On 11 March 2026, the Law of Ukraine No. 4777-IX “On Amendments to Certain Laws of Ukraine Regarding the Improvement of Competitive Conditions for the Production of Electricity from Alternative Energy Sources and Strengthening Energy Resilience” (Law) entered into force.
This Law was created to enhance the auction mechanism for allocating support quotas for electricity generation from renewable energy sources (RES), also known as “green” auctions, and strengthen the sector’s investment attractiveness.
Key aspects of the Law
Picture 1 below illustrates the key aspects of the Law (available at the following link in Ukrainian).
Picture 1. Key aspects of Law No. 4777.
Below is a summary of the main points introduced by the Law.
1. “Green” auctions have been reformed, lowering barriers to entry and improving the investment case for new RES projects:
- the support has been extended to 31 December 2034;
- performance guarantees have been reduced to EUR 10,000 per MW;
- minimum generation quotas have been halved to 5%; and
- financial security options have been broadened.
2. Guarantees of Origin (GoO) are aligned with EU standards, opening cross-border green energy certification and strengthening commercial value for export-oriented and ESG-driven investors:
- a mutual recognition framework for GoO with EU member states and Energy Community Contracting Parties has been introduced; and
- the National Energy and Utilities Regulatory Commission (NEURC) has been granted the authority over Ukraine's EECS Domain Protocol.
3. Cable pooling is expanded, reducing infrastructure costs and enabling hybrid project structures:
- battery energy storage systems (BESS) eligibility for the cable pooling mechanism has been confirmed; and
- the range of permitted connection arrangements has been broadened, allowing electricity generation, storage, and consumption installations to share a grid connection point or connect to networks of other participants.
4. BESS integration has been significantly improved, lowering the financial, technical, and regulatory barriers to developing co-located BESS:
- network fees for co-located facilities (generation plus BESS) will be calculated on a net-difference basis;
- the licensing requirement for BESS facilities of up to 5 MW has been removed;
- licensed BESS operators have received the right to install generation facilities without obtaining a generation licence; and
- clarified the Distribution System Operator`s (DSO) interconnection fee calculations for hybrid RES-plus-storage projects.
5. Direct line rules have been relaxed for biomass and biogas: biomass and biogas facilities may now supply electricity to their own consumption sites via direct lines even where sites are separated by land plots owned by related parties or linear infrastructure (including roads, pipelines, railways, and power lines), reducing reliance on the public grid and lowering operating costs.
6. Flexible connection has been introduced, enabling faster project commissioning in constrained grid areas:
- developers may now opt for grid connection with partially guaranteed capacity rather than waiting for full network reconstruction;
- system operators may not refuse a developer’s application for flexible connection; and
- the NEURC will develop a detailed procedure, quality of which will determine the extent of the amendment’s positive impact.
7. Bilateral electricity sales outside the auctions have been extended to distributed generation: electricity producers operating generation facilities of up to 20 MW may now sell electricity via bilateral agreements outside mandatory auction processes, improving commercial flexibility and enabling more efficient capacity utilisation.
8. Clearer settlement rules for RES facilities have been established:
- a dedicated register of RES facilities in temporarily occupied territories has been envisaged;
- a special commission will be established to determine occupation dates and outstanding payment obligations; and
- solar purchase obligations of JSC “Guaranteed Buyer” (Guaranteed Buyer) have been limited to defined daylight hours to remove systemic imbalance risks caused by so-called night-time solar generation.
The following is a detailed overview of the changes introduced.
Detailed Overview
Amendments to “Green” Auctions Procedure
The Law introduces substantial reforms to the “green” auction framework, which serves as the primary mechanism for allocating support quotas for RES projects in Ukraine. The amendments are expected to reduce financial barriers for developers, extend the duration of the support scheme, and introduce greater flexibility in project implementation. Table 1 below highlights the most commercially relevant changes for developers and investors introduced by the Law.
Table 1. Key changes to the “green” auction mechanism under the Law
Expected Impact: The extension of the support scheme to 2034, coupled with reduced financial guarantee requirements and increased flexibility in project implementation, is expected to lower the barriers to entry for developers and enhance the overall investment attractiveness of new RES projects in Ukraine.
Guarantees of Origin for Electricity
The Law introduces a framework for the mutual recognition, on a reciprocal basis, of GoO issued by:
- EU member states;
- Energy Community Contracting Parties; and
- other countries, provided that these countries’ guarantees are also recognised by the EU and/or the Energy Community.
The detailed implementation framework is expected to be determined in the secondary legislation to be adopted by the NEURC.
To further facilitate the recognition of Ukrainian GoO, the Law expands the powers of the NEURC, granting it the authority to approve and amend the Ukraine’s EECS (European Energy Certification System) Domain Protocol. This protocol sets out the rules for the issuance, transfer and cancellation of GoO and constitutes a pre-requisite for Ukraine’s full membership in the Association of Issuing Bodies, a Europe-wide association of issuing bodies operating energy attribute tracking systems across all energy carriers and technologies.
In addition, the Law clarifies that GoO transferred by RES producers benefiting from feed-in tariff or feed-in premium schemes to the Guaranteed Buyer have no monetary value. This amendment addresses the ambiguity arising from previous wording, under which the value of GoO was deemed to be included in payments made by the Guaranteed Buyer under the relevant support schemes.
Expected Impact: Mutual recognition of Ukrainian GoOs with EU and Energy Community standards, combined with NEURC designation as the competent authority for the EECS Domain Protocol, is expected to facilitate cross-border green energy certification and strengthen the commercial attractiveness of Ukrainian renewable energy to export-oriented and ESG-driven investors.
Cable Pooling Mechanism
The Law also expands the list of installations eligible for cable pooling. Under the amended framework, electricity generation, storage, and consumption installations may:
- share a single grid connection point; or
- be connected to the networks of other electricity producers, storage operators, or consumers.
Previously, cable pooling in Ukraine was a regulatory and technical mechanism that allowed two or more electricity installations, typically located in close proximity, to share a single grid connection point. This approach has already gone beyond the more traditional EU model of combining a generation facility solely with a BESS.
Expected Impact: By expanding cable pooling eligibility to BESS and broadening the range of permitted connection arrangements, the Law is expected to enhance the efficient utilisation of renewable energy installations and improve grid connection efficiency, thereby reducing costs and potentially unlocking new opportunities for hybrid and co-located projects.
BESS Connection
The Law introduces a series of targeted amendments to the regulatory framework for BESS projects, both as standalone facilities and as co-located assets alongside renewable energy generation.
The amendments are expected to have the following impact for developers:
- Reduced network fees: producers operating co-located BESS will pay transmission, distribution and dispatching fees based only on the net difference between electricity withdrawn from and injected into the electricity grid;
- Simplified licensing for small-scale BESS: BESS facilities with a capacity of up to 5 MW may now be operated without a licence for electricity storage; and
- Clearer interconnection cost calculation: the Law specifies how DSO’s interconnection fees must be calculated for RES projects with co-located BESS, using the combined total of expected grid injection and withdrawal capacity.
These changes are expected to significantly improve the commercial and regulatory environment for BESS projects, by reducing financial, technical, and administrative barriers to developing hybrid projects in Ukraine.
Transmission, distribution and dispatching fees
The Law clarifies the calculation of transmission, distribution, and dispatching fees for producers operating co-located BESS alongside their generation facilities.
Producers operating co-located BESS will now pay fees for transmission, distribution of electricity, and dispatching management services based on the difference between:
- the monthly withdrawal of electricity by BESS from the grid; and
- the monthly injection into the grid of electricity previously withdrawn by such BESS.
Picture 2 below illustrates the new approach to calculating fees for transmission, distribution, and dispatching services.
Picture 2. New approach to calculating transmission, distribution, and dispatching fees.
Previously, this calculation methodology was provided only for operators with standalone BESS facilities. This approach does not apply to producers operating under the feed-in tariff or those that have switched from the feed-in tariff to the feed-in premium mechanism. Such producers must pay the relevant fees based on the full amount of electricity withdrawn from and injected into the grid.
Expected Impact: The new approach is expected to ensure that electricity producers with co-located BESS facilities are not subject to double payment for both the withdrawal and the injection of electricity. In practice, this is expected to significantly improve the economics of hybrid projects and attract more investors to install BESS facilities, which are now crucial for the Ukrainian energy system.
Importantly, the Draft Law No. 12087-d, adopted on 7 April 2026, introduces a slightly updated approach to the calculation of fees for BESS operators (i.e. market participants holding such status, as opposed to generators with co-located BESS). In particular, as of 1 May 2027, networks fees payable by BESS operators in respect of newly installed BESS facilities will be determined by the NEURC.
Licensing
The Law permits BESS operators to operate BESS facilities without a licence if their capacity does not exceed 5 MW. Electricity producers continue to have the right to use BESS without a licence, provided that such producers inject electricity into the grid within the limits permitted for the relevant generation facility.
Licensed BESS operators are also granted the right to install generating facilities alongside their battery energy storage systems without obtaining a separate licence for electricity generation. This is subject to the condition that the generation facilities not exceeding the limits for injection to and withdrawal from the grid established for the particular BESS facility.
Following the adoption of the Law, licensed BESS operators may co-locate generation capacity without a separate generation licence, which is expected to significantly simplify the regulatory pathway for hybrid BESS-plus-generation projects and reduce administrative burden for developers.
Expected Impact: By removing the licensing requirement for small-scale BESS facilities (up to 5 MW), the Law is expected to lower the barriers to entry for households and small/medium-sized businesses seeking to install their own storage capacity. This is expected to facilitate a broader deployment of distributed BESS across Ukraine, enabling end-users to store electricity during off-peak periods and draw on it during shortage hours, thereby reducing their exposure to supply limitations and contributing to overall grid stability.
Interconnection Fees
The Law clarifies the calculation of the DSO`s interconnection fee where a developer intends to build RES generation facilities alongside co-located BESS.
In particular, when calculating the interconnection fee, the total capacity of expected withdrawal from and injection to the grid must be taken into account. For example, if a co-located project envisages injection to the grid of 10 MW and withdrawal from the grid of 10 MW, the total capacity of 20 MW should be used for calculation purposes.
Picture 3 below illustrates the new approach to calculating DSO interconnection fees.
Picture 3. New approach to calculating DSO interconnection fees.
Previously, DSOs faced practical challenges in issuing technical conditions for the interconnection of such projects, as the legislation did not clearly specify how the interconnection fee should be calculated.
By clarifying how DSO interconnection fees should be calculated for hybrid projects, the Law removes a key source of regulatory uncertainty that had previously complicated the technical conditions process for such facilities.
It is expected that the NEURC will, within six months, amend its secondary legislation to clarify the procedure for issuance of technical conditions for the interconnection of RES projects with co-located BESS.
Market participants are expected to submit proposals to the NEURC regarding the content of the implementing legislation. In particular, market participants consider requesting the NEURC to amend the methodology for calculating the DSO interconnection fee so that the rates per kW for co-located projects are lower than those for standalone generation or BESS facilities.
Expected Impact: By resolving the ambiguity over how DSO interconnection fees are to be calculated for co-located projects, the Law is expected to facilitate the issuance of the DSO’s technical conditions for such projects and thereby accelerate their development.
Direct line connection
The Law also expands the use of direct lines for facilities operating on biomass and biogas.
Previously, RES producers were permitted to connect and supply their own consumption facilities via a direct line only where the installation met one of the following criteria:
- it was located on the same land plot as the electricity generation installation; or
- it was situated on adjacent land plots connected through internal electricity networks.
Under the Law, biomass and biogas facilities are permitted to supply electricity to their own consumption sites, even if these sites are separated by:
- land plots owned by related parties; or
- linear infrastructure (including public roads, pipelines, railways, and power lines).
Expected Impact: The expanded direct line rules are expected to provide biomass and biogas developers greater flexibility to supply their own consumption facilities across related land plots and linear infrastructure, thereby reducing reliance on the public grid and lowering operating costs for such facilities.
Flexible connection
The Law introduces the concept of “flexible connection” to transmission and distribution grids, aimed at facilitating faster grid access under conditions of limited network capacity.
Under this framework, a flexible connection allows a generating facility (or other electrical installation) to connect to the grid subject to limitations on permitted capacity. Permitted capacity under a flexible connection may be partially guaranteed, meaning that a portion of the capacity will be available at all times, while the remainder may be subject to curtailment.
The “flexible connection” will provide developers with the following benefits and challenges:
- faster grid access in constrained regions – flexible connection allows generating facilities to connect to the grid without waiting for full reconstruction or new construction of external networks, significantly reducing project timelines in areas of limited network capacity;
- reduced upfront infrastructure costs – by offering flexible connection as an alternative to network reconstruction, the Law removes the requirement for developers to finance or wait for costly external network upgrades prior to commissioning, lowering the capital expenditure required to achieve grid access; and
- increased exposure to curtailment risk – in exchange for faster and cheaper grid access, developers must accept that a portion of their permitted capacity may be curtailed when network limits are exceeded, which may affect projected revenues and requires careful risk allocation in project financing and offtake arrangements.
A developer may propose a flexible connection as an alternative to reconstruction or new construction of external electricity networks required for interconnection. The transmission system operator (TSO) or DSO may not refuse such a proposal.
From a technical perspective, flexible connections will include automated control systems at the connection point, enabling disconnection or load reduction where permitted capacity limits are exceeded.
Flexible connections may be permanent or temporary.
Temporary flexible connections are intended to allow the connection of new capacity while grid upgrades remain pending. In such cases, the timeline for granting full (i.e. unrestricted) connection will be based on approved transmission or distribution development plans or otherwise determined under applicable grid system codes.
While the introduction of flexible connection represents a positive step toward unlocking grid access and accelerating renewable deployment, the quality of implementing secondary legislation will be critical. In particular, the framework should ensure:
- transparent curtailment criteria;
- predictable dispatch restrictions; and
- clear allocation of curtailment risk.
Expected Impact: Flexible connection is expected to become a key tool for accelerating project timelines in constrained grid conditions – rather than waiting for full network reconstruction or new grid construction, developers may opt for a connection with a portion of capacity guaranteed at all times and the remainder subject to curtailment.
Bilateral sale of electricity by distributed generation
The Law permits electricity producers operating generation facilities with a capacity of up to 20 MW to sell produced electricity via bilateral agreements outside of mandatory auctions.
Previously, this option was available only to RES producers.
The primary beneficiaries of this amendment are expected to be producers operating gas-fired and co-generation facilities, as these typically fall within the 20 MW threshold.
Expected Impact: Extending bilateral sale rights to non-RES producers below 20 MW, in particular gas-fired and co-generation facilities, is expected to provide these operators with a direct route to the market outside the mandatory auction process, by improving commercial flexibility and enabling more efficient capacity utilisation.
Settlements with RES Facilities
Settlements with solar RES facilities
For SPPs operating under feed-in tariff or feed-in premium, the Law defines the periods of the day during which the Guaranteed Buyer is obliged to purchase electricity or provide market premium support.
In particular, the Guaranteed Buyer will purchase electricity injected to the grid during the following periods:
- from 1 April to 31 October – from 4:00 am to 11:00 pm; and
- from 1 November to 31 March – from 6:00 am to 9:00 pm
This provision was introduced at the initiative of the TSO and the Guaranteed Buyer to address the issue of “night-time generation” by solar power plants.
Expected Impact: By limiting the Guaranteed Buyer's purchase obligation to defined daylight hours, the Law is expected to align support payments more closely with actual solar generation profiles.
Settlements with RES facilities located in temporarily occupied territories
The Law introduces a comprehensive framework for addressing the status and settlement of renewable energy facilities located in territories temporarily occupied by the Russian federation. These provisions establish procedures for:
- identifying affected facilities;
- determining dates of occupation and de-occupation; and
- resolving outstanding payment obligations between market participants.
The TSO is required to establish, maintain, and publish on its official website a register of RES electricity generation facilities located in territories temporarily occupied by Russia (Register).
Picture 4 below illustrates the timeline for setting up the Register.
Picture 4. Timeline for setting up the Register.
Within 30 calendar days of the Law’s entry into force, the Ministry of Energy must establish a special commission (Special Commission), which will be comprised of:
- the NEURC;
- the Ministry for Development of Communities and Territories of Ukraine;
- the State Inspection of Energy Supervision of Ukraine;
- the TSO;
- the DSOs licensed to operate on territories that were occupied or are temporarily occupied; and
- the Security Service of Ukraine.
Within 45 calendar days of its establishment, the Special Commission must:
- approve the list of affected RES facilities located in (or previously located in) occupied territories;
- determine:
- the dates of occupation and de-occupation, and
- the time of termination and resumption of electricity supply from such facilities to the controlled part of Ukraine’s energy system;
- submit this information for inclusion in the Register.
Based on the Special Commission’s decisions, the TSO must include in the Register:
- the list of relevant RES facilities;
- the dates of occupation and de-occupation of the territories where such facilities are located;
- timestamps of termination and resumption of electricity supply to the controlled grid.
Under the new rules:
- electricity market participants must not purchase or make payments for electricity generated by facilities included in the Register for periods when such electricity is not supplied to Ukraine’s grid;
- payments already made for such electricity prior to the Law’s entry into force must be returned by producers within one month from issuance of adjustment invoices;
- following metering corrections, if a producer has outstanding liabilities to the Guaranteed Buyer (e.g. overpayments, imbalance charges, or consumption debts), the latter may unilaterally offset such amounts against its payment obligations; and
- for periods during which RES facilities are identified in the Register as not supplying electricity to Ukraine’s grid, the Guaranteed Buyer must exclude their generation and consumption volumes from imbalance calculations and from balancing group settlement.
Expected Impact: The new register and settlement framework is expected to provide long-awaited legal certainty for market participants for facilities in occupied territories, and enable the Guaranteed Buyer to settle outstanding feed-in tariff payments for 2022 and remove a material source of financial uncertainty from ongoing market settlements.
Conclusion
The Law represents significant progress in Ukraine's efforts to modernise its electricity market framework and enhance investment conditions for renewable energy projects. In particular, by reforming the green auction mechanism, introducing flexible connection options, clarifying fee structures for co-located BESS, and expanding cable pooling eligibility, the Law is expected to address longstanding regulatory barriers that have hindered sector development.
While the success of these reforms will depend largely on the quality and timeliness of implementing secondary legislation to be adopted by the NEURC, the Law establishes a solid foundation for accelerating Ukraine's energy transition and strengthening its energy resilience during a critical period.
For more information, contact your CMS client partner or the CMS experts who contributed to this article: Vitalii Radchenko, Maryna Ilchuk.
