On 11 March 2026, Law of Ukraine No. 4777-IX “On Amendments to Certain Legislative Acts of Ukraine Regarding the Improvement of the Functioning of Energy Markets, Competitive Conditions for the Production of Electricity from Renewable Energy Sources, and the Strengthening of Energy Resilience” entered into force (the “Law”).
The Law materially updates the legal framework for renewable energy projects, introduces flexible grid connection, broadens the use of battery energy storage systems (“BESS”), clarifies certain issues regarding active consumers, and further develops the system of guarantees of origin (“GoO”).
At the same time, the Law is best viewed as a meaningful improvement of the legal framework rather than a complete de-risking instrument: in several areas, its practical effect will depend on secondary legislation, contractual implementation, and market practice.
1. Auctions: a better support model, but not a complete de-risking tool
The Law extends auctions for support quotas until 31 December 2034 and refines several auction parameters. The support period for winning projects remains 12 years. The Law also allows the Government to introduce additional annual quotas during the year, caps the share of the annual and additional quota that may be obtained by one entity together with its affiliates at 50%, reduces the main performance security to EUR 10/kW, introduces an additional EUR 10/kW cash guarantee option for bid security in favour of the Guaranteed Buyer, and allows a +/-10% deviation in installed capacity without treating it as a breach.
Most importantly, the Law removes the earlier two-way settlement logic, under which a producer could owe payments to the Guaranteed Buyer if the reference market price exceeded the auction price. This change enhances the clarity of the support model for the structuring of new projects and their assessment by lenders.
Practical significance: the legal framework is more financeable than before, but the Law does not by itself eliminate payment-chain risk or broader market settlement risk. For lenders, that distinction remains critical.
2. Solar + BESS: support is available, but only for substantive hybrid projects
The Law reserves at least 10% of the annual auction quota for solar plants with energy storage installations. At the same time, it sets strict eligibility criteria for that category. The BESS must have a power capacity equal to at least 80% of installed generation capacity, its storage capacity must be at least 2 kWh per 1 kW of solar generation capacity, and support under the market premium mechanism is unavailable for two consecutive hours between 10:00 and 16:00. The maximum bid price for this category is set at EUR 0.12/kWh.
In practical terms, the Law does not support every project labelled “solar + battery”. It rather supports a narrower category of hybrid projects capable of providing actual system flexibility rather than merely daytime solar output.
Practical significance: the Law is clearly intended to support projects that offer genuine system flexibility rather than nominal “solar + battery” configurations. The commercial viability of this category will, however, depend on whether the market considers the applicable thresholds workable and sufficiently competitive.
3. Grid access and storage: promising tools, with practical value still dependent on follow-up regulation
One of the Law’s most important changes is the introduction of flexible grid connection. Ukrainian law now expressly allows connection with limited permitted capacity, including partially guaranteed capacity, and prevents the TSO/DSO from refusing that option if properly requested. In addition, the Law contemplates technical means of automatic limitation or disconnection on both a temporary and permanent basis.
The Law also expands the single connection point approach beyond generation to include storage and consumption. It clarifies the licensing test for storage by reference to total installed capacity at one metering site, regardless of ownership, and confirms that a producer may use storage without a separate storage licence if the existing permitted injection capacity is not exceeded. It also allows a storage operator to sell electricity to a consumer sharing a common connection point, without a supply licence, provided commercial metering is in place.
Practical significance: these changes may be particularly relevant for projects in grid-constrained regions and for industrial-site projects combining generation, storage, and consumption. Their practical value, however, will depend heavily on secondary legislation and the relevant contractual arrangements.
4. Active consumers: a clearer tax and settlement framework
The Law clarifies that self-generation agreements with active consumers applying the simplified taxation system must allow settlements without netting. This is a targeted but important clarification for active consumers operating under that tax regime.
Practical significance: this change removes one source of uncertainty by addressing the inconsistency between netting-based settlements and the Tax Code requirement that single-tax payers settle in monetary form. It does not, however, fully resolve the tax position of active consumers applying the simplified taxation system, as a separate issue remains under the Tax Code in relation to the production and sale of electricity as an excisable good.
5. Guarantees of origin: a more developed legal framework
The Law materially develops Ukraine’s GoO regime. It clarifies the status of the GoO register, expands NEURC’s powers in this area, preserves the principle of free circulation of guarantees, allows for mutual recognition with EU Member States and Energy Community Contracting Parties, and authorises NEURC to advance Ukraine’s domain protocol for AIB purposes.
Practical significance: these changes strengthen the domestic legal basis for the issuance, circulation and recognition of GoO and bring the Ukrainian framework closer to European practice. At the same time, the practical cross-border use of Ukrainian GoOs will continue to depend on further technical and institutional integration.
Additional notes
For further information on the topic please contact senior partner Glib Bondar or managing associates Rostyslav Mushka and Inna Erbelidze, or by telephone +380 44 591-3355 or via e-mail.
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Posted on March 23, 2026
