Ukraine’s New Policy Approa­ches for a Resi­li­ent Energy Sector

Ukraine’s energy infra­struc­ture has suf­fe­red massive damage since 2022, with over half of its gene­ra­tion capa­city des­troyed or occu­p­ied. The remai­ning system strug­gles with fle­xi­bi­lity, grid sta­bi­lity, and debt crises, espe­ci­ally in the balan­cing market. The policy response includes new auction models for rene­wa­ble energy support, ancil­lary ser­vices, and fle­xi­ble capa­city – cri­ti­cal steps toward rebuil­ding a resi­li­ent energy sector and alig­ning with EU standards.

 “Factors Cons­trai­ning the Success of RES Support Auc­tions in Ukraine” – by Igor Piddubnyi and Oleksii Mykhailenko 
This paper exami­nes why Ukraine’s shift from feed-in tariffs to rene­wa­bles auc­tions has fal­te­red. Despite EU inte­gra­tion com­mit­ments, early auc­tions in 2024–2025 attrac­ted few bidders due to inves­tors’ dis­trust, but also metho­do­lo­gi­cal flaws, such as appli­ca­tion of basel­oad indices and two-month price smoot­hing for refe­rence price, which reduce support effec­ti­ve­ness. The authors recom­mend alig­ning Ukraine’s CfD (Con­tract for Dif­fe­rence) and FiP (Feed-in Premium) models with Euro­pean prac­ti­ces, sim­pli­fy­ing sett­le­ment rules, and intro­du­cing dynamic price adjus­t­ments to boost inves­tor con­fi­dence and acce­le­rate rene­wa­ble deployment.

Paper in English

Paper in Ukrainian

 “Special Ancil­lary Ser­vices Auc­tions. Unlo­cked Poten­tial for Grid Sta­bi­lity in Ukraine” – by Olga Gruz­hynska and Igor Piddubnyi 
Focused on ancil­lary ser­vices, this paper high­lights how special long-term auc­tions for fre­quency con­tain­ment (FCR) and auto­ma­tic fre­quency res­to­ra­tion reser­ves (aFRR) have suc­cessfully mobi­li­zed private invest­ment in battery storage and fle­xi­ble gas capa­city. By intro­du­cing euro-linked pricing and defer­ral options, these auc­tions have enabled over 200 MW of new battery storage and impro­ved grid sta­bi­lity. The authors urge further insti­tu­tio­na­liza­tion of such auc­tions, pre­dic­ta­ble plan­ning, and stron­ger safe­guards to sustain inves­tor trust and address per­sis­tent market debts.

 “Streng­thening the Fle­xi­bi­lity of Ukraine’s Power System. The Role of the Govern­ment Tender in 2024–2025” – by Olga Gruz­hynska, Yev­he­niia Zahu­men­nova-Kru­po­vych and Igor Piddubnyi (in Ukrai­nian)
This paper ana­ly­zes the government’s 2024–2025 tender for new fle­xi­ble capa­city, which awarded con­tracts for 316 MW – 45 % of the tar­ge­ted need. While the tender demons­tra­ted cost effi­ci­ency (average support at €457,000/MW, half the cap), regio­nal imba­lan­ces per­sis­ted, limi­ting effect for the regions with energy deficit. The authors recom­mend stream­li­ning tender pro­ce­du­res, invol­ving inter­na­tio­nal part­ners for over­sight, and addres­sing war-risk insu­rance gaps to ensure fle­xi­ble capa­city is built where it is most needed for energy security.