On 6 February 2025, the President of Ukraine signed Law No. 4213-IX dated 14 January 2025 "On Amendments to Certain Laws of Ukraine in the Field of Energy and in the Field of Heat Supply to Clarify Provisions Related to the Martial Law in Ukraine" (the Law).
The Law comes into force and is enacted on the day following the day of its publication, except for certain provisions. The adopted Law provides for significant changes that will affect technical conditions and grid connection agreements, create new business opportunities and promote infrastructure development.
One of the key innovations is the introduction of a capacity booking mechanism that can minimise investors' risks when implementing large-scale wind energy projects in Ukraine.
The conditions for extending the validity of agreements and technical conditions for grid connection have also been introduced. The adopted changes also affect already concluded grid connection agreements.
Furthermore, the Law contains provisions that may make "green" auctions more attractive. The Law also includes a number of provisions that will be in force during the martial law regime in Ukraine.
Read more about the key changes in the review below.
Capacity booking
The new Law allows customers planning to connect wind power plants with a capacity of 20 MW or more to book technical solutions for the connection scheme of generating facilities under a capacity booking agreement for up to two years.
To reserve capacity, the customer should apply to the transmission system operator (NPC Ukrenergo) with a relevant application and a package of documents in accordance with the procedure to be approved by the Regulator (NEURC).
The cost of booking the capacity will be EUR 5,000 per 1 MW by depositing it into the TSO's escrow account, which will be included in the connection cost.
If the customer fails to submit an application for connection and conclude the main agreement before the expiry of the capacity booking agreement, such agreement will be terminated, and the paid funds will not be returned to such customer but will be credited to the TSO's account.
The NEURC shall develop the relevant forms of documents and the procedure for capacity booking within 6 months from the date of publication of this Law, i.e. by 9 August 2025.
Extension of technical conditions
The Law amends the Law of Ukraine "On Regulation of Urban Development", according to which the validity of technical conditions for connection to power grids is now determined considering the Law of Ukraine "On the Electricity Market".
The validity period of the technical conditions may be extended for the period necessary to complete construction, but the total validity period of the technical conditions may not exceed 6 years from the date of the connection agreement.
To extend the validity of the technical conditions, the following conditions should be met:
- the project documentation has been approved
- the cost of connection has been paid
- documents granting the right to perform construction work have been received
The technical conditions that were in force at the time of the introduction of martial law on 24 February 2022 are automatically extended for three years if, as of the date of entry into force of this Law, the customer has:
- developed and approved the project documentation
- transferred the project documentation to the system operator
- paid the connection fee according to the terms of the agreement
Advance payments under the connection agreement
The Law also introduces a mandatory payment of a part of the connection cost, which is made in the amount of EUR 10,000 per 1 MW of ordered capacity in two stages:
- 50% within 30 days from the date of receipt of the technical conditions for connection
- 50% within 12 months from the date of receipt of the technical conditions for connection
The paid part of the cost is included in the total fee for connection to the transmission system operator's power grids.
The customer is entitled to a refund of this amount if he terminates the agreement within six months from the date of receipt of the technical conditions.
At the same time, if the project documentation is not submitted and approved within twelve months, the agreement is automatically terminated, and the amount paid is non-refundable.
Important: already concluded connection agreements with a TSO should be brought in line with the adopted amendments within three months from the date of entry into force of the Law, i.e. by 9 May 2025.
For already concluded agreements, part of the connection fee is paid in the following order:
- 50% within 30 days from the date of receipt of the invoice issued by the TSO no later than 100 days after the Law enters into force
- 50% within six months after the first payment
Within nine months, the customer should hand over the project documentation to the TSO or initiate termination of the agreement.
If these requirements are not met, such agreements are automatically terminated on the day following the expiry of the nine-month period.
This rule does not apply to customers who, as of the date of entry into force of this Law, have already developed and approved project documentation and paid the connection fee in full as stipulated in the agreement.
New opportunities for customers of non-standard connection to distribution system operator (DSO)
The adopted amendments open up new opportunities for customers of services for non-standard connection to the distribution system operators with a capacity of more than 1 MW.
Now, customers who independently design the linear part of the connection have the right to take responsibility for the entire range of works, including:
- design of power grid equipment
- construction, installation and commissioning works
- capacity generation works
The amount of the customer's expenses related to the above works shall be included in the total connection fee. At the same time, such costs may not exceed the cost of the non-standard connection service determined by the operator.
Cable pooling
With the amendments, the customer can connect different electrical installations operating on different energy sources at one connection point, even if their installed capacity exceeds the permitted capacity. At the same time, such a customer will be able to supply power to the grid only within the permitted capacity, while ensuring separate commercial metering for each type of installation.
Annual support quotas for "green" auctions
According to the adopted amendments, the annual quota for participation in "green" auctions has been increased. In particular, based on the results of the auctions held in the relevant year for the allocation of the annual support quota, a business entity, either alone or together with other business entities with which it has a common ultimate beneficial owner, is entitled to receive no more than 50% of the annual support quota for the relevant year, instead of the previous 25%.
Changes for the period of martial law in Ukraine
The following changes were adopted for the period of martial law in Ukraine:
- Suspension of enforcement actions and measures to enforce decisions in enforcement proceedings arising between 24 February 2022 and 1 September 2024 in terms of recovery of the inflation index, recovery of 3% annual fee or other interest, recovery of fines for late fulfilment of monetary obligations, the payment of which is stipulated by the relevant agreements between all participants in the electricity market, including between the State Enterprise "Guaranteed Buyer" and RES producers.
- An active consumer may install generating facilities of up to 20 MW without obtaining a licence to carry out economic activities to produce electricity.
- The total amount of excess income received based on the results of dispatch (operational and technological) management activities in 2023 and 2024 is used by the transmission system operator for the following purposes
45% - to repay the transmission system operator's debt, which was formed in the balancing market
45% - to cover expenses and repay the transmission system operator's debt to the guaranteed buyer
10% - to cover expenses and repay the transmission system operator's debt to universal service providers under service agreements to ensure an increase in the share of electricity generation from alternative sources for the purpose of further payment by universal service providers for electricity generated by private households using alternative energy sources
Conclusion
The adopted amendments will significantly impact the development of renewable energy projects. The Law provides certain incentives to improve the conditions for connecting wind projects, stimulates auctions, opens up opportunities for implementing hybrid projects based on different types of generation through cable pooling, etc. On the other hand, the Law will be a certain stress for companies developing projects in the TSO's grids, as it introduces a requirement to pay significant upfront fees, which may be difficult to meet under martial law. As a result, many projects may lose their technical conditions, but this may also stimulate the implementation of new projects due to capacity release. At the same time, for the successful implementation of the adopted changes, the Government and the NEURC should adopt a number of secondary legislations to implement these changes.
By Yaroslav Petrov, Partner, and Marta Halabala, Counsel, Asters
