Ukrainian Government Takes Further Step Toward Liberalisation of Direct Bilateral Contracts for Distributed and Renewable Generation

On 20 May 2026, the Government of Ukraine adopted Resolution No. 644 “On Amendments to the Procedure for Conducting Electronic Auctions for the Sale of Electricity under Bilateral Agreements” (“Resolution”). The Resolution introduces a significant exemption from mandatory exchange-based trading, permitting producers of distributed generation and renewable energy sources (RES) to participate in regulated electronic auctions on a voluntary basis only.

The regulated auction mechanism includes state-imposed price caps and standardised contractual arrangements. Under the new framework, eligible producers may instead enter into direct bilateral arrangements outside the exchange trading system.

The exemption applies broadly across the distributed and renewable generation sector, subject to limited exclusions. In particular, the exemption does not apply to electricity generated using blast furnace gas or coke oven gas. In the hydropower sector, eligibility is limited to micro, mini, and small hydropower plants.

The amendments represent an important step towards the liberalisation of the Ukrainian electricity market and align more closely with the principles underpinning the EU acquis communautaire. Prior to the adoption of the Resolution, the overwhelming majority of electricity producers were effectively required to sell electricity exclusively through centralised electronic auctions conducted under detailed state regulation. This framework materially constrained the development of direct off-exchange contractual structures, including corporate power purchase agreements (PPAs) between localised producers and end-consumers.

Legislative Background

The mandatory auction framework originated from Law of Ukraine No. 1639-IX, dated 14 July 2021, which amended paragraph 9 of Section XVII (“Final and Transitional Provisions”) of the Law of Ukraine “On the Electricity Market”. The amendment introduced a temporary requirement for electricity producers to sell electricity under bilateral contracts exclusively through electronic auctions conducted in accordance with procedures approved by the Ukrainian Government.

Certain categories of producers were exempted from this requirement, including producers operating under the “green” tariff regime and producers that had obtained state support through renewable energy auctions.

The temporary regime remained in force from 1 September 2021 until 1 April 2023. No subsequent legislative amendments extended the operation of these restrictions beyond that date. The Resolution now provides long-awaited regulatory clarification by expressly establishing a voluntary participation model for the relevant categories of distributed and renewable generation.

The amendments are expected to facilitate greater contractual flexibility in the electricity market and may accelerate the development of decentralised generation projects and corporate renewable procurement structures in Ukraine.

Additional notes

For further information on the topic please contact senior partner Glib Bondar or managing associate Olena Sichkovska-Chornobyl, or by telephone +380 44 591-3355 or via e-mail.