Secretariat and Ukrenergo Develop De-Risking Mechanism in Support of Grid Resilience and Renewable Energy Integration

The Energy Community Secretariat and NPC Ukrenergo are developing a risk mitigation mechanism for participants of long-term special auctions for the purchase of ancillary services. The relevant Memorandum of Understanding (MoU), within the framework of the events of the Rome Ukraine Recovery Conference, was signed by Vitalii Zaichenko, Chairman of the Management Board of NPC Ukrenergo and Artur Lorkowski, Director of the Energy Community Secretariat.

The main goal is to support Ukrenergo's efforts to increase the capacity of ancillary services. This will strengthen the resilience of the Ukrainian power system in the face of Russian attacks and allow for the continuation of the effective integration of renewable energy facilities into the Integrated Power System (IPS) of Ukraine.

The de-risking mechanism aims at:

• Supporting the implementation of projects that won Ukrenergo's special auctions for the purchase of ancillary services;
• Reducing specific project risks, including damage to infrastructure due to hostilities;
• Unlocking financing or freeing up capital for investors participating in Ukrenergo's special auctions.

"For Ukrenergo, special auctions for the provision of ancillary services have proven to be generally successful. The introduction of a risk mitigation mechanism will make participation in special auctions even more attractive for investors. Accordingly, competition between participants will increase, due to which we expect even greater savings on the purchase of ancillary services," said Vitalii Zaichenko, Chairman of the Management Board of NPC Ukrenergo.

"The MoU reaffirms the Energy Community Secretariat’s trust in Ukrenergo's auctions for the provision of ancillary services by Ukrainian staekolders. The new innovative de-risking approach will enable private investments to move forward with new generation capacity projects despite the challenges posed by wartime. It will also reduce risk for Ukrainian banks which finance the energy projects that aim to support the stability of the Ukrainian grid", said Artur Lorkowski, Director of the Energy Community Secretariat.

It is expected that the de-risking mechanism for investments will be applied within the framework of the activities of the Ukraine Energy Support Fund (Fund), which is administered by the Energy Community Secretariat.

Based on the MoU, the Energy Community Secretariat and Ukrenergo will collaborate in the coming weeks to finalise the mechanism’s structure and — subject to alignment with donors — initiate the implementation phase.