Ukraine Opens the Path to Market Coupling with the EU: What the New Law Means for the Energy Business

The Ukrainian Parliament has adopted Law No. 4834-IX, which initiates a profound transformation of Ukraine’s electricity market and establishes the legal framework for its integration with the European internal market. The Law transforms the model of the market functioning in accordance with European approaches.

This is the largest update of energy legislation since 2017.

1. Market coupling: integration with the EU and a new logic of trading

The Law creates the legal framework for the coupling of the Ukrainian day-ahead market (DAM) and intraday market (IDM) with European trading zones. This means:

• entry of Ukrainian traders into the common European liquidity pool, where transparent prices are formed
• automatic allocation of cross-zonal capacity in accordance with European algorithms
• harmonized trading rules that comply with the requirements of ACER and ENTSO-E
• reduction of price volatility due to synchronization with EU markets

Before the launch, the NEURC shall publish a readiness report, which will include the designation of the nominated electricity market operator, the conclusion of the necessary agreements, and confirmation of technical compatibility. Market coupling will be preceded by technical work and testing jointly with ENTSO-E.

For business, this means predictability, access to broader liquidity, and a reduction of barriers to export/import.

1. New business models: flexibility, demand response, energy communities

The Law introduces modern European concepts that open the market to new players:

• demand response – the possibility for consumers to earn by changing their consumption patterns
• flexibility services – distribution system operators will be able to procure them to manage congestion
• citizen energy communities – local projects that can generate, store, and sell electricity

This creates new niches for technology companies, RES investors, energy storage operators, and service businesses.

1. Balancing: accession to European platforms

Ukraine integrates into European balancing platforms, which will allow:

• cross-border balancing
• increased resilience of the power system
• attraction of new participants to the balancing market
• reduction of balancing costs due to competition

This is an important step for integration with ENTSO-E not only technically, but also at the market level.

1. Removal of price caps and transition to market-based pricing

From 1 May 2027, price caps on the DAM, IDM and the balancing market will be removed. Temporary restrictions will be possible only in emergency situations and shall not limit the ability to carry out electricity imports and exports.

For business, this means:

• more accurate price signals
• the possibility of hedging and arbitrage
• increased role of flexible technologies (storage, gas peaking plants, aggregation).

1. Capacity, reserves and new rules for generation

The Law introduces:

• capacity mechanisms (up to 10 years) as a temporary instrument
• updated rules for resource adequacy assessment
• reform of auctions for new generation to implement demand-side management measures

The auction mechanism will be fully abolished from 1 May 2028, as it was regarded by European partners as a «hidden form of business support».

This is a signal to investors: the market is moving towards a competitive model without quasi-subsidies.

1. Smart metering, cybersecurity and GDPR

The Law promotes the large-scale deployment of smart meters and establishes requirements for:

• functionality and security of equipment
• data protection
• cybersecurity
• establishment of a GDPR compliance system

This is important for investors in digital infrastructure and network operators.

1. New rules for TSOs and DSOs

The following have been updated:

• the procedure for calculating cross-zonal capacity
• interaction with European TSOs
• requirements for network development planning
• restrictions on DSO activities (in particular, the prohibition of aggregation)

This increases transparency and brings the Ukrainian model closer to the European one.

1. When full market coupling may take place

Possible launch dates for market coupling are 1 January 2028 or 1 January 2029, depending on the pace of technical integration and the adoption of secondary legislation.

What this means for business:

Producers: new export opportunities, increased competition, the need for flexibility and modernization.

Traders: access to liquid European markets, new trading instruments, the possibility of arbitrage.

Investors: transparent rules aligned with the EU, new segments, flexibility, storage, aggregation, reduction of regulatory risks.

Network operators: new obligations regarding planning, cybersecurity, and data management, integration with European platforms.

For additional information, please contact Asters' Partner Yaroslav Petrov and Senior Associate Tetiana Piskun.