Energy Market Reboot: New Architecture of RES Support and Practical Challenges for Lawyers

On March 9, 2026, Law of Ukraine No. 4777-IX came into force, introducing large-scale changes to the regulation of support for renewable energy source (RES) producers, grid connection, energy storage, and guarantees of origin. The Government is required to align its regulations within two months, and the NEURC (National Energy and Utilities Regulatory Commission) within six months.

For lawyers supporting projects in the RES sector, this piece of legislation changes the baseline logic of relations between producers and the state-run Guaranteed Buyer, adjusts the conditions of financial collateral, introduces new grounds for licensing, and shapes a distinct legal framework for hybrid SPP + ESS (solar power plants + energy storage systems) facilities. All of this requires a rethink of the legal models used in project structuring and support.

In this article, we will examine the key changes and their practical implications.

From “Contract for Difference” to Market Premium: What Changes Are Made in the Contractual Framework

The most fundamental change relates to the support mechanism. The law repeals the provision regarding the return of the price difference to the state-run Guaranteed Buyer if the market price exceeds the auction price. Thus, Ukraine is transitioning to the Feed-in Premium (market premium) model.

The previous “contract for difference” framework proved to be unsustainable: producers were obligated to immediately return windfall profits when market prices peaked, while compensation for deficit months lagged from the state for quarters. This disrupted the logic of project finance and undermined lender confidence.

The transition to a market premium implies a fundamentally different contractual architecture:

• Predictability: The settlement model with the state-run Guaranteed Buyer becomes more predictable, directly impacting credit risk assessment in project finance.
• Contract Audits: Agreements concluded under the old model require analysis regarding transitional provisions; the law sets out deadlines for aligning regulations, but the fate of active contracts remains open pending the NEURC’s stance.
• Financial Models: The new model changes the formula for calculating project returns, which is critical when preparing financial and investment models to attract institutional investors.

A critical detail to note: The law defines specific time intervals during which the Guaranteed Buyer is obligated to purchase electricity from solar stations: from April 1 to October 31 between 4:00 and 23:00, and from November 1 to March 31 between 6:00 and 21:00. For classic SPPs without storage systems, volumes delivered outside these intervals will be qualified as a positive imbalance and will not be paid at the feed-in tariff.

Auction Horizon until 2034: New Parameters for Financial Collateral

The law extends the allocation of support auctions until December 31, 2034. Winners will receive support for 12 years. For the legal design of projects, this means a longer planning horizon for contractual relations and, consequently, stricter requirements for the quality of contractual structures.

The parameters for financial collateral have changed significantly:

• The construction performance guarantee for a facility has been reduced from €15 to €10 per kW.
• Collateral for extending construction deadlines has been reduced from €30 to €10 per kW.
• An alternative financial collateral tool has been introduced: a guarantee deposit into the account of the Guaranteed Buyer or an escrow account of the auction participant (at €5,000 per MW).

The introduction of alternative financial collateral via escrow is a major practical innovation. First, it breaks the monopoly of bank guarantees as the sole instrument, broadening project finance structuring options. Second, it creates a need to develop new contract templates—escrow agreement terms, fund release procedures, and risk allocation among participants.

Deadlines for auction preparation have also shifted: 12 months are now allowed for submitting a connection agreement instead of 6. The commissioning deadline for facilities is 18 months for SPPs and 36 months for other RES, with a possible extension up to 42 months during martial law. These deadlines must be accurately reflected in construction contracts, EPC contracts, and agreements with lenders.

In addition, the mandatory support quota by RES type has been lowered from 10% to 5%, giving the Ministry of Energy more flexibility when shaping annual auction schedules. From a practical perspective, this increases regulatory risk for projects in niches where the quota might be heavily slashed in a given year.

SPP + ESS: A Distinct Legal Framework and Structuring Requirements

The law singles out the category of hybrid facilities—solar power plants combined with energy storage systems (ESS)—into a standalone regulatory block. For this category, a separate minimum auction quota (not less than 10%) and a price cap of 12 euro cents per kWh have been established.

At the same time, access to this quota is bound by strict technical requirements:

• ESS capacity must be at least 80% of the SPP capacity;
• Storage capacity must be at least 2 kWh per each kilowatt of capacity;
• There must be at least one 2-hour interval between 10:00 and 16:00 when the market premium is not paid.

These technical parameters hold direct legal weight. Contracts between the construction customer and the general contractor, technical specifications for connection, and insurance terms must reflect these new mandatory features. Any breach of ESS capacity or volume requirements during project execution could result in loss of support or reclassification of the facility into a different auction category.

For lawyers supporting the construction of such facilities, it is crucial to establish a clear documentation workflow at all stages: from drafting design briefs and passing state expert reviews to securing permits from the State Inspectorate for Architecture and Urban Development (DIAM) and commissioning. Each stage is tracked automatically within the Unified State Electronic System in the Construction Sector (EDESSB), and any discrepancy between declared and actual specifications can block document registration.

ESS Licensing: New Boundaries and Practical Impact

The law establishes that licensing for electricity storage activities is mandatory if the installed ESS capacity at a single metering point exceeds 5 MW. Concurrently, ESS operators acquire the right to install generating facilities at the licensed site without holding a separate generation license.

At first glance, the 5 MW threshold appears quite liberal. However, several practical nuances must be considered:

• Metering Point Focus: The threshold value is tied to a single “metering point,” not the operator as a legal entity. When structuring multi-site projects, it is vital to understand how the metering point is defined and whether adjacent sites risk being classified as a single facility.
• Compliance: Facilities falling under licensing must comply with NEURC licensing conditions, both during initial licensing and regular regulatory audits. Preparing for such audits and building internal compliance procedures becomes a distinct task.
• Dual Functioning: Merging the functions of a producer and an ESS operator within a single project without a separate generation license is a novel practical model that requires careful drafting in contract documentation and corporate structuring.

Among the technical, yet practically essential changes, is the netting rule for ESS. Producers who install storage units at their generation sites are entitled to pay transmission and distribution fees only on the net difference between monthly off-take and injection by the ESS.

Practically, this lowers operational expenses for such producers, which is vital when constructing financial models. For lawyers structuring PPAs or other bilateral contracts, this parameter must be accurately accounted for in electricity pricing calculations.

Flexible Connection and Cable Pooling: New Opportunities and Contractual Risks

The law introduces the concept of flexible connection to transmission or distribution systems as an alternative to grid reinforcement or new grid construction in cases of insufficient capacity. The core mechanism: a facility may have partially guaranteed and partially non-guaranteed capacity, and automated systems are installed at the connection point to curtail or disconnect the unit during grid congestion.

Conditions regarding non-guaranteed capacity, curtailment procedures, and liability for lost revenue require meticulous drafting when preparing technical specifications and negotiating terms with system operators.

The expansion of cable pooling warrants separate analysis. The law extends this mechanism to ESS operators and consumers: they are granted the right to connect their own electrical installations to the grids of another producer, ESS operator, or consumer. Consequently, generation, consumption, and storage can legally co-exist at a single connection point, even under different ownership, subject to there being separate commercial metering.

This is a fundamentally new model for project structuring that brings both opportunities and risks. The number of legal entities at a single connection point increases, raising the potential for contractual disputes. Questions regarding the allocation of liability among owners of adjacent installations during outages, imbalances, or breaches of connection terms currently lack established regulatory precedent.

Active Consumers, ESCOs, and Distributed Generation: New Business Models

The law expands legal avenues for smaller market players and alternative business models, which is arguably the most underestimated part of the reform regarding long-term impacts.

• ESCO Investments: Energy service companies (ESCOs) are officially authorized to implement projects for building RES facilities and installing energy storage systems. Previously, ESCOs operated primarily in the building energy efficiency and infrastructure segments, with no formal path into generation. This legal gap has now been closed, introducing projects with non-typical financing structures to lawyers: ESCO projects rely on investment returns driven by energy savings or revenue from electricity sales, requiring a highly specific contractual architecture.
• Over-the-Counter Cogeneration: Power producers utilizing gas turbine and cogeneration units are recognized as distributed generation facilities. They gain the right to sell electricity via direct bilateral agreements, bypassing mandatory exchange trading.
• Active Consumers: Citizens and businesses generating electricity for their own needs retain the right to remain on the simplified taxation system (single tax). In parallel, self-consumption contracts transition exclusively to cash settlements without offsets. This eliminates the legal ambiguity that previously arose when structuring contractual relations between self-consumers and suppliers.

Occupied Territories: Special Register and Settlements

A distinct block of the law regulates the status of RES facilities located in temporarily-occupied territories. Within 30 days of the law coming into force, a Special Commission will be established, consisting of representatives from the Regulator, the Security Service of Ukraine (SBU), the Ministry of Energy, the Ministry of Reintegration, the State Energy Supervision Inspectorate, the TSO, and DSOs.

The Commission will approve a list of such facilities, defining the dates when electricity injection into the controlled part of the Integrated Power System (IPS) of Ukraine ceased and resumed. Based on this list, the TSO will form a special register. Producers are obligated to return funds paid by the state-run Guaranteed Buyer for periods when electricity supply did not actually take place.

Guarantees of Origin and the Euro-Integration Context

The law refines the legal status of guarantees of origin: producers benefiting from support via the feed-in tariff or market premium transfer all guarantees of origin to the Guaranteed Buyer. Crucially, it is explicitly stipulated that such guarantees carry no standalone monetary value, which is vital for taxation and accounting purposes.

From a Euro-integration perspective, the provision granting the NEURC the right to recognize European guarantees of origin stands out. This brings Ukraine closer to full membership in the Association of Issuing Bodies (AIB), while paving the way for the development of cross-border green certificate trading.

For foreign investors executing projects in Ukraine, this change could serve as a decisive factor: the ability to secure guarantees of origin recognized in European markets significantly enhances the attractiveness of Ukrainian RES assets.