Please find below information on recent legislative initiatives and updates that could be of interest for investors in renewable energy sources and energy projects in Ukraine. Certain changes that went into effect at the first of the year, if not taken into consideration, could result in a considerable increase in costs for a potential investment.

Amendments impact grid connections to the distribution system

On December 29, 2024, the National Energy and Utilities Regulatory Commission (the Regulator) adopted Resolution No. 2648 (the Amending Resolution), which amends Resolution of the Regulator No. 352 dated March 26, 2022 On peculiarities of temporary grid connection of power installations to the distribution system for the period of martial law in Ukraine (the Amended Resolution). The Amending Resolution took effect on January 1, 2024.

As per the Amending Resolution, as a general rule, starting from January 1, 2024, the provision of services for standard and non-standard connections to electrical networks must be done in accordance with the Distribution System Code (DSC).

However, in response to the need to facilitate connections to electrical networks in areas where active hostilities are possible or ongoing, the Regulator—taking into account safety requirements and the protection of distribution system operators’ production personnel—extended the provision of connection services by distribution system operators in accordance with the Procedure for temporary grid connection of power installations to the distribution system during the period of martial law in Ukraine, approved by the Amended Resolution.

This extension applies exclusively to applicants that submit an application to connect to the following kinds of power installations:

• Facilities used for
  • The temporary accommodation of displaced persons for their temporary residence in modular towns
  • Meeting the needs of enterprises under the Ministry of Strategic Industries of Ukraine and the Ministry of Economy of Ukraine
  • Enterprises of the state concern “Ukroboronprom” involved in fulfilling mobilization tasks, the Armed Forces of Ukraine, other military formations of Ukraine, law enforcement agencies, and civil defense forces
• Facilities located in areas where active hostilities are possible
  • Areas of active hostilities, and/or areas of active hostilities where state electronic information resources operate, as defined by the order of the Ministry for the Reintegration of Temporarily Occupied Territories of Ukraine dated December 22, 2022, No. 309.

Furthermore, by January 1, 2025, electric vehicle charging stations must be able to be connected without payment for power connection.

All other market participants, including RES producers, must comply with the requirements for the grid connection procedure established by the DSC. This includes, e.g., that both the application for the grid connection conditions and grid connection agreement satisfy the application package requirements to get grid connection conditions and that the grid connection agreement is in accordance with the DSC.

Given that performance of the grid connection agreement must also be in line with the DSC, grid connection fees under all grid connection agreements will be payable as per established rates for grid connection, regardless of martial law (temporary grid connection envisaged payment of grid connection fees based on actually incurred costs of the operators during periods of martial law and until six months after its end; afterwards, applicants must enter into permanent grid connection agreements with payment of the full grid connection fee as per established rates for the grid connection). The grid connection fees as per established rates are calculated on the basis of rates for grid connection as adopted by Resolution of the Regulator No. 2630 dated December 29, 2023 On approval of rates of payment for non-standard connection of capacity and rates for the linear part of the connection for 2024, Resolution No. 2630 establishes:

• Payment rates for non-standard connection of capacity for all distribution system operators for both production and consumption and for all respective districts (the rates are differentiated also by the area (rural or city) and category of supply); so depending on various factors, the respective rate could be less than UAH 1,000 or could be close to or even exceed UAH 3,000 per kW.
• Rates for the linear part of the connection are diversified, according to the voltage of the lines and types (cable or overhead lines).
  • For example: the rate for an overhead power line for 35 kV is UAH 2,208 per m and for 110 (154) kV it is UAH 3,150 per m; whereas, the rate for the cable line for 35 kV is UAH 6,336 per m.

Please note that, by default, applicants must make payments as per the following schedule:

• 50 percent of the payment for connection of capacity within 20 business days after receiving (i) technical conditions, (ii) calculation of the fee for the connection to the grid and (iii) an invoice for the payment
• 40 percent of the payment for connection of capacity and 90 percent of the payment for the linear part within five business days after agreeing the design documentation
• Full settlement must be made within five business days after completion of the connection services, as confirmed by a notification on rendering the service

Nevertheless, the parties to a grid connection agreement are entitled to agree a different procedure for payment of the fee. Thus, from January 1, 2024, it has become essential for developers and investors to pay close attention to the payment terms provided in grid connection agreements of the projects they plan to invest in, because the costs could be considerable.

In respect of the technical conditions issued to RES projects—according to the Amended Resolution, before January 1, 2024, the Amending Resolution did not render them invalid or oblige the respective applicants to amend them. However, distribution system operators in territories without ongoing military actions have until March 1, 2024 to take measures to regulate contractual relations with applicants who entered into temporary grid connection agreements without expiry dates in respect of the establishment of the terms of such agreements or their termination. Therefore, it cannot be ruled out that respective operators will encourage all applicants, including RES Producers, to terminate their existing temporary grid connection agreements and sign new grid connection agreement as per the DSC.

Net billing secondary laws

On December 29, 2023 the Regulator also adopted legislation concerning prosumers and net billing, as well as aggregation. These have already taken effect, namely:

• Resolution No. 2649 dated December 29, 2023 On approval of amendments to the Transmission System Code envisaging
  • A procedure and requirements to connect energy storage facilities by prosumers
  • A listing of peculiarities related to connecting the internal networks of energy storage facilities to the grid
  • A calculation of grid charges for prosumers
  • Obligations of aggregators and their liabilities as well as the requirements for units of the aggregation group
• Resolution No. 2651 dated December 29, 2023 On the procedure for the sale, accounting of electric energy generated by prosumers, and settlements for it
  • Establishes key principles for entering into power purchase agreements with guaranteed offtakers (for small prosumers) and other market players
  • Sets out a calculation of the net output of prosumers, amount of payments and their terms in case of supply to the guaranteed offtakers, and if supplied to other offtakers, there are no set prices, and parties may agree the procedure for the offtake.

It is expected that the regulation of net billing and prosumer activity will boost deployment of RES installations in Ukraine by respective end users.

This information does not constitute legal advice and is merely the opinion of the author.