Dmytro Lukomskyi, Head of the Investment Committee of the Solar Energy Association of Ukraine (SEAU), explains the conditions under which energy storage systems in Ukraine are transitioning from a promising technology to a new class of infrastructure assets capable of attracting long-term private capital.
Just a few years ago, Battery Energy Storage Systems (BESS) in Ukraine were primarily viewed as a promising technology. The discussion focused on technical specifications, battery costs, and the payback periods of individual pilot projects. Today, these parameters no longer fully explain the processes taking place in the sector.
As a result of the loss of more than 20 GW (up to 50%) of generating capacity due to the war, BESS have become a critical element of energy resilience. The question is no longer whether Ukraine needs energy storage. The question is: under what conditions can BESS become a fully-fledged class of infrastructure assets capable of systematically attracting long-term private capital?
From Technology to an Investment Asset
New energy solutions tend to follow a similar development path. Initially, they are assessed primarily through their technical parameters. However, as the market matures, the key factor becomes an asset’s ability to generate predictable economic value. This transition is now taking place with BESS in Ukraine as well. It is being accelerated by the liberalization of legislation and the simplification of procedures.
Since 2024, BESS installations can be commissioned without construction permits and placed on land plots regardless of their designated purpose. In addition, for BESS with a capacity of up to 5 MW operating under self-consumption and Net Billing mechanisms, the licensing requirement has been abolished. For other operating models, licensing requirements depend on the installation’s capacity and the specific project configuration.
Another practical step has been the recent liberalization of regulation by the National Energy and Utilities Regulatory Commission (NEURC). Operators of energy storage facilities (ESS) are now allowed to sell electricity to consumers sharing a common grid connection point without a power supply license, provided that proper commercial metering is in place. At the same time, renewable energy producers have been given the possibility to supply backup power to the electrical installations of related parties. An additional financial incentive remains the exemption from VAT and import duties on relevant energy equipment, which has been extended until January 1, 2029.
While investors previously focused primarily on the technology’s payback period, BESS today need to be assessed across at least three interconnected dimensions: investment readiness, revenue resilience, and system value.
Investment Readiness (Bankability)
Investors are interested not in the technical specifications of the equipment, but in the project’s ability to attract financing. The quality of project preparation comes to the forefront – from land and grid connection to contract structures and the financial model. Manageable risks and clearly defined revenue streams are becoming more important than the technology itself.
In practice, the key constraint on attracting capital is the shortage of high-quality ready-to-build projects. It is often at this stage that it is determined whether a future BESS will have investment value rather than merely technical readiness.
Revenue Resilience
Relying on a single revenue model makes a BESS project highly vulnerable. Therefore, modern business models rely on a combination of several market mechanisms (revenue stacking), reducing dependence on any single revenue source:
- Ancillary services: Auctions conducted by NPC “Ukrenergo” for Frequency Containment Reserve (FCR) and automatic Frequency Restoration Reserve (aFRR) provide five-year contracts denominated in euros, which represents a stable signal for investors.
- Green auctions (Feed-in Premium): The updated mechanism, with the program running until 2034, provides for a dedicated quota of at least 10% for Solar + BESS projects. Such projects are subject to specific requirements for storage configuration: the storage power capacity must be at least 80% of the solar PV plant’s capacity, while its energy capacity must be at least 2 kWh per 1 kW of installed solar PV capacity.
- Market arbitrage: BESS enable revenues to be generated from price differences by operating in the Day-Ahead Market, Intraday Market, and Balancing Market.
System Value
The value of energy storage is not determined solely by how much energy it can store. More important is when and what kind of service it can provide to the power system.
BESS increase grid flexibility and facilitate the integration of renewable generation. This is why the Solar + BESS model is becoming one of the key directions: it makes it possible to manage the generation profile and provide the system flexibility that solar generation alone cannot deliver.
Investment Barriers in the Ukrainian Market
According to SEAU estimates, following the commissioning of the first megawatt-scale projects in 2025, approximately 1 GWh of new utility-scale storage capacity was added, while total newly added capacity, including the residential and C&I sectors, reached 3 GWh. By the end of 2026, more than 3 GWh of additional BESS capacity is also expected to be deployed. The market is already transitioning to an industrial scale. At the same time, another aspect of the issue is becoming increasingly apparent – the extent to which these assets are ready to attract long-term capital.
The Ukrainian market presents investors with several significant barriers:
- Debt crisis: The most acute issue remains the debt crisis in the balancing market segment.
- Regulatory constraints: The application of price caps by the regulator (NEURC) limits the potential profitability of projects relying on market arbitrage.
- Infrastructure challenges: Procedures for connecting new facilities to the power system remain slow and complex. At the same time, the lack of mandatory registration for self-consumption installations makes the market statistically “invisible,” complicating strategic planning.
- War-risk insurance: The lack of effective and comprehensive mechanisms for insuring war-related risks remains a critical obstacle to attracting large-scale foreign investment.
What This Means for Market Participants
For BESS developers, projects should already be designed as standalone assets with their own financial models. The ability to bring a project to the ready-to-build stage is becoming one of the key competitive advantages.
For banks and financial institutions, the question is different: are they ready to adapt their project financing approaches to a new class of assets with multi-component revenue streams?
For the state and the regulator, the priorities remain practical: resolving the debt crisis, simplifying grid connection procedures, and establishing effective mechanisms for war-risk insurance. Without these measures, market scaling will remain limited.
Conclusion
Ukraine’s energy storage market is entering a new phase. The decisive factor is no longer the speed at which batteries are deployed, but the ability to integrate them into fully-fledged investment models.
The next stage is not simply about more BESS. It is about higher-quality projects, clearer revenue models, and financing structures designed around Ukrainian risks.
This is precisely where the line will be drawn between energy storage as a technology and BESS as an infrastructure asset that can be clearly valued, financed, and insured, and that is capable of systematically attracting long-term capital.