Green Energy at the Center of Ukraine’s Energy Sector Reconstruction Russia Destroyed

“War, of course, is a tragedy, but it’s up to you how you respond to it,” said Volodymyr Kudryckiy, CEO of Ukraine’s state-owned electricity distributor, Ukrenergo. “You can say, ‘Okay, this is a terrible situation and we are just victims’ — or we can try to rebuild better, come back in better shape.”

The plan is to switch from large, smoky thermal power plants (there are nine in Ukraine and they supply electricity to much of the country) to a mix of renewable energy that can be tapped using wind and solar power, energy storage facilities and biofuel plants.

At the same time, officials say, a vast network of smaller gas turbines will be built across the country that will generate enough electricity to power a small town or city block, which will also be less vulnerable to attack.

“We can’t say it’s good that the war led to this. But we can say… our strategic task is to take advantage of this situation,” Kudrytskyi said. He added that because of Russia’s invasion, Ukraine will introduce a low-emission energy system before many European countries.

Energy sector paralyzed ahead of winter

The task, however, is daunting. Ukraine is undertaking a major overhaul of its energy sector because it remains at war with Russia. In addition, the authorities must attract outside investors and financing, organize some form of war insurance and create a regulatory framework for a new, decentralized energy system.

Ukraine is already partly a clean-energy country. About half of its electricity comes from nuclear plants, which emit no emissions. Hydroelectric plants provide some electricity, but the Russians have them in their sights. Green energy, such as solar and wind, has declined sharply since the war began, but accounted for about 10 percent of production last year, the country’s Energy Ministry said.

However, thermal power plants are necessary and crucial to cover short-term increases in consumption.

Because of Russian airstrikes, Ukraine has lost about nine gigawatts of the 18 gigawatts needed for peak demand this winter — far too much to recover in such a short time. Officials say power could be limited to five to seven hours a day — or less — during the cold winter months.

Ukrainian officials are trying to gather enough equipment from outside the country to keep the outages to a manageable level. Some of that equipment will go to repair thermal power plants that can be saved, officials said.

But the Ukrainian government has also begun buying small gas turbines that officials hope will generate half a gigawatt to one gigawatt of energy this winter and help cities provide basic services in the event of sudden power outages.

Officials say that as more renewable energy sources come online in the coming years, reliance on the turbines will decrease and they will be used primarily to balance energy load on the power grid.

Eventually, there could be thousands of such units across the country. Together with wind and solar farms, they would make it much harder for Russian missiles to target the energy system.

“Imagine a situation in two, three years when we have hundreds of new gas-generating facilities, wind farms, a few more solar farms, biomass, where possible — it will be a really quite resilient system against missile attacks,” said Yuri Kubrushko, founder of Imepower, a Ukrainian energy consulting firm.

“Because it’s easy for the Russians to attack 10 large power plants, that’s really obvious,” he said. But when there’s a system of smaller units, “it’s really not worth firing an Iskander (ballistic missile) at every two- or three-megawatt gas engine in every small town.”

But there are many obstacles — not the least of which is the challenge of attracting investors to a country embroiled in Europe’s biggest conflict since World War II.

Since March, Russian forces have regularly bombarded Ukraine with missiles and drones, often damaging energy facilities that have only recently been repaired after previous attacks. DTEK power plants, for example, have been attacked more than 180 times, according to the company.

To cope with energy shortages this summer, periodic power cuts were introduced.

According to Grzegorz Zieliński, head of the Energy Europe team at the European Bank for Reconstruction and Development, “large international players would be rather reluctant to invest in Ukraine during the war.”

“So the approach is different, it’s very bottom-up, identifying those few investors who are willing to commit capital,” he said. “That’s mostly true for Ukrainian investors because for them the risk perception is completely different.”

Some outside companies are interested, however. The EBRD signed a joint venture with Germany’s Goldbeck Solar Investment at the Ukraine Recovery Conference in Berlin last month to develop about 500 megawatts of solar power over the next three to five years.

Securing international financing is also a problem — as is convincing insurance companies to cover the risk. “We don’t have access to commercial financing,” said Maksym Timchenko, CEO of DTEK, Ukraine’s largest private energy company.

DTEK supplies most of Ukraine’s heat—the company has lost nearly 90 percent of its generating capacity, Timchenko said—but it is also a major player in renewable energy. A Russian missile attack recently targeted one of the company’s solar farms, but the damage was quickly repaired because solar panels are much easier to repair and replace than power plants.

Timchenko has said he fully supports turning Ukraine into a clean-energy haven, and experts say DTEK is likely to play a role in the project. But international institutions have been hesitant to provide funding to the company because it is owned by Rinat Akhmetov, Ukraine’s richest oligarch, which Western diplomats say raises corporate governance issues.

Long-term projects, slow payback

It will also be difficult to develop an effective decentralized network regulation system for the whole of Ukraine — a country roughly the size of Texas — while providing investors with a steady stream of income.

“If you want to invest in renewables – where the asset life is 20, 25, 30 years – you want to be sure that the regulatory framework is going to be in place for a long time,” said EBRD’s Zielinski.

Ukraine’s previous attempts to boost renewable energy have been mixed, and reform of the energy sector — traditionally an opaque and highly profitable area for the country’s oligarchs — has long been blocked, observers say. Last year, the Ukrainian government was reported to have owed renewable energy producers about $500 million.

If the clean energy plan goes ahead, it would cost billions of dollars and ultimately take years to implement. But Ukrenergo’s Kudrytskyi said Ukraine needs to start immediately to prepare “for the coming winters.”

“Because if we don’t start now, the winter of 2025-2026 will be much harder than the winter of 2024-2025.”

Kostiantyn Khudov assisted in the preparation of this report.