21.09.2026
Ukraine’s energy storage market is approaching a turning point: investor interest is growing rapidly, but standalone projects face regulatory, technical and economic constraints that may significantly affect their long-term profitability. Yurii Podoliak, CEO of IKNET, spoke about this during the Energy Club forum “Energy Freedom: Resilience and New Opportunities in Ukraine’s Energy Storage Market,” held in Kyiv on 17 September.
IKNET has been involved in the development of energy storage projects since the market was only beginning to emerge in Ukraine. According to Podoliak, the company participated in a DTEK project as early as 2021, when energy storage systems did not yet have a clearly defined status in Ukrainian regulation and the project was formally implemented as the reconstruction of a power plant.
In 2023, the company and its partners began developing an industrial-scale commercial energy storage system before specialised auctions had been introduced. This required close cooperation with Ukrenergo and practical solutions to procedures that had not previously been tested in Ukraine. “Today, we are already approaching a certain peak. Practice shows that many investors begin entering a market just as it is about to close. We are starting to feel this now,” Yurii Podoliak said.
He divided the energy storage market into four principal models: a standalone storage facility operating as an independent market asset; storage integrated with a generating facility; storage used as part of a consumer’s backup power system; and storage incorporated into an energy island or microgrid.
Each of these models, he emphasised, is developing differently and faces its own regulatory, technical and financial challenges.
Among the positive changes, Podoliak mentioned the regulatory possibility of combining energy storage facilities with generation. Previously, existing generating facilities encountered legal barriers when attempting to add storage, while storage projects faced similar difficulties when integrating generation. The regulatory framework is gradually changing in response to market needs.
“At the level of government, Parliament, the regulator and the ministries, there is often no comprehensive vision, and many developments take place spontaneously. At the same time, they are catching up: they see the feedback, communicate with the market and, when a problem becomes apparent, try to resolve it. I would rate what is happening at four minus out of five,” he said.
At the same time, connection procedures remain one of the most serious risks for investors. Podoliak referred to regulatory changes that could increase connection charges by taking into account both the charging and discharging capacity of a storage facility. A temporary exemption was offered to projects capable of obtaining technical conditions and completing implementation within approximately three months.
“This is not even a joke. We all know how difficult connection procedures are, and here a project is expected to be fully constructed and completed within three months,” Podoliak noted.
In his opinion, excessively high connection costs and unrealistic implementation deadlines could quickly slow the development of the market. As an example, he referred to the market for gas-piston generation, where a change in economic conditions sharply reduced investor interest even though many projects had previously appeared attractive.
“One decision can effectively close a market. The projects being implemented today are mainly those that were launched earlier, under different conditions,” he said.
Podoliak believes that the investment window for some standalone energy storage projects may be relatively limited. “It is not three years to build a project; it is three years to earn the money,” he stressed.
One of the factors that could transform the market is the expiry of the feed-in tariff for many renewable energy facilities around 2030. Owners of solar power plants already have grid connections, land, energy infrastructure and access to bank financing. According to Podoliak, many of them may begin installing energy storage systems to shift electricity generated during low-price daytime hours to periods of higher demand and higher market prices. “The electricity that is currently sold cheaply during the day will be stored and used by the same producers in the evening. This is one of the key changes that the market should prepare for,” he explained.
Another major obstacle is the technical connection process and the requirements imposed by Ukrenergo, particularly those related to emergency control systems. Podoliak described cases in which technical conditions were based on N-2 scenarios involving the simultaneous failure of two major grid elements. Some calculations, he said, included operating assumptions that did not reflect the actual state of Ukraine’s power system or realistic market behaviour.
In certain projects, investors may be required to establish communication links with dozens of substations. When market participants proposed using GSM or Starlink as backup communication channels, these options were rejected in favour of a second fibre-optic line. “When you begin calculating how many hundreds of kilometres of cable must be installed, the result can be three years of work and approximately UAH 180 million,” Podoliak said, citing one practical estimate.
He expressed hope that future regulatory decisions would introduce more realistic technical assumptions and remove unavailable or non-operational generating facilities from the scenarios used for connection studies and emergency automation requirements.
Storage integrated with generation is still developing more slowly than standalone energy storage projects. However, some investors are already selecting sites that will allow solar generation to be added later. Podoliak considers this a reasonable approach because the economics of renewable generation and storage may change significantly after 2030.
The consumer segment is developing under a different logic. Industrial companies, factories and other businesses increasingly view storage not only as a source of market revenue but also as an instrument of energy security.
“For two years, many consumers expected the situation to improve. Over the past year, they have realised that nothing will change automatically. We are now seeing considerable demand for energy storage, gas-piston systems, solar power plants and diesel generation. Businesses are taking action,” he said.
Such projects can combine backup power, self-consumption, electricity cost optimisation and, where technically and legally possible, participation in the electricity market. However, Podoliak emphasised that storage should not be viewed in isolation. It must become part of a wider system that includes generation, consumption, automation and energy management.
This approach is particularly important for the creation of energy islands. Such a system must balance the consumer’s load profile, solar generation, cogeneration and battery operation. In practice, it functions as a small-scale power system governed by the same fundamental principles of generation, consumption, distribution and balancing.
“A great many consumers simply buy individual pieces of equipment without studying their actual load profiles. But an energy island requires an understanding of how generation, storage and consumption will operate together,” Podoliak explained.
He noted that technically such projects are already possible, but their legal and economic models remain insufficiently defined. Creating an energy island around a 110 kV substation, for example, could require at least EUR 3 million for automation, balancing and related systems, even where generating capacity already exists.
The central question is who should finance such infrastructure. Distribution system operators manage hundreds of substations and cannot independently invest hundreds of millions of euros in their modernisation. Individual consumers and municipalities also often lack the necessary budgets.
Despite these barriers, Podoliak believes that energy islands represent an important direction for the future because they can allow local generation and consumers to continue operating when the external grid is unavailable.
In his assessment, Ukraine may experience two major waves of energy storage development. The first is already underway and will continue as current projects enter operation. The second may begin closer to 2030, when the end of the feed-in tariff and the further expansion of renewable generation fundamentally change the electricity market.
“We are moving two steps forward and one step back. Nevertheless, we have already reached the point where we can discuss not only the current peak, but also what will happen in the coming years. These are turbulent, but very interesting times,” Yurii Podoliak concluded.
