Executive summary

Ukraine opened its electricity market in July 2019 by introducing competitive market principles in line with the 3rd energy package laid out in EU directives. The general market framework as well as the fundamental principles of how the electricity market should function are set out in the Law on the Electricity Market, while numerous by-laws provide detailed regulations.

On December 12, 2019, draft Law #2582 was registered in the Ukrainian parliament. Its goal is to provide incentives for energy storage systems in the Ukrainian electricity market. LCU analysis of the draft law text shows that instead of while providing certain incentives for energy storage, it may also undermine competition on the ancillary services market.

In order to stimulate the development of energy storage in Ukraine, a draft law:

1. should remove existing legislative barriers on the market. It should define fundamental principles instead of specifying detailed procedures. Detailed provisions should be set out in by-laws;
2. should explicitly prohibit system operators from owning, developing, managing or operating energy storage systems, which are used to provide services in organised electricity market segments;
3. may introduce definitions for energy storage operations in order to provide the Regulator with a legal basis to separate energy storage operations from operations of buying and selling electricity;
4. may introduce definitions for energy storage that distinguish energy storage used to participate in the market and energy storage used as a fully integrated grid component;
5. should determine an approach for a due process that will allow exceptions from the rule that prohibitis the system operator from owning, operating and managing energy storage systems;
6. may create an incentive for RES operators to use energy storage for non-market activities by fostering a deeper integration of RES into the market and giving them more flexibility in the balancing market;
7. should not explicitly state any technical characteristics. Those characteristics should not be determined by legislative bodies, but by executive bodies in accordance with established rules;
8. consider introducing a definition for an aggregator as a market player, with a fair, equal and barrier-free status on the market compared to other players.