With investments into renewables topping USD 7 billion and a total renewable power capacity reaching 7 GWt that continue to grow, Ukraine’s efforts to disrupt the conventional energy have been positively marked on an investment radar. In 2019, BloombergNEF ranked Ukraine among top-10 most attractive emerging markets for investing into renewables. The country also offers over 11 Bcm of proven natural gas reserves and significant gas storage capacities of over 31 Bcm that remain underutilised.

Since 2014, Ukraine has acted consistently in pursuing energy independence. The nation has transposed core EU energy laws and simplified domestic legislation seeking to kickstart the liberalisation of energy markets and maintain their integration with the European energy system.

The country enjoys more than 11 Bcm of proven natural gas reserves. It also boasts significant gas storage capacity of over 31 Bcm that remains underutilised and offers a 'customs warehouse' duty- and tax-free regime for gas stocks physically imported for a certain period of time for their re-exports at discounted rates. Recently, the country’s gas TSO has kickstarted auction-based gas capacity allocation at its cross-border interconnection points through overseas platforms, boosting competition among the network users and securing efficiency in international energy capacity allocation.

Ukraine further administers one of the largest in the world gas transmission systems (GTS).

The GTS allows secure transportation of natural gas by volumes more substantial than through regular European pipelines, and delivers short-haul transit services for a competitive fee. Additionally, virtual interconnection points are soon to be introduced aimed at facilitating cross-border gas trading and activities of adjacent gas transmission system operators.

All of the above can prove helpful not only to balance gas supplies in the CEE, but also to make the European energy market more efficient and secure.

Positive developments also include pro-investor transformation of the principal authority regulating the geology and subsoil use operations, as well as the exercise of an expanded toolkit for gas producers, including through production sharing agreements that apply to offshore sites, too. As a result, there emerged dozens of gas traders, who apart from doing deals, have also been contributing to the country’s energy security. Global service companies have also been active bringing their expertise and tech to intensify gas production, whilst new investors continue to compete for their share in the upstream.

At the same time, Ukraine has been noticeable for its favourable legal environment in the renewables.

Total investments into the sector exceed USD 7 billion covering over 5 GWt of power capacity, of which by the end of 2020, the purely international investors’ share is to reach 1/3 of the total renewables capacity and USD 2,5 billion of the investment portfolio, respectively. The sector is further boosted by an increased appetite of private household investors accounting for approximately 24 k households with total power capacity of more than 600 MWt and half a billion US dollars in investments. The pre-PPAs freshly executed prior to January 2020 secure 12 GWt of total renewable power output.

Our team members have served as general counsels in some of the largest energy companies, as well as acted for numerous international investors delivering full legal support in the largest renewables mandates.

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