Ukraine publishes draft tender documentation for 1.5 GW capacity auction

On 7 July 2026, NPC Ukrenergo (Ukrenergo) published draft tender documentation for Ukraine’s competition for the construction of 1,505 MW in new manoeuvrable generation capacity. The publication marks the next stage in implementing the support scheme announced in May 2026.

The draft provides investors with insights into the auction mechanics, qualification requirements and project obligations while allowing market participants to submit comments before the documentation is finalised.

The tender documentation is available (in Ukrainian) at this link. CMS’s analysis of the support scheme is available at this link.

Key takeaways

• the auction will follow a two-stage qualification and price competition process: qualification followed by price competition;
• bidders must provide two financial guarantees: a participation guarantee and, if successful, a substantially larger performance guarantee;
• only projects capable of delivering balancing and frequency restoration services will qualify;
• successful bidders will receive five years of one-sided premium support during designated peak hours;
• the winner will enter into a detailed five-year support agreement with Ukrenergo;
• strict eligibility requirements apply including sanctions screening, ownership restrictions, equipment-origin requirements and limitations on receiving other state support;
• bids may be submitted at Ukrenergo’s office until 6 October 2026, 15:00 Kyiv time; and
• comments on the draft documentation may be submitted until 26 July 2026.

Background

On 22 May, the Cabinet of Ministers of Ukraine launched a long-awaited competitive support mechanism for new flexible generation.

The auction will procure 1.5 GW of flexible generation to strengthen balancing capabilities across four regional lots:

• Lot 1 (Kyiv city, Kyiv and Chernihiv regions): 250 MW;
• Lot 2 (Sumy, Kharkiv and Poltava regions): 872 MW;
• Lot 3 (Dnipropetrovsk region): 283 MW; and
• Lot 4 (Odesa region): 100 MW.

The regional allocation represents areas where the transmission system currently faces the greatest balancing constraints.

The support mechanism operates as a one-sided contract-for-difference. Successful bidders receive support for five years when market prices fall below the awarded bid price (capped at EUR 0.2792/kWh).

Tender process

Only bidders that successfully complete the qualification stage will be eligible to participate in the price competition.

Within each regional lot, bids will be ranked from the lowest price until the tendered capacity has been allocated. 

Financial commitments of participants

Before submitting a bid, each participant must pay a participation guarantee of the Ukrainian hryvnia equivalent of EUR 5,000 per MW of proposed capacity with a transfer into the Ukrenergo account.

Following award, the successful bidder must provide a performance guarantee equal to EUR 15,000 per MW, either as: 

• funds transferred to Ukrenergo’s bank account; or
• an irrevocable bank guarantee from a qualifying bank (minimum “uaA” national rating or “A-” international rating).

These guarantee requirements mean bidders will need committed financing and bank support in advance.

Technical requirements favour flexible thermal generation

The support targets flexible dispatchable generation capable of supporting system balancing.

Among other requirements, generating units must:

• have a minimum installed capacity of 10 MW;
• achieve full output within 30 minutes of receiving a dispatch instruction;
• activate frequency restoration reserves within five minutes;
• operate continuously for at least 16 hours;
• perform at least two start-stop cycles per day;
• provide black-start capability;
• comply with Type C or Type D Transmission System Code requirements; and
• have a minimum design life of 20 years (or 100,000 operating hours).

These specifications favour flexible gas-fired reciprocating engines and gas turbines designed for balancing.

Critical infrastructure and security requirements

Successful projects must implement the second-level protection for critical infrastructure according to CMU Resolution No. 471 dated 26 April 2024 “Certain Issues of Engineering Protection of Critical Infrastructure”.

In addition, equipment must:

• be entirely new;
• not originate from, or involve manufacturers affiliated with, the aggressor state; and
• not involve companies subject to international sanctions or designated by Ukraine as sponsors of war.

Eligibility rules

The documentation introduces restrictions on eligible participants. Among others, bidders cannot:

• have overdue debt (unfulfilled obligations) to Ukrenergo;
• be subject to Ukrainian or international sanctions;
• have ownership linked to the aggressor state;
• operate from occupied territories;
• use projects that have already received state support for construction or operation; or
• submit projects that were commissioned before 22 May 2026.

Performance-based remuneration

In line with previous announcements, support is payable only where:

• electricity is actually generated and sold on the bilateral, day-ahead or intraday markets during the designated support hours; and
• the market price is below the successful bidder’s awarded price.

The support amounts to the difference between the market price and the awarded price. 

Restrictions on combining state support 

Bidders must confirm that no support or cost reimbursement has been received for the construction, modernisation or operation of the submitted facility.

In addition, the proposed project:

• may not simultaneously participate in any other auction or tender aimed at obtaining additional state payments, preferences or support for generation capacity;
• may not participate in ancillary services auctions that provide investment or construction support for the same generating asset; and
• must not receive any other public support directed towards the construction or development of the same generating capacity.

The only exception is fully repayable financial assistance such as commercial loans.

Timeline

The documentation provides detailed tender participation guidelines, as set out in the table below.

Practical implications for investors

The draft documentation demonstrates that success in the auction will depend on more than submitting the lowest bid.

Although the documentation remains in draft form, prospective bidders should already assess whether their projects can satisfy qualification requirements, including:

• technology selection capable of satisfying all balancing requirements;
• permitting and engineering work sufficient to meet the 20-month commissioning deadline;
• financing arrangements covering both financial guarantees;
• supply chain due diligence demonstrating compliance with sanctions and equipment-origin requirements; 
• EPC contractor availability; and
• commercial modelling based on the payment formula and seasonal support windows.

The publication of the draft documentation also gives prospective bidders an opportunity to engage with the tender commission during the consultation process to seek clarification before the rules are finalised.

Conclusion

The publication of the draft documentation moves Ukraine’s long-awaited flexible generation auction significantly closer to launch. Although certain provisions may still change after the consultation process, the draft provides investors with sufficient detail to begin assessing project eligibility, financing structures and bidding strategy. Early preparation will be particularly important given the technical qualification requirements, financial guarantees and relatively short implementation timetable.

For more information, contact your CMS client partner or the CMS experts who contributed to this article.