Ukraine’s strategic need for energy storage

Long-term, the government wants to establish market structures and opportunities that will cement the role of storage as the “strategic ‘glue’ of the power system,” Nahorniak says. While many investors and partners from home and abroad are already involved, there is a need to attract more, and Ukraine is committed to showing that this can be a viable opportunity far into a more peaceful and stabilised future.

“As a Member of Parliament, I devote special attention to dialogue with investors,” Serhiii Narhorniak says.

“Together with my colleagues, I’m working on harmonising Ukrainian legislation to make the conditions for international businesses entering the Ukrainian energy market as transparent, secure, and comfortable as possible.”

At the Energy Storage Summit 2026 next week in London, UK, Nahorniak will deliver a morning keynote on Day One (24 February). In the session ‘Ukraine’s power market and the role of BESS,’ he will be joined onstage by Wenyan Sharp, deputy regional director at SolaX Power, one of the major international renewables and energy storage companies to have made its market entry already.

We look forward to welcoming you to London for the Energy Storage Summit EU later this month. What sort of topics will you discuss, and what outcomes do you hope this event can help to achieve?

The main topic of my presentation will be Ukraine’s electricity market and the role of battery energy storage systems (BESS). I will do my best to describe the adaptation of Ukraine’s power system to extreme conditions and the vital role of battery storage in ensuring its stability.

Additionally, I will discuss recent legislative changes regarding BESS and the practical aspects of market operations under constraints, such as the procurement of ancillary services and price signalling.

The key objective of my participation is to attract new strategic investors to the Ukrainian market by transforming their initial interest into concrete investment cases. We aim to use this event as a platform to build trust and demonstrate that the Ukrainian energy market offers unique opportunities for long-term partnership and the development of innovative technologies, even in challenging times.

We previously spoke about a gap between expressed interest in participating in the Ukraine market or in conversation and action, in terms of investment and establishing a local presence, including maintenance and support after installation. What are your views on this, and how to appropriately encourage action and investment?

The main barrier for businesses moving from discussion to action remains the perception of risk.

To transform “interest” into “physical presence,” we have implemented a series of concrete incentives:

• Tax Exemptions: Import VAT and customs duty exemptions are in effect in Ukraine for equipment related to BESS, solar (SPP), wind (WPP), and gas generation facilities until 1 January 2029.
• Licensing Relief: Legislation provides the possibility to operate energy storage without a license for specific categories of participants:
• Renewable energy producers, provided the storage is used exclusively for their own needs.
• Active consumers, if the BESS capacity does not exceed the contracted capacity of their electrical installations (up to 5MW).
• Consumers, provided they do not feed stored energy back into the grid.
• ‘Green’ tariff producers within the Guaranteed Buyer’s balancing group, if energy is drawn only from their own plants, output does not exceed the licensed capacity, and separate commercial metering is in place.
• ‘Green’ tariff producers outside the Guaranteed Buyer’s balancing group, provided the installation is co-located with the generation source, input/output does not exceed the contracted capacity, and commercial metering is ensured.
• Special Ancillary Services Auctions: These auctions allow for long-term service agreements (up to 5 years) with NPC Ukrenergo. This approach facilitates securing project financing, which is crucial during the initial stages of developing BESS as a business.
• Accelerated Depreciation: Up to 50% of fixed assets can be depreciated in the first year of operation.
• Low-cost Financing: Access to affordable funding through International Financial Institutions (EBRD, EIB, EU), which provide loans and grants via dedicated programs aimed at enhancing energy resilience and supporting energy efficiency and storage projects.

Where do new energy technologies, such as renewable energy from solar and wind, and energy storage, fit into the current need for Ukraine to maintain or enhance energy supply security and reliability?

For Ukraine, Renewables and BESS are not merely a matter of ecology, but above all, a matter of the power system’s survival under wartime conditions. The foundation of this resilience is decentralisation. Unlike large thermal power plants, small and distributed RES facilities, reinforced by storage systems, are virtually impossible to destroy with a few targeted strikes.

The implementation of these technologies critically enhances the system’s flexibility and reliability, providing fast power reserves and the ability to manage demand effectively. Due to the ability of storage systems to transform the intermittent generation of solar and wind into a stable and predictable resource, we can minimise or even completely eliminate imbalances for market participants.

This allows for the optimisation of daily production and consumption schedules, smoothing load peaks and increasing consumption during surplus hours, which effectively replaces deficient thermal generation.

Furthermore, the development of BESS is a vital factor in meeting Ukraine’s international obligations regarding exchange flows and balancing capacity reserves within the ENTSO-E synchronous zone.

According to our target development scenario, our goal by 2030 is to integrate 3.6GW of wind and 10GW of solar capacity, which requires the parallel deployment of approximately 1.5GW of energy storage installations.

What is the current need for energy storage in Ukraine, both in terms of the volumes and the types of energy storage systems?

As of 2025, the total capacity of BESS in Ukraine’s power system is approximately 0.4GW. In the long-term perspective leading to 2035, according to the target development scenario, this requirement is projected to grow to 2GW. At the same time, Ukraine is making a strategic bet on long-duration energy storage systems with a 4-hour discharge cycle, creating a total capacity requirement of 4GWh.

We are deliberately moving away from short-term reserve systems in favour of full-scale utility-scale storage, capable of reliably supporting the power grid throughout the entire evening peak demand.

Can you give examples of other energy technologies, or perhaps other industries entirely, where Ukraine has successfully introduced foreign investment and public-private partnerships, and what were some of the challenges and breakthroughs?

A prime example is the entry into the Ukrainian market of a major international player, the Kazakh holding BI Group, the largest in Central Asia and ranked among the top 200 construction companies worldwide. The holding made a strategic investment by acquiring the engineering firm Watzenrode, founded by French entrepreneur Ignace Haertlé. The arrival of a global giant of this calibre is a clear testament that international capital views Ukraine as a promising hub for ambitious infrastructure projects, despite external challenges.

Another powerful signal to the market is the project by the investment holding EFI Group in the Zvenyhorodka district, Cherkasy region. Despite all wartime risks, construction has begun on the “Feednova Centre” plant, which will specialise in the production of high-protein feed additives and animal fats. This is an exemplary case of international cooperation: the project, valued at over US$20 million, is being implemented jointly with the Dutch partner Mada Participations B.V. and the investment company UMGI.

Notably, under the state support programme, ‘Feednova Centre’ will receive UAH172.1 million in compensation for engineering and transport infrastructure costs. This marks the launch of a strategic project that drives industrial and agricultural development, particularly in the livestock sector, creating real added value within Ukraine.

Finally, the third fundamental example is the Norwegian company Emergy, whose activities have become a symbol of investment resilience. Their key projects, including the Syvash wind farm and the future ‘Zophia’ wind park with a total capacity of approximately 1GW, are currently located in the temporarily occupied territories of the Kherson and Zaporizhzhia regions.

It is crucial to understand that despite the war, the company has not withdrawn its presence; instead, it is exploring sites in Western and Central Ukraine for new wind generation projects. When companies of this scale remain in the country and continue to plan mega-projects, it serves as the best possible signal to other global players that the Ukrainian energy sector is a strategic asset for the future of Europe.

Of course, the focus today is on Ukraine overcoming its energy sector difficulties associated with the war. What are the government’s plans and intentions regarding post-war installation and applications of energy storage and other new energy technologies?

After the war, energy storage systems will become the strategic ‘glue’ for our modernised energy system, ensuring its integrity and flexibility in the new reality. By 2030, we aim to integrate large-scale renewable energy facilities into the system, which, according to the target scenario, involves the operation of 3.6GW of wind and 10GW of solar power plants. In this context, BESS installations will play a key role in balancing the specified capacities, as well as allowing Ukraine to provide high-quality ancillary services for the European ENTSO-E network.

A vital vector of post-war development will be the expansion of distributed generation and the implementation of Smart Grids, stimulating the creation of autonomous microgrids capable of stable operation during any emergency. This will pave the way for a fundamentally new level of energy independence for the population: through the mass adoption of demand-side management (DSM) and smart metering, households will not only meet their own needs but also become active market participants, selling surplus electricity from their domestic storage units directly back to the general grid.

What sort of market structures, regulations and design does Ukraine have presently, and what do you expect to see in the longer term?

To date, Ukraine’s market model is already closely aligned with the EU’s Third Energy Package. The market is segmented into bilateral agreements, the day-ahead market, the intraday market, and the balancing market.

A key element of this design is energy storage systems (ESS), which not only increase system flexibility by providing fast reserves, but also contribute to the integration of RES, minimising imbalances of market participants and optimising daily consumption schedules. The importance of this direction is confirmed by specific calculations: the projected need for automatic frequency restoration reserves (AFRR) for 2026–2035 is +1.2GW for loading and -0.42GW for unloading.

To cover this deficit, NPC Ukrenergo holds special auctions for ancillary services, which allow ESF operators to conclude long-term five-year contracts and receive a stable economic basis for development. In the long term, we aim to transition to a model where BESS owners will be paid not only for the energy actually delivered, but primarily for their willingness to provide power to the system at critical moments.

Our ultimate goal is full market coupling with European markets, which will ensure automatic price alignment and the formation of a single energy space with the EU.

Energy-Storage.news publisher Solar Media is hosting the Energy Storage Summit EU 2026 in London, UK, on 24-25 February 2026 at the InterContinental London – The O2. See the official website for more details, including agenda and speaker lists. Also, ESN Premium users can get a 30% discount.