EY Ukraine supports Phase II of the EU-funded project “Better Services for Consumers in the Reformed Energy Markets”

EY Ukraine continues to actively support the development of Ukrainian energy market. Within the EU‑funded initiative “Better Services for Consumers in the Reformed Energy Markets – Phase II” EY Ukraine applies its significant sector experience to provide deep expertise into the current state of Ukraine’s energy system while contributing to the strategic shaping of its future.

As part of the project, EY Ukraine delivers a wide range of services including legal and regulatory analysis, economic assessment, and market‑focused research. The team’s involvement includes:

• conducting comprehensive analyses to assess the alignment of Ukrainian legislation with European standards, including evaluating its transposition and implementation;
• drafting regulatory legal acts governing the electricity and natural gas sectors;
• preparing analytical studies regarding market operation, specific activities, phenomena, and emerging trends within Ukraine as well as selected EU jurisdictions;
• developing analytical tools and templates to automate targeted calculations and reporting processes;
• delivering training sessions for stakeholders on requested topics and the use of developed tools.

The EU-funded project “Better Services for Consumers in the Reformed Energy Markets – Phase II” supports the National Energy and Utilities Regulatory Commission (NEURC) in advancing energy market reforms that benefit consumers and stakeholders in Ukraine. Building on Phase I, which began shortly before Russia’s invasion of Ukraine, the project strengthens EU–Ukraine cooperation to develop transparent, competitive wholesale and retail energy markets and improve consumer protection and empowerment. Phase II also supports Ukraine’s EU accession path by helping NEURC align energy market regulation with the EU acquis.

The project is structured around three components. Component 1 supports regulatory reforms to improve electricity and gas wholesale and retail markets, promoting transparent competition that benefits and protects consumers. Component 2 strengthens consumer protection and empowerment, with a focus on combating energy poverty. Component 3 builds the capacity of NEURC and other energy stakeholders to implement these reforms, drawing on experience and best practices from EU Member States. An important part of the work is the ad-hoc assistance that the project will provide for further aligning energy market regulation with the EU acquis.  Strategic support will be provided in elaborating the regulatory amendments of the Ukrainian energy markets’ legislation for compliance with the EU acquis, strategic advice on the implementation of these regulatory amendments and ensuring that they are effectively integrated into the national legal system of Ukraine.

A key achievement of Phase I of the project under Component 1 was supporting NEURC in developing 70% of the secondary legislative acts adopted to enforce the Regulation on Wholesale Energy Market Integrity and Transparency (REMIT). REMIT is the EU framework that prohibits market abuse, attempted manipulation, and insider trading in energy markets, ensuring transparency and fair competition for the benefit of consumers. Phase II provides technical assistance to support REMIT implementation and in preparing the mechanisms for the transition of Ukraine from REMIT to REMIT II including the period after market coupling between Ukraine and the EU and before Ukraine joins the EU.  REMIT II, adopted by the European Union in 2024, introduces changes that further strengthen transparency in wholesale energy markets.  The project will develop a step-by step action plan for NEURC’s cooperation with ACER, the Energy Community Secretariat and the European Commission for the transition period.

Under Component 1, the project will also address electricity storage systems, which are essential for grid stability, resilience, and overall power system performance. Given Ukraine’s current energy challenges, electricity storage is critical for strengthening energy security, supporting energy access in remote areas, and enabling further energy market development. The project will provide guidance on regulatory review for storage integration, proposals to accelerate storage deployment in Ukraine, EU benchmarking and case studies, and impact assessment of storage-related reform.

The project also addresses Guarantees of Origin by developing EU-aligned approaches for electricity suppliers to disclose energy origin information to end consumers (including in consumer bills) and by creating a “residual energy mix” methodology to harmonise how the environmental impact of energy consumption, including CO₂ emissions, is calculated and disclosed.

Power losses are categorized as “technical” and “non-technical”. Technical losses are unavoidable due to physics, while Non-Technical Losses (NTL) occur when electricity is delivered or used but not properly metered or billed—through theft, unmetered use, or faulty/tampered meters. NTL undermines reliability, increases outages and safety risks, and often raises tariffs for energy consumers. Reducing NTL requires both technical solutions (smart metering, monitoring, data analytics) and regulatory/legal measures (clear rules and incentives), especially to deter theft. Under Component 2, the project will provide guidance on the regulatory and legal frameworks of NTL, so there is a solid understanding of both the frameworks and the treatment of NTL on an EU level including meter inspections, methodology for confirming non-technical losses and methodology for assessing the level of energy loss as well as the legal treatment of electricity theft.

As part of Component 2, the project will prepare recommendations to strengthen the energy market framework for consumers and prosumers, focusing on Demand Response and EV charger deployment. Building on Phase I deliverables on introducing demand management in Ukraine’s retail markets, this activity will align with Directive (EU) 2019/944 and Regulation (EU) 2019/943 and support demand-side flexibility through the growth of distributed energy resources, with particular emphasis on electric vehicles. A detailed case study from one EU Member State will examine real-world flexibility applications, including EV-based demand response, and how these could operate under different aggregator models.

The project will also assess the development of Citizen Energy Communities (CEC) and Renewable Energy Communities (REC). These are legal entities whose main objectives are to deliver environmental, economic, or social benefits to members or shareholders. In June 2023, Ukraine adopted Law No. 3220 on restoring and green transformation of the power system, introducing amendments that partially transpose RED II and the Electricity Directive. However, the Energy Community Secretariat noted in its compliance report that the concept of energy cooperatives remains unclear and requires alignment with the Electricity Directive.

To support progress in this area, the project will review EU best practices, assess Ukraine’s legal and regulatory frameworks for energy communities, identify regulatory, market, and technical barriers, and develop proposals for high-level legislative amendments and practical recommendations for introducing energy communities in Ukraine.

Under Component 2, the project will also prepare a report with recommendations to improve the electricity and gas supply code to better address consumer protection, data exchange and access to data rights, data protection, procedures for filing complaints with the Regulator, and dispute resolution by the Regulator. This includes an assessment of the current consumer protection situation and recommendations for implementing relevant EU provisions that go beyond supplier switching, which was addressed in Phase I.

The project will also advise on the introduction and monitoring of dynamic electricity price contracts as an alternative to fixed-price contracts. Dynamic pricing allows consumers to pay variable rates based on the time-of-day electricity is consumed and can reduce costs for consumers who can adapt their consumption behaviour. A comprehensive report will analyse the opportunities, costs, and risks of dynamic pricing for consumers, identify potential barriers, and provide regulatory and monitoring recommendations to support its introduction and effective management in Ukraine’s retail electricity market.

A key focus under Component 2 is energy poverty. Phase II will concentrate on calculating, monitoring, and reporting energy poverty levels, as well as identifying mitigation measures and associated regulatory requirements. Building on Phase I work, which focused on defining energy poverty metrics and developing a methodological framework, Phase II will develop a calculation tool to measure energy poverty. The tool will estimate the number of energy-poor households, track changes over time, and map support schemes and required measures geographically to identify where energy poverty is most prevalent and where interventions are taking place, ensuring resources are targeted to areas of greatest need.

To support public awareness and coordination with public authorities, the project will develop a standard reporting template covering two linked elements: the level of energy poverty and the initiatives or measures being implemented to mitigate or solve energy poverty in Ukraine.

Based on European best practices, the project will also prepare a concept for regulatory arrangements for energy poverty measurement and monitoring. This document will be developed through communication with NEURC and other relevant government institutions and will address the distribution of institutional responsibilities, information exchange procedures, and processes for measuring and monitoring energy poverty in Ukraine.

Training is a key element of the project which is interconnected with the other two project components and will facilitate the transfer of know-how on the regulatory activities implemented as part of this project.  Six training workshops will be carried out in line with the key topics addressed in the work of Components 1 and 2.

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