ECONOMICS
The upcoming winter in Ukraine is expected to be even tougher than the last one. Russia has shifted its tactics, targeting not only electricity grids but also power generating facilities. Over the past six months, Ukraine’s largest energy holding company, DTEK, has seen 90% of its thermal power plant capacity destroyed or damaged. The country as a whole is now producing barely a third as much electricity as it did the year before Russia’s full-scale invasion. Electricity is already being rationed, and as winter sets in, keeping the lights on will become a top concern. Some of the damaged infrastructure might be restored by then, and some energy will be imported from Europe, but it won't be enough. In the worst-case scenario, Ukrainians may only have electricity for four hours a day during the winter. The government remains hopeful that better case scenarios are still possible, but authorities in Kyiv are still urging people and businesses to “rely on themselves.” And while the government has eased import regulations on generators and is subsidizing solar panel purchases, many Ukrainians simply cannot afford such items.
Russia's targeted attacks on Ukraine's energy infrastructure in 2024 have caused significant damage to the energy system, leading to longer power outages, according to the National Bank of Ukraine (NBU). As a result, the country's projected electricity deficit is expected to exceed 7% this year (up from the previous estimate of 5%) and to persist for at least two more years. While businesses have partially adapted to the ongoing outages, power shortages have slowed economic growth in recent months.
Despite the very real damage Russia has done to the Ukrainian power grid, warnings about the country freezing this winter are dismissed as Russian propaganda aimed at demoralizing the population. Energy Minister Herman Galushchenko assures Ukrainians that heating systems will hold up despite Russia's ongoing attacks. However, Dmytro Sakharuk, the executive director of Ukraine’s largest energy company, DTEK, advises his fellow countrymen to “rely on themselves” when preparing for the cold. In response, residents are stocking up on flashlights, gas lamps for cooking, and charging stations. Businesses are installing generators, setting up solar panels, and even starting to buy electricity directly from abroad.
New Russian tactics: targeting power generation facilities instead of power grids
Since the beginning of the year, Russia has not only intensified its air attacks on Ukraine's energy system but also shifted its tactics. In 2022-2023, the focus was on distribution grids and substations, but now the strikes are aimed at power generation facilities. In just six months, 90% of DTEK's thermal power plant capacity has been destroyed or damaged. Hydropower has also suffered, with 45% of its capacity lost, including damage to the country’s largest hydroelectric plant, DniproHES. Before the full-scale invasion, Ukraine's generation capacity was 55 GW; now it is below 20 GW, with nuclear power plants providing the bulk of it. The total capacity of nuclear plants in Ukrainian-controlled territory is about 7.7 GW.
Since the beginning of the March wave of attacks alone, Russia has destroyed an astounding 9.2 GW of energy generation in Ukraine, according to EU Ambassador to Kyiv Katarina Maternova. To put that in perspective, Ukraine has lost a capacity equivalent to the peak load in countries like the Netherlands, Finland, or the combined total of Slovakia, Lithuania, Latvia, and Estonia. Altogether, since February 2022, the IMF estimates that the country's energy sector has suffered losses amounting to $56.5 billion.
The strike on DneproGES on March 22, 2024; later the station was re-attacked on June 1
The losses have led to two significant changes: an increase in electricity imports and the need for strict consumption limits, including regular forced shutdowns for large consumers.
In June alone, Ukraine imported more electricity than it did throughout all of 2023 — 858,400 MWh, compared to 806,400 MWh last year — making it the largest monthly import volume in the last 10 years. Hungary accounted for the largest share of imports (45%), followed by Poland (19%) and Romania (18%). Slovakia and Moldova also supplied electricity. Since the emergency synchronization that occurred on February 16, 2022, barely a week before the start of Russia’s full-scale invasion, Ukraine’s network connections with EU countries have provided a total import capacity of 1.7 GW.
However, domestic generation and electricity imports are still not enough to cover the deficit. As a result, for the first time since the winter of 2022-2023, in May large-scale regular power outages returned to Ukraine. Shutdown schedules have been implemented across the country, initially targeting businesses and industrial consumers, and later extending to households. Consumers not classified as critical infrastructure have been divided into six groups, with power outages rotating among them. On average, the power is cut several times a day for a couple of hours at a time.
Losses, poisonings and accidents
The impact of the energy deficit varies across the country: it's worse in the east than in the west. As expected, the frontline regions are suffering the most. It’s still not possible to transfer enough energy from western nuclear power plants to the east because Russian shelling has destroyed part of the distribution stations. In Kharkiv, reports from the spring indicated that nearly all energy infrastructure was destroyed by shelling. The city is gradually recovering, but even in July, power outages lasted up to 16 hours a day. Many residents in newer buildings were left without water, elevators, or the ability to cook on electric stoves.
Traffic lights are also being turned off, as not all are equipped with backup power, reducing road safety. Statistics show a sharp increase in road accidents across Ukraine. In cafes and shops, food is defrosting and spoiling, leading to an increase in complaints about stale products and a rise in food poisoning cases.
Businesses are also taking a hit. “When there's a power outage, it takes about 10 minutes for the generator to kick in, and by then all the dough in the ovens is already ruined, which means losses,” explains Natalia Petrovskaya, executive director of the Ukrainian Food Retail Alliance. Without electricity, the internet often goes down, making card payments impossible. These are just some of the additional challenges businesses are facing.
Animal husbandry is particularly hard-hit. Dairy farms rely on automated systems for everything from milking to milk storage, all of which need a continuous power supply. When the central power grid goes down, farmers have to switch to their own generators, but this increases diesel fuel costs, which in turn drives up the prices of dairy products.
Decentralization for greater resilience
The Ministry of Energy remains optimistic and is working to ensure that all nine nuclear power units in Ukrainian-controlled territory are operational during the autumn-winter period. These units supply more than half of the country’s total electricity consumption.
DTEK aims to restore 60-70% of the thermal generation capacity destroyed by Russian shelling by October. However, the situation is more challenging when it comes to rebuilding infrastructure. At heavily damaged stations, even the walls and roofs need to be reconstructed — without them, equipment won’t function properly amid low winter temperatures, Sakharuk explains. Unfortunately, donors are not funding construction work or footing the bill for materials, which make up nearly 70% of the restoration costs. “Right now, in the absence of roofs, we’re simply covering the unit with a sheet of metal, so it’s working out in the open. When it rains, there’s a short circuit, and the unit shuts down. Until there’s a roof, the station won’t be able to operate normally,” Sakharuk noted.
Given the risks of repeated attacks, the state is focusing on decentralizing the energy system to help reduce the deficits. Authorities have announced plans to build up to a gigawatt of flexible gas generation capacity with the help of partners by the end of the year. The project would include small-scale gas turbine and gas piston stations with capacities ranging from 10 kW to 500 MW, which can be connected to the grid within minutes.
Residents and businesses preparing for winter
However, these plans are uncertain because Russian attacks continue. As a result, Ukrainians are already preparing for winter themselves. People are stocking up on food and water and are also buying flashlights, charging stations, and generators. Some are even installing solar panels on both private homes and apartment buildings. However, these options are costly and remain out of reach for most Ukrainians. Even charging stations and generators are becoming less affordable, with prices rising sharply — by 60% in the past two months alone. In fact, charging stations are now more expensive than generators. The cost of a 2-3 kW generator, suitable for a small private house, starts at 14,000 hryvnias (about 320 euros), while the average salary nationwide is around 19,000 hryvnias (420 euros).
As for businesses, large retail chains have already purchased generators. However, the electricity they produce is 2-3 times more expensive than electricity from the grid. Because of this, Ukrainians are being warned to expect higher food prices due to power supply disruptions.
Shopping and entertainment centers in Kyiv have begun to import electricity. The tariff for imported electricity is on average 25% higher than usual, but that’s still cheaper than using diesel generators.
Small and medium-sized businesses are in a tougher spot, forced to choose between finding ways to prevent products from spoiling or simply shutting down due to massive losses.
To support citizens and businesses in adopting alternative energy sources, Ukraine launched new credit programs on July 20. Homeowners can now get 0% loans for 10 years to purchase and install solar panels and wind generators. Associations of apartment building co-owners (OSMD) and housing cooperatives (ZhSK) can receive loans for 5 years, while small- and medium-sized businesses are also eligible for 10-year loans to buy gas turbine, gas piston, or biogas installations. Large businesses can access loans for 5-7 years at interest rates of 14-16% for developing alternative energy generation. The first loans have already been issued.
Additionally, Ukraine has eliminated duties and taxes on the import of generators and solar panels. As of July 27, generators, charging stations (over 300 W), and solar panels can be imported tax-free.
How Europe can help
Ukraine is currently negotiating with European transmission system operators to increase its electricity import capacity from 1.7 GW to 2.2 GW. Achieving this will require time and investment from European network companies to upgrade substations, install additional transformers, and build new power lines.
Slovak President Peter Pellegrini has pledged to boost electricity supplies to Ukraine during the autumn-winter period. Moldova is ready to join a “gas for electricity” exchange project, which will involve deploying generator sets using natural gas supplied by Ukraine.
Poland is exploring another option: producing electricity specifically for Ukraine at its coal-fired power plants. “We plan to use Polish coal, which we have in abundance, without incurring costs for emissions. Electricity produced from this coal will be sold to Ukraine through the existing energy bridge,” explained Prime Minister Donald Tusk. While he acknowledged that this solution won't fully resolve Ukraine's energy issues, “at least it could offer partial relief during a challenging winter.”
Countries that don't share a border with Ukraine are offering support in different ways. The Lithuanian energy company Ignitis Gamyba has transferred equipment from Vilnius CHP-3, which has been out of operation since 2015. This plant had nearly 1000 MW of thermal and electric capacity and supplied heat to about half of Vilnius for over 30 years. Thanks to conservation, the equipment remains fully functional, according to the company. Latvian state energy company Latvenergo has contributed equipment from Riga HPP, including a high-voltage transformer with a 250 MW capacity. Estonia pledged in early June to provide Ukraine with a complete power unit from a thermal power plant with a 200 MW capacity. Additionally, Turkey has offered expert and technical support for the restoration efforts.
Forecasts for the winter
According to Ukrenergo, Ukraine has a good chance of experiencing minimal or even no power outages in September and October. However, forecasts for the heating season remain uncertain. The company’s head, Volodymir Kudritsky, notes that given the current electricity deficit, winter will likely bring even more challenges, as consumption typically increases by 35% compared to summer.
Experts estimate that the winter peak load in Ukraine will range from 18 to 19 GW, depending on the temperature. Although this is within the range of Ukraine’s own generation capacity, even with additional power supplied from imports, the power deficit during winter could reach up to 5.8 GW — almost equivalent to the capacity of the Zaporizhzhia Nuclear Power Plant, which is currently under Russian occupation.
Yasno CEO Serhiy Kovalenko, whose company specializes in energy efficiency solutions, believes it’s quite realistic that Ukrainians might only get five to six hours of electricity per day during winter. Sakharuk notes that increasing imports will be crucial to keeping the lights on.
Despite significant support from Western countries, international efforts will not be enough to make up for the extensive damage Russia has done to Ukraine’s energy infrastructure. Preparing for winter could require around $1.5 billion in urgent funding, while full restoration may require tens of billions of dollars — depending on how much more destruction is yet to be inflicted.
As a result, power outages this winter are likely unavoidable. The main question is the extent of the problem. In the worst-case scenario, Ukrainians might only have electricity for four hours a day.