Ukrainian Parliament Approves Bill for Integration of Electricity Market with Europe

The Ukrainian Parliament, known as the Verkhovna Rada, has approved an important legislative measure that pertains to the integration of Ukraine's electricity market with the European market. This law, referred to as Bill No. 12087-d, was backed by 245 members of parliament during the voting session. This decision marks a significant step towards the complete synchronization of Ukraine's energy systems with those of Europe, enabling Ukraine to export electricity during surplus periods and import it during times of deficit.

Andriy Gerus, the head of the Verkhovna Rada's Committee on Energy and Utilities, emphasized the importance of this law, stating: "This law is about fully synchronizing the energy systems of Ukraine and Europe. When there is a surplus, we can export without hindrance, and conversely, when there is a deficit — we can import. In Europe, there are negative electricity prices. We have never had such a situation. Therefore, we want this law to allow cheap electricity from Europe to enter Ukraine."

Andriy Zupanin, the deputy head of the committee and one of the authors of the bill, assured that the new law would not affect electricity prices for the population. He noted that the goal of the law is to gradually implement uniform rules across electricity markets. "This law will provide us with EUR 500 million under the Ukraine Facility," Zupanin added.

During the presentation of the bill at the committee meeting, Zupanin characterized it as visionary, highlighting that after its adoption, it would take no less than 12 to 18 months for the actual integration of the markets. He also mentioned potential dates for the integration — either January 1, 2028, or January 1, 2029, as a series of subordinate acts would need to be adopted for this process.

One of the key provisions enshrined in the law is the abolition of price caps in the electricity market. Zupanin explained that in the EU markets, price caps are more technical in nature and do not serve the function of price limitation as they do in Ukraine. "The fundamental position of our EU partners was that price caps should be abolished. And they should be abolished even before the markets are integrated. This will be a gesture showing that Ukraine is ready to demonstrate its desire to move towards European markets. Therefore, price caps will be abolished from May 1, 2027," he stated.

Zupanin also clarified that the national energy regulator, the National Commission for State Regulation of Energy and Public Utilities (NERC), could revisit the idea of price caps in the event of a declared state of emergency in the energy sector. However, he noted that this would not be the same procedure as currently exists, but rather an opportunity to respond quickly to a critical situation in the energy sector, such as the destruction of a part of the generation capacity.

Additionally, the law stipulates the continuation of competitions for new generating capacity only until May 1, 2028. Zupanin explained that European partners view such competitions as a hidden form of state support for businesses. Therefore, until May 1, 2027, Ukrenergo will have the opportunity to conduct such competitions, while until May 1, 2028, there will be a transitional period with competitions only in energy-deficient regions.

Furthermore, the law maintains a ten-year provision regarding the balancing tariff for energy storage facilities, allowing them to pay a tariff only on the difference between the electricity injected and withdrawn. This applies to investors who have concluded agreements or technical conditions by May 1, 2027. Otherwise, the issue of paying the transmission tariff will remain at the discretion of NERC.

Gerus, commenting on the bill, noted that the provisions of the law come into effect over time, providing the market with predictability. The Verkhovna Rada also made decisions on April 7, 2026, that will allow Ukraine to receive funding from the European Union under the Ukraine Facility program. Ukrainian Prime Minister Yulia Svyrydenko reported that key decisions necessary for continuing funding were adopted, including the law on the digitalization of executive proceedings and the law on integration into the EU energy market.

These two initiatives will enable Ukraine to secure EUR 875 million in funding from the EU. Another bill concerning the delineation and distribution of powers among levels of public governance was also passed, which could lead to an additional EUR 440 million. It was previously reported that in 2022, Ukraine's energy system officially completed its integration with the European system and became part of ENTSO-E.