20.08.2026
On September 17 in Kyiv, Energy Club will hold the forum “Energy of Freedom: Sustainability and New Opportunities of the Energy Storage Systems Market in Ukraine”. The focus is on the future of the ESS market, its investment attractiveness, practical models of operation and the role of storage systems in strengthening the sustainability of the Ukrainian energy system.
The development of this market depends not only on technologies and the cost of equipment. No less important are the rules by which investors and operators will operate: the procedure for connection, commercial accounting, participation of UZE in various market segments, licensing, network payments, land and urban planning issues. That is why a special emphasis of the forum will be placed on the legal and regulatory aspects of the development of energy storage systems.
One of the main speakers of the forum will be Maksym Fedotov, a lawyer, CEO and founder of the law firm FEDOTOV&PARTNERS. In an interview with the Energy Club media department, he talked about how Ukrainian legislation already meets the needs of the ESS market, what remains the biggest legal risk for investors today, what changes the regulatory environment needs, and what can make the Ukrainian energy storage market truly attractive for long-term investments.
– Mr. Maksym, energy storage systems are today called one of the main elements of Ukraine’s energy security. Is Ukrainian legislation keeping up with the pace of development of this market? What legal gaps do you consider the most critical?
– In short, it is keeping up, but with a lag. Compared to the situation two years ago, the gap between the market and regulation has narrowed significantly, but the law is still catching up with the market rather than forming stable and predictable rules for it in the future.
The basis for the energy storage facility (hereinafter referred to as the ESF) market was laid by Law No. 2046-IX of February 15, 2022, which entered into force in June of the same year: the concepts of “energy storage facility” and “ESF operator” appeared in the Law “On the Electricity Market”, storage became a separate type of activity, and the ESF operator was an independent market participant. Then the NEURC approved licensing conditions, changed the codes of transmission and distribution systems, market and commercial accounting rules, and regulated individual models of combining generation and storage — but it did so slowly, sometimes chaotically, and not always at the pace of market demand.
The next stage was Law No. 4777-IX of February 10, 2026, which changed the framework for the functioning of energy markets and the conditions for the operation of UZs in the energy system. The National Commission for the Regulation of Energy and Utilities of Ukraine has already transferred these norms to the subordinate legislation level – through amendments to the Retail Market Rules No. 312, Procedure No. 2651, the Commercial Accounting Code and the Distribution Systems Code.
I consider the fragmentation of legal regulation to be the most critical gap today. An investor has to simultaneously take into account the Law “On the Electricity Market”, licensing conditions, the Transmission System Code or the Distribution Systems Code, the Commercial Accounting Code, the Market Rules and special regimes that change regularly.
The least unified are the urban planning and land blocks: there is no special regime for UZs, so the relevant requirements have to be derived from the general norms of urban planning and land legislation. Instead, the issues of connection, delimitation of the capacity of withdrawal and supply, joint connection and commercial metering are significantly detailed by the latest changes of the National Commission for the Regulation of Energy and Power Generation of Ukraine, a significant part of which will come into force on September 1, 2026.
The issue of network payments has also received a legislative solution: for UZE, the fee for transmission, distribution and dispatching is determined based on the absolute difference between the monthly volumes of withdrawal and supply of electricity to the external network. UZE’s participation in the balancing market and the ancillary services market is directly provided for by the Law and the Market Rules. Therefore, the main challenges today lie mainly in the area of practical implementation, qualification and technical integration, and not in the absence of a regulatory model. This is the key change of the last two years.
– Investors are ready to invest only when they see clear rules of the game. What legislative or regulatory changes do you think could be the strongest signal for the development of the ESS market in Ukraine?
– The strongest signal for investors is a predictable long-term model of work in the market. An investor in storage systems plans a project for ten or more years ahead, so regulatory predictability is often more valuable to the investor than a one-time preference.
It is necessary to ensure a practical possibility to combine different sources of UZE income – arbitrage on DAM/IDR, balancing, ancillary services and, in the future, flexibility services with clear rules for capacity availability, accounting, and prevention of double counting of the same resource.
Practically, five areas can be distinguished.
1. Predictability of regulation and protection of already made investments. For significant changes in the rules, clear transition periods and mechanisms should be in place that allow the investor to predict the impact of the new regulation on an already implemented project.
2. Stability of the network tariff regime. The basic special approach to network payments for UZE has already been formed. The next task is to ensure its consistent application to different technical configurations of UZE and to prevent regulatory changes that unpredictably worsen the economics of already implemented projects.
3. Long-term competitive contracts. These are contracts for capacity, flexibility and ancillary services suitable for bank financing: without a forecasted cash flow, the project does not pass the credit committee.
4. Transparent connection procedures. Fast procedures with real capacity reservation are needed, rather than formal confirmation of intention.
5. Sub-legal detailing of the self-generation mechanism. This direction has already been partially implemented. Amendments to the PRREE and to the Resolution of the National Commission for the Regulation of the National Energy and Power Sector of Ukraine No. 2651 of December 29, 2023 “On Approval of the Procedure for the Sale and Accounting of Electricity Generated by Active Consumers and Settlements for It” allowed the parties, by mutual agreement, to make settlements for the released and withdrawn electricity without applying netting – in separate accounts, with payment of the cost of the released energy in favor of the active consumer by the 15th of the month following the settlement. Separately, this is expressly provided for business entities on a simplified taxation system, for which netting was a tax trap.
This change increases the transparency and predictability of the cash flows of an active consumer: the sale of electricity can form a separate cash income, which is easier to take into account in the financial model of the project.
– How legally clear is the status of the owner of the energy storage system today? Are the issues of its participation in various segments of the electricity market sufficiently regulated?
– The status of the UZE operator today is much more defined, not only in the retail, but also in the wholesale segments of the market. Here it is legally important to distinguish between the owner of the installation and its operator. For participation in the market, the status of the UZE operator is decisive, and today it is already quite clearly defined by law.
The latest changes of the NEURC have further detailed the retail model of UZE operation. The operator of the energy storage facility has received a directly enshrined right to provide electricity to the consumer’s electrical installations that have a common connection point with the UZE to the DSO or TSO networks, and to sell electricity to such a consumer under a purchase and sale agreement without obtaining a license for the supply of electricity. A prerequisite is the proper organization of commercial accounting.
At the same time, this regime is delimited from backup electricity supply: the UZE operator is excluded from the list of entities that provide backup electricity supply under clause 2.4.6 of the Retail Market Rules. Thus, the sale of electricity from the UZE to a consumer with a common connection point has received an independent regulatory structure.
What remains unresolved is not the status as such, but the applied issues of a specific project model: building a commercial accounting scheme, registration of permitted withdrawal and release capacities, qualification of UZs for the provision of balancing and auxiliary services, interaction with TSOs and DSOs, and application of new rules to complex hybrid facilities that combine consumption, generation, and storage of energy.
Therefore, it is more correct to say that the “UZs on the market” model already has a formed regulatory basis, and the main challenge is gradually shifting from determining the status of the storage system itself to the practical implementation of relevant rules for specific technical and contractual models.
– Projects to install energy storage systems are already being implemented in Ukraine. What legal risks do their initiators most often face at the preparation and launch stage?
– Risks arise even before the actual launch of the system, and the main challenge lies not so much in the lack of regulation, but in the correct choice of the legal and technical model of a specific project.
I will highlight five blocks that are important to consider.
1. Connection and capacity. For a UZE, it is fundamentally important to determine not only the installed capacity of the equipment at the design stage, but also the permitted contractual values of the selection and release of electrical energy at a specific connection point. A typical risk arises when the technical characteristics of the UZE allow releasing more power into the network than is provided for by the contract and the passport of the distribution or transmission point. In such a situation, the actual operating mode of the installation has to be limited or undergo a procedure with changes in connection parameters.
2. Commercial accounting. For UZE, accounting is not an auxiliary, but a structural element of the market model. This is especially true for facilities where consumption, generation and storage are simultaneously combined or where electrical installations belong to different entities. The commercial accounting scheme must be designed simultaneously with the electrical scheme, since it should allow for the separate determination of the origin and directions of electrical energy flows: how much is produced by generation, how much is selected for charging the UZE, how much is released from the storage, consumed on the site and transmitted to the external network.
3. Qualification of the work model. Even before launch, it is necessary to determine whether the UZE will operate as an independent operator in the wholesale market segments, as part of an active consumer facility, together with a generating installation, or will sell electrical energy to a consumer with a common connection point. Each of these models has different contractual structure, requirements for commercial accounting, network contracts and licensing. Incorrect qualification of the model at the beginning of the project may require restructuring of the entire contractual and technical structure even before launch.
4. Licensing and market access. It is necessary to determine in advance who exactly will be the operator of the UZE, whether its activities are subject to licensing and in which market segments it is planned to sell electricity or provide services. This is especially important for large BESS and projects that plan to combine arbitrage on the DAM and VDR with the balancing market or ancillary services.
5. Land and urban planning issues. Before purchasing and installing equipment, it is necessary to check the proper right to use the land plot or site, approval from the owner of the facility and electrical networks, urban planning and permitting regime for installing the container system, as well as requirements for project documentation.
Therefore, the biggest risk for the initiator today is not the lack of legal status of the UZE as such, but the situation when the technical scheme, connection model, commercial accounting and contractual structure are designed separately from each other. For BESS, these issues must be agreed upon even before purchasing equipment.
– Ukraine is integrating into the European energy space. What European approaches to regulating energy storage systems should be implemented first?
– The European benchmark today is no longer only Directive (EU) 2019/944 and Regulation (EU) 2019/943, but also the 2024 electricity market design reform. Its key logic is that storage should not be considered as a separate exception to the rules for generation or consumption, but as an independent source of flexibility in the energy system.
This logic leads to several approaches that should be implemented first.
Equal access to system markets. ESOs should be able to participate on equal terms in the balancing market, provide ancillary services and, where applicable, participate in capacity adequacy mechanisms. Qualification requirements should be based on the actual ability to provide the service, and not on the type of technology.
Taking into account the dual role of the storage device. The European approach requires taking into account both the withdrawal of electricity during charging and its subsequent release, without creating an unjustified double tariff or tax burden. For Ukraine, it is relevant to bring this model to a consistent application for different schemes of operation of UZE.
Flexible connection. If there is not enough free capacity in a certain network node, this does not necessarily mean a refusal to connect. The European model allows you to establish guaranteed and flexible withdrawal and release capacity with the possibility of temporarily limiting operating modes. For Ukraine, where the shortage of network capacity is often one of the main barriers for new UZE, this approach is especially practical. Given that Ukraine has already begun implementing the relevant mechanism provided for by the Distribution Systems Code and the Transmission System Code, the key task now is to ensure its uniform and practical application by system operators.
If we boil it down to three things, the most important for Ukraine are a full-fledged flexibility market, practically working aggregation and flexible connection. The basic status of the UZE, the right to operate in different market segments and a significant part of the issues of network payments have already been settled. The next stage is to create mechanisms under which the accumulator can monetize all the services that it is technically capable of providing.
– One of the main topics of the forum will be the economics of ESS projects. To what extent does the current regulatory framework allow building effective business models for such investments, and what currently hinders their payback?
– Today, the regulatory framework already allows building economically different ESS models – from work “behind the meter” to full participation of the accumulator on the market. Therefore, the main question is gradually shifting from “can this model be legally implemented” to “how predictable its revenues are and whether long-term financing can be attracted for them”.
The biggest challenge to payback can be considered the lack of a sufficient share of long-term forecasted revenue. Investment in BESS is capital-intensive, and a significant part of the potential future revenue depends on future price spreads and demand for balancing and ancillary services. For bank financing, a model in which part of the revenue is contracted for several years, for example, through developed mechanisms for purchasing flexibility or other long-term products, would be much stronger. The Regulator itself calls the development of mechanisms for rewarding flexibility one of the next tasks of the market.
Therefore, the main limiting factor for ESS today is no longer the lack of permitted business models, but their ability to be acceptable for bank and debt financing. This is influenced by the cost of capital, the predictability of arbitrage revenues on the DAM and IDR, the balancing market, ancillary services and flexibility services, as well as consumer cost savings, available connection capacity and the stability of market rules.
The market for energy storage systems in Ukraine is already moving beyond experimental projects. The next task is to create conditions under which technological potential will be transformed into real investments, new business models and additional stability of the energy system.
And here it is not only megawatts of installed capacity that are important, but also clear rules of the game. Predictable regulation, transparent access to markets, the ability to monetize flexibility services, and protection of investments can become the foundation on which the Ukrainian ESS market can scale.
This is exactly what the participants of the Energy Club forum will talk about – not only about technology, but also about rules, economics, and responsibility for the future of the energy system – on September 17 in Kyiv.
