The Verkhovna Rada approved the legislation, known as Bill No. 12087-D, in its final reading, paving the way for deeper synchronization between Ukraine’s energy system and European markets.
The bill removes barriers between Ukraine and the EU energy space, allowing market participants to trade electricity freely on a unified platform.
“The main innovation of this document is the creation of an ‘energy Schengen’ for Ukraine. We are erasing the borders between our energy market and the European space,” Herus said.
Under the new system, electricity prices and access to cross-border transmission networks will be determined simultaneously, replacing a system that previously required traders to separately secure cross-border capacity and then find buyers or sellers.
The bill introduces so-called implicit auctions, eliminating what he described as “two circles of bureaucratic hell” for traders.
Another key provision legalizes negative electricity prices — a common feature in EU markets that reflects fluctuations in supply and demand, particularly with renewable energy.
“In terms of scale, this step can be compared to the 2017 reform, when we created a modern market model domestically. Today, we are making that model part of the larger European family,” Herus said, adding that the legislation will not affect electricity prices for households but is intended to gradually align market rules with those of the EU.
Andriy Zhupanin, a co-author of the bill and deputy head of the energy committee, said the reform could unlock about €500 million ($585 million) in funding under the Ukraine Facility program.
He added that full market integration is expected to take 12 to 18 months after the law’s adoption, with potential launch dates of Jan. 1, 2028, or Jan. 1, 2029, pending additional regulatory steps.
The law also removes price caps in the electricity market, further aligning Ukraine’s system with European standards.