01.12.2025
Vyacheslav Babich, Deputy Director of the Department for Commerce at PJSC “Ukrhydroenergo,” outlined the role, opportunities, and challenges for energy storage units (ESU) in the electricity market, specifically Pumped Storage Power Plants (PSPP) and Battery Energy Storage Systems (BESS), at the Energy Club forum “Energy of Freedom: Resilience and New Opportunities for the Energy Storage Systems Market in Ukraine,” held on November 20 in Kyiv.
The speaker reminded the audience that energy storage technologies encompass various types:
Since 2019, PJSC “Ukrhydroenergo” has been actively operating two PSPPs with an installed capacity of 1534 MW. These are mechanical energy storage units that convert electricity into potential water energy, store it, and release it during peak load hours.
The company operates in all segments of the electricity market and has significant experience in operating PSPPs, particularly: in the Bilateral Contracts Market (BCM), during export operations, in the Day-Ahead Market (DAM), the Intraday Market (IDM), the Balancing Market (BM), and the Ancillary Services Market (ASM). The company’s share in the ASM and BM reached about 50% in some periods — it is in these segments that PSPPs demonstrate the greatest efficiency.
Prior to the increase in the share of solar generation, PSPPs predominantly worked at night in “pumping” mode (consuming electricity to fill the upper reservoir) and generated electricity during morning and evening peaks. Now, with the growth of Solar Power Plants (SPP), PSPPs are more actively used during daylight hours for “pumping,” especially from March to September.
Vyacheslav Babich drew the attention of market participants to the fact that electrochemical ESUs operate on a similar principle to pumped storage: they accumulate electricity and release it at specific hours.
Advantages of PSPP:
Advantages of BESS:
The emergence of the first BESS projects has already created competition in the ancillary services market and the balancing market.
The speaker noted that market experience can bring both additional profit and losses in the form of non-compliance penalties in the ancillary services market and the balancing market. Currently, during martial law, NEURC Resolution No. 332 is in effect, introducing a moratorium on such charges. However, after the end of martial law, these risks will return, and they must be kept in mind.
The company plans to install its own electrochemical ESUs. Their operation is expected not to differ significantly from PSPP operation, as all market processes are analogous. Vyacheslav Babich also highlighted the great potential of small HPPs and small PSPPs in Ukraine, which is worth paying attention to.
“Ukrhydroenergo” conducted modeling regarding BESS usage and concluded that their operation is most effective in the ancillary services market. Special auctions by NEC “Ukrenergo” confirmed this:
“In our opinion, the need for ancillary services is significantly greater than the volumes purchased today.” Babich addressed NEC “Ukrenergo” with a proposal to increase purchase volumes for primary and secondary reserves for frequency and active power regulation.
The Deputy Director of the Department for Commerce at PJSC “Ukrhydroenergo” confirmed that arbitrage is possible for BESS but has a limited economic effect due to small battery capacity. A typical configuration for Ukraine is 1 MW power / 2 MWh capacity. Even modern European systems rarely exceed 6 MWh capacity.
To increase profitability, arbitrage should be considered not within a single segment (DAM or IDM) but in combination, for example:
Balancing Market + DAM.
This approach increases revenue and reduces the payback period of projects.
