Context
Since Russia’s invasion in 2022, Ukraine has lost more than a third of its baseload power generation, around 10 GW, leaving over 12 million people exposed to severe energy poverty and prolonged blackouts. Rebuilding the energy sector will cost an estimated EUR 66 billion, a gap the state cannot close alone given annual fiscal deficits above EUR 38 billion. Energy remains Ukraine’s largest source of emissions, accounting for around 70% of the national total, while increased diesel and coal use during the war has added further pressure. Yet Ukraine remains committed to cutting emissions by 65% by 2030 and aligning with EU energy rules. With renewable potential exceeding 800 GW, Ukraine has significant scope for decentralised clean energy, but few projects currently meet international investment standards.
Goals and approach to transformational change
The project aims to mobilise EUR 300 million for 20–25 decentralised renewable energy and biomethane hubs, totalling 500 MW, by combining project preparation support with catalytic first-loss equity. Modular, storage-backed systems will strengthen energy resilience by helping municipalities and critical facilities maintain power during blackouts. By absorbing risks that private investors are currently unable or unwilling to take, the project aims to demonstrate that mid-sized renewable projects can reach financial close even in a conflict-affected market. Successful first projects will establish standardised, investable models for resilient reconstruction and are expected to help later portfolios attract capital on increasingly commercial terms, reducing reliance on concessional finance over time.
Components and support mechanisms
The EUR 21 million Financial Component (FC) component combines two instruments. An EUR 8 million Project Preparation Facility covers early-stage costs such as structuring, design, and environmental and social safeguards for pipeline projects, addressing a stage where commercial finance is currently unavailable. A further EUR 13 million in catalytic first-loss equity is invested in the blended finance vehicle, absorbing country risk and helping mobilise a larger pool of senior institutional capital.
The EUR 4 million Technical Component (TC) component strengthens the enabling environment by developing hybrid, storage-backed hub designs suited to a conflict-affected grid, establishing carbon accounting and Monitoring, Reporting and Verification (MRV) systems aligned with international carbon markets, and aligning the investment model with international capital market standards.”
Long-term impact
The 500 MW portfolio is expected to avoid around 500,000 tCO2e annually while strengthening energy resilience and supporting Ukraine’s 2030 climate target. More importantly, the project aims to demonstrate that decentralised renewable infrastructure can attract commercial capital even in a conflict-affected market. Successful replication would help steer reconstruction towards resilient, low-carbon generation rather than new long-lived fossil assets.