantees, their purchase and sale at free prices, and the possibility of import and export under foreign economic contracts. The Committee, commenting on Law No. 4777-IX, separately emphasized that the new package creates prerequisites for integrating the Ukrainian system of guarantees of origin into international systems, in particular through the possibility of recognizing guarantees issued in EU member states and Energy Community Contracting Parties. However, one should not substitute one for another here. Guarantees of origin indeed create legal and commercial prerequisites for the independent circulation of the environmental characteristic of electricity produced from renewable sources, but in themselves, they do not mean full compatibility with the entire body of European climate regulation. The Energy Community Secretariat, in the document Assessment of the Law of Ukraine No 3220-IX dated 30 June 2023, noted that Law No. 3220 partially transposes the provisions of RED II, in particular regarding guarantees of origin, self-consumption, and support schemes for electricity from renewable sources, as well as certain provisions of the Electricity Directive regarding active consumers, aggregators, and energy communities, but some of its provisions still raise doubts in terms of compliance with the Energy Community acquis. Similarly with CBAM, the legal construction of which focuses not on the very fact of confirming the renewable origin of electricity, but on the definition, calculation, and verification of embedded emissions in goods. That is why guarantees of origin indeed eliminate a significant part of the legal and commercial barriers to the separate circulation of confirmation of electricity origin from renewable sources, but in themselves, they do not solve the issue of proving the decarbonization characteristics of the product for CBAM purposes.
This is where the third, implementational, level of analysis begins, without which any conversation about the relevance and progressiveness of the law will be premature. In future practice, at least four large blocks of disputes can be expected. First, contractual: market participants and creditors will check whether the market premium mechanism is capable of providing a truly predictable cash flow, whether secondary regulation does not dilute the calculation formula, and whether the investor is sufficiently protected from changes in rules after the auction. Second, network: flexible connection will almost inevitably give rise to discussions about the limits of DSO discretion, the priority of restrictions, the volume of permissible curtailment, and the standard of proving abuse. Third, regulatory: new models of active consumer, self-production, third-party assets behind the meter, storage up to 5 MW, and hybrid projects will require coordination between the Law, system codes, market rules, tax practice, and banking requirements. Fourth, integrational: guarantees of origin and their international recognition will run into technical and regulatory compatibility, and the draft law card explicitly states that, although the project does not contradict Ukraine’s international legal obligations in the field of European integration, Ukraine must still conduct consultations with the European Commission regarding its compatibility with EU law. This means that the legislative act has already been adopted, but its European indisputability is not an absolute presumption.
Therefore, the final assessment of Law No. 4777-IX should be overall positive, but cautious given the volume of subsequent implementation, on which its practical effectiveness will depend. This law truly attempts to solve problems of different levels with one regulatory package, for example, to provide market participants with individual short-term regulatory reliefs, expand the range of permissible business models in the field of production, consumption, and storage of electricity, create a legal basis for modern self-production configurations and the use of storage systems, introduce tools for more flexible interaction with the grid, strengthen the role of distributed generation, and bring Ukrainian regulation closer to European approaches regarding the circulation of guarantees of origin for electricity from RES. But its weakness is that almost every strong novelty requires a very high-quality second step, bylaws, typical contracts, technical codes, methodologies, regulatory discipline, and consistent law enforcement. That is why this law should be perceived not as a final solution, but as a serious attempt to change course from a fragmented market that defends itself against crisis to a market that is learning to work simultaneously in the logic of resilience, investment attractiveness, and European integration. How successful this attempt will turn out to be will be shown by the first wave of implementation and the first disputes that the new model will inevitably generate.
Thus, Law No. 4777-IX should be considered not as the final point of the reform, but as its start. It forms a new framework for the development of RES, energy storage, corporate microgrids, and modern models of electricity self-sufficiency. How effective this framework becomes will depend on whether the state can ensure consistent implementation and stability of the rules of the game. It is the trust in these rules that ultimately determines whether legislative novelties turn into real investments and a new energy architecture for the country.
