Ukraine’s energy system has been undergoing significant transformations. The war, the destruction of generation facilities, the need for rapid recovery, and the implementation of European environmental standards are forcing the country to look for new solutions.
One of the main challenges remains finding a balance between renewable energy, flexible power capacities, and traditional generation.
In Ukraine, processes of decarbonization, a gradual shift from coal-based energy, and the active development of distributed energy systems are already underway.
But how feasible is it to implement this strategy in wartime, and what tools can help ensure the stability of the energy system?
Decarbonization and Reduction of Thermal Generation
One of the key directions for the development of Ukraine’s energy sector is the gradual phase-out of traditional thermal power generation, which does not meet European Union environmental standards. According to government plans, a significant number of thermal power plants (TPPs) that do not comply with the new regulations will be decommissioned after 2025.
However, this raises a new challenge: how quickly can the loss of these capacities be compensated?
According to representatives from Ukrenergo, without substantial changes in the country’s decarbonization policy, Ukraine risks losing critical power generation facilities with no option for an adequate replacement. For this reason, flexible generation and energy storage systems (ESS) must be actively developed alongside decarbonization efforts.
An important step was the initiation of a competition for the construction of new flexible power capacities, totaling 700 MW. This is the first large-scale competition of its kind, which will attract investors to build gas-fired power plants and other flexible energy facilities.
Increase in the Share of RES and Energy Storage Systems
The development of renewable energy sources (RES) remains a key focus in the reform of Ukraine’s energy system. By 2030, Ukraine plans to increase the total capacity of solar power plants to 11 GW.
However, production instability remains a challenge, as RES depend on weather conditions. To address these fluctuations, the government is gradually creating the legal framework for the development of energy storage systems.
An important step in this process was the adoption of legislative changes, which allow storage systems to not only operate in conjunction with RES but also integrate into the overall energy system.
This opens up opportunities for the development of a power arbitrage model, where stored electricity is sold during peak hours at higher prices.
Key innovations include:
- СLifting restrictions on electricity withdrawal from the grid for storage systems.
- The introduction of flexible conditions for RES investors, simplifying their access to the electricity market.
- Pilot projects for corporate PPAs (Power Purchase Agreements), which allow businesses to invest in “green” power without being tied to state tariffs.
Distributed Generation: New Opportunities for Business
The growth of distributed gas generation is another important trend that can significantly enhance the country’s energy security.
As of the end of 2024, over 830 MW of capacity had been connected in Ukraine, including cogeneration, gas turbine, and gas piston units.
These solutions are actively used by industries to ensure uninterrupted energy supply. However, a large share of these units still operate exclusively for internal enterprise needs and are not connected to the national power grid.
Ukrenergo is encouraging businesses to integrate their backup generators into the general grid, allowing them to earn revenue from the sale of surplus electricity.
Key Priorities for Future Development
Amid war and shifts in global energy policy, Ukraine is being forced to reconsider its approach to shaping an effective energy mix.
The main priorities for the forthcoming years include:
- Support for flexible generation. The construction of new flexible power capacities must be in parallel with the gradual decommissioning of outdated thermal power plants.
- Development of RES. Ukraine is already creating conditions to attract investors, but it is crucial to continue market reforms and ensure predictability in project rentability.
- Integration of energy storage systems. Without effective energy storage, further growth in the share of RES could pose additional threats to energy system stability.
- Incentives for distributed generation. Businesses that invest in their own energy solutions should have the opportunity to connect to the national grid under favorable conditions.
Energy development is not only a technical issue but also a strategic challenge. Ukraine now has the opportunity to build a modern, efficient, and environmentally friendly energy system that meets EU standards and ensures stability even during turbulent periods
Source:
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