In January 2024, Ukrainian Electricity Transmission System Operator, Ukrenergo (TSO), became the 40th member of the European Network of Transmission System Operators for Electricity (ENTSO-E) after fulfilling key technical conditions to ensure permanent interconnection between the power systems of Ukraine and Europe (to learn more about ENTSO-E member states, see Picture 1. ENTSO-E members as of December 2023). This connection significantly improved the reliability of Ukraine\u2019s power system by allowing Ukraine to receive timely assistance from Europe in the event of emergency power plant outages and to import European electricity, which reduces the number of disconnected consumers.<\/p>\n
Picture 1. ENTSO-E members as of December 2023<\/em><\/p>\n Source:\u00a0ENTSO-E<\/a><\/p>\n Concurrently, Ukraine continues to advance its energy reforms in line with its obligations under the EU\u2013Ukraine Association Agreement and the Treaty establishing the Energy Community. One of the key steps in this direction is the market coupling [1]<\/a>\u00a0of electricity markets thought the adoption of Draft Law No. 12087-d.<\/p>\n General objectives of Draft Law No.12087-d<\/strong><\/p>\n Draft Law No. 12087-d introduces fundamental amendments to the Electricity Market Law No.2019-VIII dated 13 April 2017 and related legislation to transpose and enforce key EU instruments, including Directive (EU) 2019\/944 and Regulation (EU) 2019\/943.<\/p>\n Draft Law No. 12087-d also transforms the structural and operational design of Ukraine\u2019s electricity market in preparation for market coupling with European systems, while preserving the core institutional architecture of the national energy sector. Picture 2. presents the main objectives of this document.<\/p>\n Picture 2. Core objectives of Draft Law No. 12087-d<\/em><\/p>\n Draft Law No. 12087-d will represent only the first step toward market coupling with the EU energy system. Ukraine will also be required to undertake substantial regulatory and technical work which, according to the TSO estimates, will take no less than two years to complete (to learn about the roadmap for the full integration of the Ukrainian electricity market with the European market, please see Picture 3 below).<\/p>\n Picture 3. Roadmap to the full integration of the Ukrainian electricity market with the European market by 2027<\/em><\/p>\n Some of the largest challenges on this path are the existing price caps in Ukraine\u2019s electricity market and the transition of the national power system from a one-hour to a 15-minute settlement period, which has not yet been addressed by legislators.<\/p>\n Coupling of Ukrainian day-ahead, intraday and balancing markets with the European Ones<\/strong><\/p>\n Draft Law No. 12087-d lays the essential legal groundwork for the integration of Ukraine\u2019s key electricity market segments, which includes Day-Ahead Market (DAM), Intraday Market (IDM), and balancing market, with those of the European Union.<\/p>\n For DAM and IDM, Draft Law No. 12087-d introduces mechanisms for Ukraine\u2019s participation in the Single Day-Ahead Coupling [2]<\/a> (SDAC) and the Single Intraday Coupling [3]<\/a> (SIDC), both of which are already operational in most EU member states. Draft Law No. 12087-d envisages a two-session trading model for the DAM:<\/p>\n Draft Law No. 12087-d lays the foundation for the appointment of Ukraine\u2019s Nominated Electricity Market Operator (NEMO) and for granting local market access to NEMOs operating in the electricity markets of the EU member states and the Energy Community Contracting Parties. The National Energy and Utilities Regulatory Commission [4]<\/a> (Ukrainian Energy Regulator) is expected to adopt the detailed authorisation procedures within four to 12 months.<\/p>\n To ensure the approximation of market conditions in the coupled markets, Draft Law No. 12087-d limits the application of price caps for SDAC and SIDC trading. Ukraine\u2019s NEMO may set maximum and minimum price caps in coordination with NEMOs operating in coupled markets. Such limitations should not unreasonably impede electricity trading. At the same time, the price caps set by the Ukrainian Energy Regulator will continue to apply to internal trading sessions.<\/p>\n Additionally, Draft Law No. 12087-d provides for the use of common algorithms for price coupling and continuous trading, in accordance with EU Regulation (EU) 2015\/1222 (capacity allocation and congestion management Regulation). These measures facilitate the joint allocation of cross-border capacity, synchronised market operation, and price convergence between Ukraine and neighbouring EU countries.<\/p>\n With respect to the balancing market, Draft Law No. 12087-d paves the way for Ukraine\u2019s participation in ENTSO-E\u2019s coordinated balancing platforms, including the International Grid Control Cooperation and the Trans-European Replacement Reserves Exchange. It harmonises domestic regulations with the European Electricity Balancing Guideline, thereby enabling real-time coordination of electricity flows and the cross-border sharing of reserves. This integration is expected to strengthen operational security, enhance the efficiency of balancing service procurement, and reduce overall system costs.<\/p>\n Market access for Ukrainian and EU electricity market participants<\/strong><\/p>\n Draft Law No. 12087-d establishes a reciprocal framework for cross-border participation in electricity markets between Ukraine, the European Union, and the Energy Community.<\/p>\n Under the proposed provisions, electricity market participants from EU member states or Energy Community parties may conduct activities in the Ukrainian electricity market subject to reciprocity, which means on the condition that Ukrainian participants are granted equivalent rights within the corresponding foreign electricity market.<\/p>\n To make this principle operational, international agreements will be concluded between Ukraine and the respective states. These agreements will define mutual conditions for participation, including licensing, trading, and regulatory requirements, and will be made publicly available through the Ukrainian Energy Regulator`s webpage.<\/p>\n According to Draft Law No. 12087-d, access conditions for Ukrainian and foreign companies must be equal and non-discriminatory, ensuring compliance with the principles of the EU Electricity Regulation (EU) 2019\/943 and the Energy Community Treaty.<\/p>\n Implementation will depend heavily on:<\/p>\n In essence, this clause represents a legal foundation for full market coupling between Ukraine and the EU in the medium term, fostering investment, competition, and the development of a truly integrated regional electricity market.<\/p>\n Introduction of negative prices<\/strong><\/p>\n Draft Law No. 12087-d marks the first steps toward introducing negative prices in Ukraine\u2019s DAM and IDM. Trading under negative prices implies that the buyer is paid for purchasing electricity during periods of production surplus. In practice, the seller will pay the buyer a service fee for boosting consumption while the buyer purchases electricity at a minimal price.<\/p>\n Although the detailed procedure should be defined in by-laws, this development signals Ukraine\u2019s shift from a curtailment approach toward market-based demand management mechanisms.<\/p>\n Establishment of Energy Communities<\/strong><\/p>\n Draft Law No. 12087-d also paves the way for energy communities (e.g. legal entities established by citizens, local governments, or small and medium-sized enterprises) to engage collectively in energy generation, distribution, and supply, especially from renewable energy sources. Energy communities prioritise social and environmental benefits over profit and have the potential to foster local ownership of energy resources. To achieve these objectives, energy communities will be granted specific rights, as outlined in Picture 4.<\/p>\n Picture 4. Fundamental rights of Energy Communities.<\/em><\/p>\n By establishing a legal framework for energy communities, Draft Law No. 12087-d opens the electricity market to cooperative, locally-rooted actors. The concept of energy communities is firmly embedded in EU law through the Clean Energy for All Europeans Package, specifically the Renewable Energy Directive II and the Internal Electricity Market Directive.<\/p>\n Across the EU, energy communities have become a proven instrument for mobilising citizens, strengthening public acceptance of renewable projects, and attracting private investment. Successful examples, such as Germany\u2019s electricity cooperatives (Strom-Genossenschaften) [5]<\/a> and Denmark\u2019s community-owned wind farms [6]<\/a>, demonstrate how local participation accelerates the green transition while ensuring fair distribution of benefits.<\/p>\n Aligning with this EU practice, therefore, represent a significant step toward enhanced citizen participation, sustainable growth, and long-term resilience of Ukraine\u2019s energy sector.<\/p>\n![\"\"](\"https:\/\/new.eba.com.ua\/wp-content\/uploads\/2025\/12\/CMS_1_22122025-1-300x300.png\")
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