ELECTRICITY: RES + Solar + Energy Storage + Cogeneration

ELECTRICITY: RES + Solar + Energy Storage + Cogeneration: what form should energy autonomy take, which model will it operate under, and which tax nuances deserve attention? Olha Savchenko, Senior Partner at Altelaw&Sempra, spoke about this at a training seminar hosted by Business Club.

🔹 Law No. 4777 entered into force in March, but secondary legislation must be amended before it works in practice. Key novelties: extension of “green” auctions to 2034 and a shift to a market premium, incentives for hybrid solar + energy storage projects, connection of several generation types at a single point (cable pooling), flexible connection, and direct contracts for distributed generation.

🔹 Storage for third parties as a service: in this model, the storage operator does not sell electricity but provides a storage service. This affects taxation: VAT applies, excise duty does not.

🔹 The “consumer + energy storage” model. A business with spare permitted capacity can host a third-party investor’s generation or BESS on its site without a separate grid connection. In the training, Olha walked through the contracts required, what the consumer and the investor should check, and the restrictions that exist in licensing and commercial metering.

🔹 Market coupling. For market participants, this means that day-ahead and intraday market bids will be submitted under a single algorithm shared with European markets, which determines the price and allocates cross-border capacity without separate auctions. For storage operators, the transition period matters: the netting procedure, where transmission and distribution fees are calculated on the difference between monthly offtake and supply, applies until 30.04.2027 for storage facilities commissioned before that date.

🔹 Cogeneration units. A unit’s qualification is confirmed by the State Energy Efficiency Agency with an electronic certificate valid for one year, and it is then reassessed annually based on actual performance over the previous 12 months. For gas-fired projects, the PSO (public service obligation) rules have changed: producers that do not generate heat no longer receive preferential gas. The terms for temporary connection of generating units have also been updated: from 21.04.2026, confirmation of urgency from the regional military/civil administration or the Kyiv City Military Administration is required first, and deadlines have been extended by a year.

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