Guidebook for Energy Storage in Ukraine: market development and regulatory framework

1. Current Trends and Drivers of Ukraine’s Energy Storage Market

Renewable energy sources’ (RES) generation has emerged as a strategic priority in the development of Ukraine’s energy market and national economy, according to Ukraine`s 2035 energy strategy. As the country strives to enhance its energy security, integrate with European market, and meet decarbonisation targets, the deployment of RES — particularly wind and solar — has taken a central role in national energy policy.

See Picture 1 below to learn more about the Transmission System Operator`s estimates on the optimal evolution of Ukraine`s electricity generation mix to be developed by 2030.

Picture 1. 2025 TSO`s view on the needs in new capacity (GW) of Ukraine’s unified energy system by 2030

Notably, between 2022 and 2024, more than 1.8 GW of new renewable capacity was commissioned, including over 264 MW of wind[1] and roughly 1.6 GW of solar installations. (To learn more about the types of the electricity production in Ukraine, see Picture 2 below).

Picture 2. Electricity production in Ukraine, March 2025, %

Source: Expro, https://expro.com.ua/en/tidings/the-share-of-resin-the-structure-of-electricity-generation-in-march-2025-was-almost-9

The rapid growth of wind and solar energy introduces new challenges. These technologies are inherently intermittent and depend on weather conditions, leading to fluctuations in electricity output. Such variability can place significant strain on the power grid, creating imbalances between supply and demand and complicating frequency regulation. As a result, the integration of large shares of variable renewable energy requires complementary infrastructure capable of storing electricity and releasing it when generation is low or demand peaks.

In this context, Battery Energy Storage Systems (BESS) play an essential role in strengthening grid stability, ensuring a steady electricity supply and facilitating the efficient integration of RES into Ukraine’s energy system. BESS refers to an installation consisting of one or more rechargeable batteries and associated control equipment, designed to store electricity from the grid or distributed generation sources and release it when needed, thereby supporting grid stability, flexibility, and reliability. Beyond its basic function, energy storage demonstrates its versatility through projects that can offer multiple services to the electricity system. To learn about the opportunities provided by BESS facilities, see Picture 3 below.

Picture 3. Possible services of BESS facilities in the electricity market

Recognising the importance and high value of energy storage, foreign investors and Ukrainian energy companies have intensified efforts to develop large-scale BESS projects, as outlined in Table 1. Recently commissioned and planned BESS projects in Ukraine, which provides an overview of some of the recently commissioned and planned BESS projects in Ukraine.

The growing portfolio of these projects signals not only a technological shift in Ukraine’s energy sector, but also the emergence of a new market environment that will require careful legal design to ensure efficiency, investor protection, and alignment with European energy integration goals.

2. Legal and regulatory landscape of energy storage in Ukraine

Table 1. Recently commissioned and planned BESS projects in Ukraine

The primary legislative acts governing energy storage in Ukraine are the Law of Ukraine “On the Electricity Market” No. 2019-VIII dated 13 April 2017 (i.e. Electricity Market Law) and Market Rules No.307 dated 14 March 2018. Energy storage^[2] in Ukraine is overseen by the National Energy and Utilities Regulatory Commission (NEURC), a regulatory body for the electricity sector. The NEURC is an independent public authority with the power, among others, to:

• issue mandatory resolutions, orders and regulatory acts;
• establish licensing conditions and grant licences for energy storage;
• establish tariffs and supervise, monitor and control the behaviour of market players.

The Electricity Market Law establishes that energy storage may be carried out by an energy storage facility operator, which is an individual (including an individual entrepreneur) or a legal entity (except for pumped storage power plants) engaged in the storage of energy for the purpose of selling electricity discharged from the energy storage facility or for the purpose of providing ancillary services or balancing services using the energy storage facility (pursuant to Part 1 of Article 1 of the Electricity Market Law).

Ukrainian legislation does not set any limitations on the intended use of BESS facilities. Hence, in practice, these facilities are utilised by different market participants for a variety of purposes outlined in Picture 4 below.

Picture 4. BESS market players and the purpose of use of BESS facilities

2.1. Business models for BESS in Ukraine

As most participants in the electricity market can act as an energy storage facilities operator, various models for the utilisation of BESS facilities have emerged in Ukraine, each offering distinct features and advantages. Table 2 below presents the main operating models of BESS facilities and outlines their respective characteristics.

Table 2. Operational Models of BESS Facilities in Ukraine`s Electricity Market

2.2. Licensing requirements

According to the NEURC’s Resolution No.798 “Licensing Conditions for Carrying Out Business Activities in the Field of Energy Storage” dated 22 July 2022 (Resolution No.798), energy storage activity is generally subject to licensing if the total installed capacity of an entity’s BESS facilities amounts to or exceeds 150kW. The legislation provides additional exceptions permitting energy storage without obtaining the corresponding licence (to learn more about exceptions, see Table 3 below).

Table 3. Exceptions under which energy storage may be carried out without obtaining a mandatory energy storage licence

If the BESS operator does not meet the above-mentioned conditions, then it must obtain a separate licence for energy storage. Table 4 below contains key information on energy storage licences and the procedure for obtaining one.

Table 4. Summary of licensing conditions for energy storage in Ukraine

2.3. Ancillary services market

The ancillary services market is a distinct segment of the electricity market where Ukrenergo, Ukraine’s Transmission System Operator (TSO), procures services required to maintain the reliable operation of the power grid on an auction basis. Ancillary services may be offered and purchased to:

a)   facilitate the development and regulation of active power and energy frequency in the Unified Energy System of Ukraine, in particular:

• providing Frequency Containment Reserves (FCR);
• providing Frequency Restoration Reserves (FRR);
•  providing replacement reserves.

b)   maintain the reliability and quality of electricity supply in the Unified Energy System of Ukraine, in particular:

• voltage and reactive power regulation services;
• services to restore the functioning of the unified energy system of Ukraine after a systemic blackout.

Given that the BESS industry in Ukraine is still at an early stage, TSO has begun actively attracting investments through newly-introduces procedure of special auctions for ancillary services. The winners of special auctions will receive a fixed-term contract with TSO for five years on FCR/FRR provision with the possibility to delay the services commissioning for up to 18 months from the date of the auction. The winners will effectively have 18 months from the date of the special auction to attract financing, build, commission and certify their BESS assets.

During 2024-2025, TSO has conducted four special auctions to purchase ancillary generation services:

a)   one auction for 99 MW of FCR; and

b)   three auctions for approx. 1 GW of automatic symmetrical FRR.

The winners of the first auctions have already commissioned newly constructed BESS and commenced the provisions of the ancillary services.

TSO aims to conduct an additional special auction in 2026 for at least 500MW of FRR. As of 9 December 2025, the terms of this auction have not been published.

Conclusion

Ukraine’s transition to a low-carbon, secure, and EU-integrated energy system has accelerated the deployment of renewable energy and highlighted the critical role of energy storage. BESS technologies not only address the intermittency of wind and solar power, but also open new opportunities in ancillary services, balancing markets, and commercial energy trading.

The country’s regulatory framework is evolving to accommodate diverse business models, streamline licensing, and ensure technical reliability. Market maturity, however, will depend on clear, stable rules, competitive procurement, and continued investor confidence. With significant projects already underway and growing demand for grid flexibility, Ukraine is poised to make energy storage a cornerstone of its sustainable energy future.

To learn more about Ukraine`s electricity and RES markets, see the recently updated CMS Ukraine Investing and Doing Business in Ukraine 2025 Guide, available at this link.

For more information on Ukrainian electricity market regulation and upcoming opportunities for investors, contact your CMS client partner or the CMS experts who wrote this article: Vitaliy Radchenko, Maryna Ilchuk.
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[1] At the same time, according to Andriy Konechenkov, Chairman of the Board of the Ukrainian Wind Energy Association, Ukraine is currently constructing over 700 MW of new wind power capacity.

[2] According to article 1 of the Electricity market law, energy storage is an activity associated with the extraction of electricity for the purpose of delaying its final use to a time later than when it was generated, converting it into another form of energy in which it can be stored, storing it, and subsequently converting it back into electricity for delivery to the transmission system, distribution system, power plant network, and consumer network.

[3] Applies only to consumers purchasing electricity under an electricity supply agreement.

[4] To learn more about exceptions, see Table 4. Exceptions under which energy storage may be carried out without obtaining a mandatory energy storage licence.