On-Site Electricity Generation for Business in Ukraine
Businesses install on-site generating installations to improve energy resilience, reduce dependence on external supply and, where permitted by law, sell surplus electricity. The applicable legal requirements depend primarily on whether electricity is exported to the grid and whether it is sold.
This article is intended for Ukrainian and foreign companies planning on-site generation or energy-storage projects in Ukraine, including solar power plants, gas generators and cogeneration installations. It is particularly relevant to their management, finance and compliance teams.
Electricity generated solely for a business’s own consumption without the purpose of sale does not require an electricity generation licence, regardless of installed capacity. An active consumer may sell surplus electricity through the self-generation mechanism. Grid connection, commercial metering, storage, construction, land and tax requirements must be assessed separately.
1. On-Site Electricity Generation Models for Business
2. Licensing of electricity generation
3. Active consumer and the self-generation mechanism
4. Sale of surplus electricity
5. Grid connection of generating installations
6. Energy storage
7. Gas generation and cogeneration
8. Construction and land requirements
9. Environmental requirements
10. Tax and equipment import
11. Guarantees of origin and project review
Frequently Asked Questions
How DLF Can Help
1. On-Site Electricity Generation Models for Business
The Law of Ukraine “On the Electricity Market” No. 2019-VIII does not establish on-site electricity generation as a separate legal regime. A business’s legal status depends on the actual model: own consumption only, use of the self-generation mechanism as an active consumer, or operation on the electricity market as a producer.
Before selecting a model for renewable energy projects, the business should determine whether grid export, surplus sales, energy storage or a state-support mechanism is contemplated.
2. Licensing of electricity generation
The Licensing Conditions for Electricity Generation specify when electricity generation is subject to licensing and set out the applicable exemptions.
Electricity generated without the purpose of sale and consumed for the business’s own needs does not require a generation licence, regardless of installed capacity. In other cases, unless a specific exemption applies, generation is subject to licensing once either threshold is exceeded: more than 5 MW at one metering site or more than 20 MW in aggregate across all metering sites.
Until 1 January 2028, Law No. 4213-IX provides a special rule for active consumers and third parties connected to active consumers’ networks: such generation is treated as generation for own needs and does not require a generation licence where the installed capacity of the relevant generating installations at one metering site does not exceed 20 MW.
Regardless of capacity, a generation licence is also required for an electricity facility using alternative energy sources where its generation is supported by a green tariff or auction price; for hydropower, this rule applies only to micro-, mini- and small hydropower plants. Law No. 4777-IX, which entered into force in 2026, also amended selected rules on renewable-energy support, energy storage and grid connection.
| Model | Generation licence | Market requirements | Electricity sale |
|---|---|---|---|
| Own consumption only | Not required regardless of capacity | Separate producer registration is not required | No commercial sale |
| Active consumer up to 20 MW at one metering site until 01.01.2028 | Not required under the special rule if its conditions are met | Separate producer registration is not required for the standard active-consumer model under the self-generation mechanism | Surplus sold to electricity supplier |
| Producer outside the self-generation mechanism up to 5 MW at each metering site and up to 20 MW in aggregate | Generally not required unless another licensing trigger applies | Market-sale requirements applicable to electricity producers apply | Bilateral contracts and other market segments |
| Producer above 5 MW at one metering site or above 20 MW in aggregate | Required unless a specific exemption applies | Market requirements applicable to electricity producers apply | Sale on the electricity market |
| Alternative-energy facility with a green tariff or auction price; for hydropower, only micro-, mini- and small hydropower plants | Required regardless of capacity | Depends on the support and sale model | Applicable support mechanism |
| Energy storage | Separate licensing regime; general threshold above 5 MW at one metering site | Depends on the business model | May operate in relevant market segments |
3. Active consumer and the self-generation mechanism
An active consumer may consume electricity, generate it, store energy and sell generated or stored surplus, provided that these activities are not its primary professional and/or business activity.
The self-generation mechanism is not limited to renewable energy. Gas generation and cogeneration are addressed separately below.
The Procedure for the Sale and Accounting of Electricity Generated by Active Consumers also governs settlement for such electricity. Depending on the contract, settlement may use netting or no netting; in the latter case, electricity exported to the grid and electricity consumed from the grid are paid for separately. This is a financial settlement mechanism, not a carry-forward of unused kilowatt-hours to the next period.
Pricing and settlement depend on the consumer category, the contract and the applicable NEURC rules. For non-household consumers, the terms for purchasing surplus electricity are set by the contract with the electricity supplier, subject to those rules.
4. Sale of surplus electricity
Under the self-generation mechanism, surplus electricity is purchased by the electricity supplier with which the active consumer has concluded a self-generation electricity sale and purchase agreement, not by the distribution system operator. For household and small non-household consumers, the rules also provide for a model involving the universal service supplier.
Selling surplus electricity under the self-generation mechanism does not in itself make the active consumer an electricity supplier to end consumers. Where electricity is sold outside this mechanism, the ordinary requirements governing market sales, contracts, commercial metering and imbalance settlement apply.
A direct line is a separate arrangement. Where NEURC approval is required by law, its construction and operation are governed by the Procedure for Approval of the Construction and Operation of a Direct Line.
5. Grid connection of generating installations
The Distribution System Code sets the technical and documentation requirements for connection at distribution level. For a generating installation installed by a consumer, the Code provides for an application under Appendix 11.
For a grid-connected installation that does not export electricity to the grid, the DSO’s technical and commercial-metering requirements continue to apply even if no electricity is sold. For generating installations from which electricity is intended to be exported to the grid, including under the self-generation mechanism, the diagram and other documents required by the Code for the relevant configuration must be prepared.
For an active consumer’s generating installation equipped with an inverter, installed capacity is determined by the nominal active electrical power of the inverter equipment, as confirmed by the technical documentation or technical data sheet. Before implementation, the business should conduct legal due diligence of the project, including its technical documentation and required permits.
Current legislation also provides for flexible connection, under which permitted capacity may be limited in accordance with the connection terms when the network is constrained. For a specific project, the version of the Code and the relevant NEURC decisions in force on the application date should be checked.
6. Energy storage
Law No. 2046-IX established a separate legal framework for energy storage. An energy storage installation is not legally identical to a generating installation.
Under the current rules, energy storage is subject to licensing where the installed capacity of energy storage installations at one metering site exceeds 5 MW. Statutory exemptions apply to certain configurations, so the licensing position should be assessed together with the connection and commercial-metering arrangement.
Where an energy storage installation is used exclusively for own consumption without exporting electricity to the grid, its operating mode and technical measures preventing grid export should be properly documented. Participation in balancing, ancillary services or other market segments is subject to the relevant market agreements and rules.
7. Gas generation and cogeneration
Gas generators and cogeneration plants may be used within the active-consumer model under the current rules. The electricity component is subject to the general rules on own consumption, licensing and surplus sales.
A cogeneration project requires separate assessment of its electricity and heat components. Under the Law of Ukraine “On Heat Supply” No. 2633-IV and the Licensing Conditions for Heat Energy Generation, no heat-generation licence is required where heat is produced for own needs and is not intended for sale under a contract. The Licensing Conditions also provide special exemptions for certain reserve cogeneration installations.
Guarantees of origin are issued only for electricity generated from renewable energy sources. Natural-gas cogeneration therefore does not qualify for guarantees of origin merely because it uses cogeneration technology.
8. Construction and land requirements
Cabinet of Ministers of Ukraine Resolution No. 77 of 28 January 2026 simplified specified works for installing solar power plants on roofs and facades. Works covered by the Resolution do not require documents authorising construction works, and the facility is not subject to acceptance into operation after completion of those works. For commercial and industrial buildings, the prescribed technical inspection remains required in the cases covered by the Resolution.
The simplified regime does not displace the Law of Ukraine “On Protection of Cultural Heritage”. Approvals and permits for listed buildings and other cultural-heritage assets must be assessed separately.
For ground-mounted generating facilities, before acquiring or using a land plot, the business should verify its land category, designated use and whether the planned facility is permitted. If the current designated use is incompatible with the project, it must be changed under the applicable procedure.
Law No. 3563-IX provides a special simplified procedure for changing designated land use for qualifying facilities and territories during martial law and for five years after its termination or cancellation. Availability of this procedure depends on the site, land category and type of facility.
9. Environmental requirements
The Law of Ukraine “On Environmental Impact Assessment” No. 2059-VIII specifies the types of planned activities and facilities for which environmental impact assessment is mandatory. For an on-site generation project, the need for EIA depends not on own consumption as such but on the technology, project parameters and location.
Wind, thermal, hydropower and other projects are assessed against the criteria in Article 3 of the Law. A ground-mounted solar installation is not automatically subject to EIA solely because of its installed capacity, although associated works or other project features may independently trigger the criteria in Article 3.
10. Tax and equipment import
Electricity supply is generally subject to 20% VAT. The Tax Code of Ukraine determines when VAT liabilities arise, the rules for tax invoices and the conditions for mandatory VAT registration. For a particular business, the aggregate amount of taxable supplies and its tax status should be considered, rather than electricity sales alone.
Revenue from surplus sales is taxed under the business’s applicable tax regime. Compatibility with the simplified tax system and other tax consequences should be assessed separately.
During martial law, but in any event no later than 1 January 2029, VAT and import-duty relief is available for specified categories of energy equipment identified by particular UKTZED codes. The relief does not automatically cover every generator, inverter, solar module or storage unit. Before importing equipment, the business should verify the exact UKTZED code, technical characteristics, origin and the rules in force on the customs-clearance date.
11. Guarantees of origin and project review
Cabinet of Ministers of Ukraine Resolution No. 227 introduced Ukraine’s system of guarantees of origin for electricity generated from renewable energy sources. Guarantees are issued under the Law of Ukraine “On Alternative Energy Sources” No. 555-IV and the applicable registry rules.
An active consumer generating renewable electricity may obtain guarantees of origin for self-consumed electricity if the registry requirements are met. A guarantee of origin certifies the renewable origin of electricity but does not replace the self-generation contract, determine the price or serve as a payment instrument.
Before launch, the business should align the legal model, capacity at each metering site, surplus-sale arrangements, connection and metering, storage configuration, cogeneration requirements, construction and land issues, EIA, tax treatment, equipment import and, for renewable generation, guarantees-of-origin registration.
Frequently Asked Questions
Does electricity generation for own consumption require a generation licence in Ukraine?
No, where electricity is generated without the purpose of sale and consumed for the business’s own needs. Grid-connection, metering, construction and other project requirements may still apply.
Can a business sell surplus electricity without a generation licence?
Yes. An active consumer may sell surplus electricity through the self-generation mechanism. Until 1 January 2028, active consumers and third parties connected to their networks do not require a generation licence where the installed capacity of the relevant generating installations at one metering site does not exceed 20 MW. Other models are subject to the general licensing thresholds and any applicable special rules.
Who purchases an active consumer’s surplus electricity?
The buyer is the electricity supplier with which the active consumer has concluded a self-generation electricity sale and purchase agreement. A model involving the universal service supplier may apply to household and small non-household consumers. The distribution system operator operates the network but does not purchase the surplus electricity.
Can gas generation be used under the self-generation mechanism?
Yes. Current rules cover gas generators and cogeneration installations. The technical configuration and the rules applicable to the specific installation should still be checked.
Do rooftop solar installations require construction permits or other construction authorisations?
Works covered by Cabinet of Ministers Resolution No. 77 of 28 January 2026 benefit from a simplified construction regime. Commercial and industrial buildings remain subject to the applicable technical-inspection requirement, and separate cultural-heritage rules may apply.
Is energy storage licensed under the same rules as electricity generation?
No. Energy storage is a separate regulated activity. As a general rule, a licence is required where the installed capacity of energy storage installations at one metering site exceeds 5 MW, although statutory exemptions apply to certain configurations.
Do guarantees of origin replace the self-generation contract?
No. They certify the renewable origin of electricity but do not replace the contract, determine the price or serve as a payment instrument.
How DLF Can Help
DLF attorneys-at-law supports Ukrainian and foreign companies throughout on-site generation and energy-storage projects in Ukraine, from selecting the regulatory model and confirming licensing requirements to structuring contracts, grid connection, land and construction matters, tax analysis and equipment imports. For such projects, the most relevant DLF practice areas include Renewable Energy Law and Tax Law.
Yaroslav Anikieiev, Counsel — DLF attorneys-at-law
Contacts: +380 44 384 24 54, info@dlf.ua
This material is intended for general information. The application of the approaches described depends on the circumstances of the specific situation and requires a separate legal assessment.