Ukrainian President Volodymyr Zelensky has signed Law No. 12087-d, which aims to integrate Ukraine’s electricity market with that of the European Union. This legislative move is crucial for unlocking EU funding for Ukraine under the Ukraine Facility program.
The law, published on the Ukrainian Parliament’s website, was approved on April 20. Vitaliy Zaychenko, head of the national energy company Ukrenergo, stated that the new legislation will strengthen both Ukrainian and European energy sectors while potentially lowering electricity costs for consumers.
“The mechanisms for cross-border balancing and mutual access to reserves of adjacent system operators have long been a necessity. Our current task is to maximize the technical capacity of cross-border connections and implement the regulatory changes outlined in the updated legislation for further integration of the Ukrainian and European energy markets,” Zaychenko emphasized.
The Parliament passed this legislative initiative on April 7, with the Energy and Utilities Committee explaining that its primary aim is to establish a comprehensive legal framework for the full integration of Ukraine’s electricity market into the EU’s internal energy market.
Key Provisions of the Law
- Establishment of legal foundations for market coupling for day-ahead and intraday trading with European trading zones;
- Implementation of a European risk preparedness model in the electricity sector and introduction of capacity assurance mechanisms;
- Regulation of interactions between the transmission system operator and market operator to facilitate cross-border electricity exchanges;
- Development of new flexible market instruments, including aggregation and demand management activities;
- Enhancement of consumer roles through the development of community energy associations and active consumer institutions.
The committee also emphasized the importance of supply security, focusing on risk preparedness plans, enhanced coordination with regional centers, and compliance with ENTSO-E requirements.
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 thanks to a decision by the European Network of Transmission System Operators for Electricity (ENTSO-E). The following day, former Ukrenergo head Volodymyr Kudrytsky reported that the company had become a full member of ENTSO-E, making Ukraine the 40th participant in the “energy European Union.”
Ukraine Facility Program
On February 1, 2024, EU leaders agreed on a four-year aid package for Ukraine amounting to €50 billion during a summit in Brussels. The European Parliament endorsed the establishment of the Ukraine Facility on February 27, with the Council of the EU approving the initiative the next day.
The Ukraine Facility program is designed to provide €50 billion to Ukraine from 2024 to 2027, with €39 billion allocated to bolster the state budget and 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 usage and joint measures to prevent corruption.
President Zelensky's signing of Law No. 12087-d marks a significant step towards integrating Ukraine's electricity market with the EU, facilitating access to crucial funding. The law aims to enhance energy security and lower consumer prices while aligning Ukraine with European standards.