16.09.2026
On September 17, Energy Club will hold the Forum “Enerhiia Svobody: Resilience and New Opportunities of the Energy Storage Systems Market in Ukraine” in Kyiv. The focus will be on the development of the BESS market, its role in the resilience of Ukraine’s energy system, and new opportunities for businesses and investors.
One of the forum’s speakers will be Dmytro Olefir, Deputy Director for Strategic Development of NVP “Energo-Plus”. According to him, today energy storage systems are already not merely an element of energy security, but also a full-fledged business tool. At the same time, the effectiveness of such a project depends on a significantly larger number of factors than simply the price and capacity of the battery.
Ahead of the forum, in an interview with Energy Club journalist Olena Karpachova, Dmytro Olefir spoke about the specifics of implementing BESS construction projects in Ukraine, which approaches to investment may prove to be misguided, and why the future of energy storage depends to a large extent on how systematically Ukraine’s Unified Power System, economic sectors, and the country’s electricity market will develop.
— Mr. Dmytro Oleksandrovych, Ukraine is effectively forming an energy storage systems market amid war. Which BESS opportunities do you consider the most underestimated today, and where can Ukrainian businesses gain the greatest benefit from them?
— Thank you for the question. It is both complicated and simple at the same time. It is simple because BESS opportunities are already being used to the fullest — both to back up own consumption in case of interruption of external electricity supply from distribution or transmission system operators’ grids, and to reduce electricity purchasing costs during hours of electricity shortages and extremely high market prices, and for arbitrage when trading exclusively in electricity on the market, and for providing balancing and ancillary services. The issues of BESS participation in emergency automation systems and restoration of the energy system/energy districts from “0” after blackouts have not been sufficiently developed, but this is an issue that can and should be resolved by NEC “Ukrenergo” jointly with the NEURC as soon as possible.
In my opinion, we need to look at the future development of BESS from a different perspective. The TSO should determine the volumes of BESS reserves sufficient for balancing Ukraine’s Unified Power System in the short and medium term and communicate these volumes to potential investors in BESS construction projects (of course, while complying with confidentiality requirements under the conditions of hostilities in Ukraine).
The development of BESS should not take place chaotically, not on its own as an investment project aimed at generating profit for a particular business group, but as part of the development of Ukraine’s Unified Power System and other types of generation, taking into account the interests of Ukrainian electricity consumers. Because ultimately, it is the electricity consumer in Ukraine who pays for everything. An example of inefficient development of generation in Ukraine’s Unified Power System can be the uncontrolled construction of solar power plants in Ukraine in 2016–2021, when, without taking into account the negative experience of constructing such power plants in Europe, our country built so many solar power plants and adopted such legislative acts that now the end consumer of electricity is forced to pay for “air” (or “money into the ground”) through the transmission tariff, because the TSO has to pay funds to solar energy producers even for electricity volumes not produced by solar power plants when their generation is curtailed during surplus daytime hours.
Excessive and uncontrolled/chaotic construction of BESS may, on the one hand, lead to technical problems during their charging (overloading of power grids, power balance problems, low voltages in power grids, difficulties in eliminating cascading failures, etc.), as well as to changes in electricity market prices during surplus and deficit periods. A reduction in the price difference during such hours will lead to longer payback periods for BESS projects, and given the experience of Ukraine’s electricity market development, the “invisible hand of the market”, aimed at increasing prices during certain hours of the day, may intervene in such a situation and improve the situation with BESS investment projects, which could cause another wave of non-payments in the market by electricity consumers due to rising electricity supply prices.
Therefore, for businesses, I would not consider implementing BESS projects exclusively for operation on the electricity market. The experience of European countries is more appropriate, when ESS are involved in other sectors of the country’s economy and provide added value from the implementation of such projects. A successful example can be the introduction of electric transport in large cities and for freight transportation, as well as the introduction of energy-saving technologies (including for lighting buildings and public spaces). For example, when comparing Paris ten years ago with modern Paris, there is a clear trend toward using ESS not only for participation in the electricity market, but also for using stored cheap electricity in other sectors of the country’s economy, in particular electric transport.
— For an investor, the main question is simple: can you make money on BESS in Ukraine today? Which storage operating models already make economic sense, and which are still more of a prospect?
— The first half of the question can be answered with confidence — yes, the use of BESS in the electricity market is profitable and generates income today. How profitable it is depends on each specific project and the project’s initial parameters (availability of own consumers, generation sources, etc.).
As for the second half of the question, if I understood it correctly, it concerns the construction of economic models for operating in different segments of the electricity market. The electricity arbitrage model involves purchasing electricity at a low price, for example, on the DAM, storing it, and selling it during peak hours on the same DAM, when market prices rise. This makes it possible to use ESS capacities as efficiently and predictably as possible.
As for operating in the balancing market, when balancing electricity for charging ESS is purchased (at the TSO dispatcher’s command) at very low prices during surplus hours, and balancing energy is sold when ESS are discharged during deficit hours in accordance with TSO commands, such a model has certain disadvantages due to the lack of guarantees that commands will be issued in the balancing market by TSO dispatch personnel, as well as the long payment period for balancing energy (approximately one year), which makes BESS operation in the balancing market low in liquidity.
The same applies to participation in the ancillary services market. At present, the TSO has conducted long-term auctions for various reserves in the ancillary services market, which creates uncertainty regarding the demand for BESS capacity in daily auctions. It is almost impossible to calculate the efficiency of implementing an investment project and its payback period. Foreign specialists pointed out to Ukrainian specialists responsible for conducting long-term auctions in the ancillary services market the ineffectiveness and inexpediency of such auctions, which violates global practices for organizing auctions in this segment of the electricity market and preventing restrictions on competition in it.
Also, according to the Market Rules, there is a requirement for operation in the balancing market and ancillary services market whereby, to participate in such market segments, the regulating capacity of BESS must be at least 1 MW.
— BESS can simultaneously operate in several market segments — balancing, arbitrage, ancillary services. How difficult is it to optimize such operation in real time, and what role do automation and control algorithms play here?
— Of course, BESS have a unique opportunity, within the available ranges, to operate in several segments of the electricity market. But this requires sophisticated software and hardware systems that allow both remote monitoring of BESS equipment operation and equipment control, as well as operation in the electricity market.
For example, a company that has built BESS wants to operate on the DAM (through arbitrage), selling electricity, and on the ancillary services market, providing frequency containment reserves. This means that a certain portion of the available power and energy reserves of the BESS can be used on the DAM, but at the same time someone/something has to control sufficient power and ESS capacity for the contracted volume of FCR. In real time, this can only be implemented using SCADA and EMS, which monitor the current state of the ESS, the available ESS capacities for charging and discharging, taking into account future time periods for providing services or selling electricity, data transmission and receipt of remote commands (from the automatic generation control system or dispatcher) with parameters specified by the TSO, etc.
Depending on the project being implemented, control algorithms may differ and vary in implementation complexity, but they must take into account all requirements: those of own consumers, the aggregator (if joining an aggregated group), the DSO, and the TSO.
— You have been involved in modeling BESS projects. Which parameters are most important to calculate correctly today before making an investment: battery power and capacity, number of cycles, price fluctuations, project duration, or the ability to operate simultaneously in several market segments?
— Good question. Recently, together with energy-sector colleagues, I participated in training agricultural sector specialists as part of the AGRO Program, which was implemented by Chemonics International with the support of the U.S. Government. And these were exactly the issues discussed during the lectures.
Based on my own experience, the most important parameters that must be determined and taken into account before selecting equipment and preparing the economic model of an investment project are:
— One of the main topics of the forum is the economics of energy storage. Through which mechanisms can a Ukrainian BESS project actually generate revenue today? Is operating in a single market segment sufficient for payback, or is it necessary to combine several revenue streams?
— A complicated question, because everything depends on which project is being implemented: it may be exclusively the construction of BESS for operation on the market; it may be the construction of BESS with existing own electricity consumption; it may be a BESS project with already operating solar power plants; or the construction of BESS for subsequent entry into an aggregated group. And the economic result for each of these projects may be different.
If we are talking about different segments of the electricity market, then in my opinion, the most predictable, appropriate, and economically justified is operation in such segments as the DAM and the bilateral contracts market. Of course, if competition subsequently becomes high, the efficiency of such projects will decrease significantly, while the payback period, on the contrary, will increase.
As for the balancing market, such a market is promising, but this market segment remains low in liquidity, since you will be able to receive funds for balancing energy from NEC “Ukrenergo” at least a year later (if there are no changes in this market segment). It will also be difficult to prove the profitability of such a project to an investor, since it is not known in advance whether balancing energy will be in demand from the TSO throughout the entire period for which the economic model of the investment project is being built.
As for the ancillary services market, the situation is even less predictable, taking into account the long-term auctions conducted by NEC “Ukrenergo”. It is unknown whether BESS capacity for primary or automatic regulation will be in demand at daily auctions. But when implementing such projects, it is necessary to take into account the need for significant additional costs for project implementation: for implementing software and hardware systems for operation in the ancillary services market, telecommunications equipment, maintaining redundant protected data transmission channels, interaction with the ancillary services provision monitoring system, etc. Also, an essential component of operation in the ancillary services market and balancing market is the presence of a dispatch center and operational personnel to control BESS and interact with TSO personnel, which also requires additional costs when implementing BESS projects.
Therefore, in my opinion, the economics of each BESS construction project and its payback period depend on many factors: initial data regarding the objectives of building BESS and an understanding of the development of all types of generation in Ukraine’s Unified Power System in the short and medium term, the availability of own consumption/other generation sources, the market operation strategy, the need to back up own electricity consumers during blackouts, the region where the power grids to which BESS will be connected are located, the availability of qualified personnel, etc.
— What mistakes do investors most often make when assessing the economics of energy storage systems? Do they overestimate the potential profitability of such projects?
— I am not an investor, and therefore I can speak about their mistakes only indirectly, based on the experience I have gained working in various energy companies.
In my opinion, the main problems in determining the efficiency and profitability of BESS construction projects are the following:
All the factors I have listed have a significant impact on the economic models provided to investors to assess the feasibility of implementing a particular project.
Very often, investors do not understand the rules for operating in all segments of the electricity market, in particular the ancillary services market, which leads to incorrect decisions. The same applies to the coordination of the project’s technical and economic parameters, when inverter parameters are incorrectly selected based on the capacity permitted for connection.
— How important could the aggregated model become for the development of BESS in Ukraine? Can the combination of storage, generation, and consumers into controllable groups significantly change their capabilities in the electricity market?
— Yes, of course, aggregated groups are created precisely so that several market participants can operate effectively in different segments of the electricity market, respond to abnormal situations, and reduce the imbalances of each such participant. Whether an ESS has discharged, or BESS capacity is not in demand in the market during certain hours, it is always possible to find the most advantageous solutions for all participants within aggregated groups. And for market newcomers, aggregated or balancing groups are generally necessary so that the qualified operational personnel of the latter can respond promptly to all abnormal situations and, to some extent, train newcomers to the market.
– What currently holds back investment in energy storage systems the most: regulatory barriers, market uncertainty, the high cost of equipment, the lack of clear business models, or risks associated with the war?
– All of the risks listed, with the possible exception of clear business models, are decisive in creating an attractive investment climate for the construction of electricity storage systems in Ukraine. However, in my opinion, the most serious of the risks listed are those associated with hostilities on the territory of our country.
To confirm my point, I can give a real example when one of the very well-known companies in the electric power industry, understanding both the regulatory obstacles and having experience working in the electricity market, as well as having developed its own effective business models, built high-capacity BESS, promoted itself nationwide, started operating in the market, and a few months later its facilities were destroyed during a missile-and-drone attack. Restoring these facilities requires considerable time, while investors will be more cautious about investing in similar projects, understanding the potential military risks and the increased project costs needed to cover insurance expenses for such risks.
– LLC “NVP “Energo-Plus” works not only with equipment, but also with automation and control systems for energy facilities. How critical is the control system itself to BESS efficiency? Can we say that today “smart management” is sometimes no less important than the battery itself?
– If BESS is used exclusively for backup power supply to consumers’ electrical equipment, such automated systems are either not needed or are required only to a minimal extent – SCADA for monitoring equipment operation and promptly responding to abnormal situations: overheating of energy storage systems, critical discharge of modules, etc.
If, however, BESS is considered as an element of energy management or for participation in the electricity market, this requires sophisticated software and hardware systems – SCADA and EMS, redundant and protected data transmission channels, a dispatch center and operational personnel, which together will ensure the efficient use and remote control of BESS throughout the day, as well as the provision of information to the Settlement Administrator, DSO, TSO, JSC “Market Operator”, PPCO, etc.
Sometimes the cost of software and hardware for BESS control is comparable to the cost of the energy storage equipment itself, especially when the manufacturers are foreign companies. Therefore, national companies are gradually emerging in Ukraine that are developing their own software and hardware for BESS control, independent of foreign cloud storage systems, which is extremely important for critical infrastructure facilities and for the state as a whole. LLC “NVP “Energo-Plus” is no exception. Within the ENERGO-PLUS consortium, the company cooperates with the Polish company TWERD ENERGO-PLUS Sp. z o.o., which has experience in manufacturing inverters (certified in accordance with European Union requirements and the NCRFG standard, with the possibility of integration into SCADA systems of any manufacturer) and commissioning BESS control systems for Polish companies. An advantage is the fact that the inverters are not tied to cloud technologies and can be relatively easily configured for remote control in full compliance with customers’ requirements; they can operate in both on-grid and off-grid modes. LLC “NVP “Energo-Plus” intends to supply the relevant equipment and provide energy audit, energy management and BESS control system commissioning services to Ukrainian companies as well. At present, LLC “NVP “Energo-Plus” is at the final stage of developing its own SCADA system.
Automated BESS control systems are indispensable if the owner of an energy storage facility has energy facilities located far from one another that require synchronous control of all energy storage installations simultaneously.
– What needs to be done right now – by the state, the regulator and business – so that Ukraine does not simply purchase BESS, but creates a fully-fledged competitive and investment-attractive market around energy storage?
– To answer this question, let us look briefly at the history of the development of our electric power industry. The active development of solar power plants began back in the distant 2010s, with another iteration in 2016–2017. At that time, equipment (panels, inverters, etc.) from foreign countries was actively purchased and installed. But later, solar panels began to be manufactured by Ukrainian companies themselves: KNESS PV, Promsvyaz, Kvazar, LLC “Embud”.
The same applies to BESS: if the equipment is currently manufactured by foreign companies, in the near future the state and business need to focus their efforts on manufacturing domestic equipment. This process is already underway with inverters. This is particularly important for critical infrastructure facilities, where access to foreign cloud storage systems may pose a threat to the operation of such enterprises. With the production of domestic energy storage systems, the situation is almost at zero, despite the fact that the country has all the opportunities to do this, primarily its mineral resources. Of course, it is difficult to do this under wartime conditions, but strengthening our country’s energy independence, including through the production of domestic energy storage systems, and reducing the delivery time for this equipment to Ukrainian enterprises is a priority task that the industry and state leadership should set for themselves.
The state should also be more open with investors regarding the actual need for BESS capacity, the prospects for the development of all types of generation in Ukraine, and problems with the electricity grids to which energy storage systems are planned to be connected; it should not influence the development of the electricity market through non-market mechanisms or create additional financial and technical obstacles to the implementation of BESS construction projects.
In my opinion, there is also no need to focus exclusively on involving BESS for the needs of the electric power industry and operation in Ukraine’s electricity market. The state needs to create conditions under which energy storage systems can be effectively used for the functioning of other sectors of the country’s economy.
The development of BESS for Ukraine is much more than ensuring backup power supply during blackouts and applying forced electricity consumption restriction schedules. It is about the opportunity to strengthen the resilience of Ukraine’s power system under wartime conditions, effectively use BESS capabilities in the electricity market, and involve energy storage systems not only for the needs of the country’s energy sector but also for other sectors of the economy. To achieve this, simply increasing the number of storage systems is not enough. What is needed are clear rules and guidelines for investors, systematic planning of the power system’s needs, and domestic technological solutions.
It is precisely whether Ukraine can turn the current boom of interest in BESS into a well-considered development of the industry that will determine whether energy storage systems become yet another imported piece of equipment or one of the key elements of the new Ukrainian energy sector and new horizons for the development and strengthening of our country.
