On April 7, 2023, the Ukrainian Parliament, known as the Verkhovna Rada, approved a significant legislative measure aimed at integrating Ukraine’s electricity market with that of the European Union. This move is crucial for unlocking financial assistance for Ukraine under the EU’s Ukraine Facility program.
A total of 245 members of Parliament supported the bill, designated as No. 12087-d. The initiative is designed to establish a comprehensive legal framework that facilitates the full integration of Ukraine’s electricity market into the EU’s internal energy market.
Key Provisions of the Bill
- Establishment of legal mechanisms for market coupling, including day-ahead and intraday markets with European trading zones;
- Implementation of a European risk preparedness model in the energy sector and introduction of capacity assurance mechanisms;
- Regulation of interactions between the transmission system operator and the market operator to enable cross-border electricity exchange;
- Development of new flexible market instruments, including aggregation and demand management activities;
- Enhancement of consumer roles through the promotion of community energy associations and active consumer initiatives.
Parliamentary committees emphasized the importance of supply security, which includes risk preparedness plans, improved coordination with regional centers, and compliance with ENTSO-E requirements.
This legislative initiative is among the essential steps required for unlocking funding for Ukraine through the Ukraine Facility program.
Ukraine’s Membership in ENTSO-E
On December 13, 2023, then-Prime Minister Denys Shmyhal announced that Ukraine could import up to 1.7 GW of electricity following a decision by the European Network of Transmission System Operators for Electricity (ENTSO-E). The next day, the former head of Ukrenergo, Volodymyr Kudrytskyi, confirmed that the company became a full member of ENTSO-E, marking Ukraine’s entry as the 40th participant in the European energy community.
The Ukraine Facility Program
On February 1, 2024, EU leaders at a summit in Brussels agreed on a four-year aid package for Ukraine amounting to €50 billion. On February 27, the European Parliament endorsed the establishment of the Ukraine Facility. The following day, the EU Council approved the initiation of the Ukraine Facility, which will provide financial support from 2024 to 2027.
The Ukraine Facility program is designed to allocate €50 billion to Ukraine over four years, with €39 billion earmarked for the state budget to enhance macro-financial stability.
On May 22, Ukraine and the EU signed a framework agreement regarding funding under the Ukraine Facility. This document outlines the mechanisms for financial cooperation between the EU and Ukraine, including management and oversight of fund utilization and joint measures to prevent corruption.
The Ukrainian Parliament has approved a bill to integrate the country's electricity market with the EU, a step crucial for securing EU funding. This legislation aims to create a legal framework for market coupling and enhance energy security and consumer participation.