Building Solar Power Plants for Self-Consumption: When is a License Mandatory?

Investing in the construction of solar power plants, hereinafter referred to as SPPs, for internal use has become one of the key tools for reducing costs and improving the stability of Ukrainian businesses. For industrial enterprises, the agricultural sector, logistics complexes, and manufacturing companies, an in-house SPP makes it possible not only to reduce electricity costs but also to ensure energy stability during shortages or emergency outages.

However, constructing an SPP for a company’s own consumption does not mean that the business is automatically exempt from the requirements of energy legislation. The line between an “ordinary consumer” and an entity that must obtain an electricity generation license remains one of the most common causes of disputes with the NEURC and distribution system operators.

Legal Boundaries: When You Turn From a Consumer Into an Electricity Producer

Most companies start with a self-consumption model, expecting there to be no bureaucracy at all. Indeed, the law allows electricity to be generated for one's own needs without a license, but only within certain limits.

Under the licensing conditions, electricity generation activities are subject to licensing in the following cases:

• if the total installed capacity of electricity-generating equipment at one metering point is 5 MW or more;
• if the total combined capacity of equipment across all metering points exceeds 20 MW.

Commercial activity is a separate issue. A license is always required, regardless of the SPP capacity, if you:

• sell electricity under the “green” tariff;
• participate in electricity sale auctions;
• sell electricity to other consumers under contracts.

Therefore, if a company plans to sell electricity regularly or commercially, in most cases, it will need to obtain a license, even with relatively small generation volumes.

Expert tip: If you are considering scaling your business, calculate the SPP capacity with future construction stages in mind. Businesses often install 4 MW today and add another 2 MW a year later, forgetting that this step fundamentally changes their legal status.

At the same time, there are exceptions where electricity can be sold without a license, if it is generated for own consumption and surplus electricity is sold occasionally within permitted models.

This is exactly where the status of an active consumer applies.

You might also like: How to Start Business Operations in Ukraine’s Electricity Market and Choose the Right Model

Selling Surplus Electricity Without a License: Active Consumer Status

According to NEURC clarifications, not every sale of electricity automatically means that a license is required. This is a lifeline for businesses that do not want to become professional participants in the energy market but want to avoid wasting solar energy, for example, on weekends or during peak sunlight hours.

If your company generates electricity primarily for its own needs, but periodically has surplus electricity that can be supplied to the grid, it may operate as an active consumer. Active consumer status allows you to:

• sell surplus electricity without a license;
• partially recover the costs of the SPP;
• legally supply electricity to the grid without being treated as conducting unlicensed activity.

However, there are strict conditions for maintaining this status:

1. The installed capacity of the SPP must not exceed the permitted capacity under your grid connection agreement.
2. If the volume of electricity supplied to the grid during the year exceeds 50% of your total consumption, meaning your own consumption plus electricity taken from the grid, active consumer status is lost for one year.
3. A bidirectional meter must be installed, and an additional agreement must be signed with the supplier under the self-production mechanism (net-billing.

This regime is usually used for small and medium capacity SPPs, up to 5 MW, where generation is auxiliary to the company’s core business.

Example: A company installs a 300 kW or 1 MW SPP. During working hours, all electricity is consumed by its production lines. However, on weekends, the load drops significantly while sunlight remains strong, creating surplus electricity. By operating as an active consumer, the company can sell these kilowatts to the grid.

To do this, the company must:

• conclude an agreement with the distribution system operator;
• install a bidirectional meter;
• ensure separate metering of consumed and supplied electricity;
• execute a sale and purchase agreement for the surplus.

At the same time, this mechanism is not suitable for large SPPs that are effectively created as a business for selling electricity. In other words, if your goal is to generate systematic income from electricity production, the active consumer route is not for you.

You might also like: Net Billing: What Is It and How to Connect

SPP for Own Consumption Only: When No License Is Required at All

The law directly provides that no license is required if electricity is:

• generated without the purpose of sale;
• not supplied to other persons under a contract;
• fully used for the company’s own needs.

Formally, this means that even an SPP with a total capacity of 20+ MW may operate without a license if all electricity is consumed internally by the company.

Please note! The law allows operation without a license at any capacity if the electricity is generated “without the purpose of sale”. However, there is a hidden risk here: if you have an SPP of 5+ MW, or 20 MW in total, and it is connected to the public grid, any technical reverse flow, even accidental, may be interpreted by the NEURC as unlicensed activity.

When Is a License for SPP Electricity Generation Mandatory?

This question is key to the strategic planning of energy independence. If you are planning a project that goes beyond “minor savings”, you should prepare for licensing in advance.

An electricity generation license is required if the company:

• has an SPP with a capacity of more than 5 MW at one site or more than 20 MW in total and supplies electricity to the grid;
• supplies electricity to the grid without an active consumer status;
• sells electricity under the “green” tariff or through auctions, regardless of capacity;
• sells electricity to other consumers under contracts, except in cases involving an active consumer;
• effectively creates an SPP as a separate business for generating and selling electricity.

To quickly understand where the line between electricity producer models lies in 2026, see the table below.

As you can see, the key difference is not capacity, but the operating model and the fact of supplying electricity to the grid. If your kilowatts “touch” the public grid, you must have either active consumer status or a license.

You might also like: Documents Required for an Electricity Generation License in 2026

Risks of Operating Without an Electricity Generation License

In practice, the greatest risks arise for companies that formally declare “own consumption”, but in fact:

• supply electricity to the grid;
• cannot fully prevent technical reverse flows;
• use the SPP as an actual source of commercial generation.

In such cases, the regulator may qualify the activity as electricity generation without a license, which falls under the Law of Ukraine “On the Electricity Market” and the Licensing Conditions for conducting business activity in electricity generation, approved by the NEURC.

In particular, the very fact of carrying out electricity generation activities without complying with licensing requirements may serve as grounds for claims by the regulator in cases where such activity is subject to licensing under the established capacity thresholds or the actual operating model of the facility.

The consequences for the business may include:

• regulatory measures by the NEURC, including orders and inspections;
• fines for violation of licensing conditions;
• requirements to stop supplying electricity to the grid until the violations are remedied;
• complications or blocking of interaction with the distribution system operator;
• the need to urgently obtain a license after the SPP has already been launched;
• legal disputes over whether the company’s activity should be classified as licensable.

We have separately discussed liability for selling electricity without a license here.

Legal Support for Obtaining an Electricity Generation License

Building an SPP for own consumption is always about balancing technical solutions with legal requirements. This is exactly where businesses most often make mistakes: everything may work technically, while legally the model has already gone beyond what is permitted.

That is why the legal operating model of an SPP should be determined not after construction, but at the planning stage.

We support SPP projects based on the regulator’s real practice and help build a system that works not only technically, but also legally by:

• analyzing your generation model and determining whether you remain within your own consumption, move into active consumer status, or become a licensed producer;
• assessing the risks of technical reverse flows and how they may be qualified by the regulator;
• supporting the process of obtaining an electricity generation license or formalizing active consumer status;
• building the contractual model with the distribution system operator, the supplier, and electricity buyers;
• checking the compliance of already implemented projects if the SPP has already been built, and there are doubts about its status.

We can join the project at any stage, from the initial idea to an already operating station, and help bring it into a legally safe model.

Planning to build an SPP or already have one? Start with an analysis of the model. This will help determine whether you are required to obtain a license and where risks may already exist.

Contact us for a consultation. We will analyze your situation and show how to structure it properly before it becomes a problem.

Learn more about obtaining an electricity generation license and its cost with us here.