Mykhailo Pyrtko — how international investors view “green” energy in Ukraine.

 

The full-scale war has radically changed the Ukrainian energy sector. According to the fourth Rapid Damage and Needs Assessment prepared by the World Bank, the Government of Ukraine, the European Commission, and the UN, Ukraine’s energy sector suffered direct losses amounting to 20.51 billion US dollars as of early 2025. Systematic attacks on thermal and hydroelectric power plants, substations, and transmission networks make the traditional centralized production model vulnerable, as highlighted in the IEA report.

Under these conditions, renewable energy is acquiring strategic importance. It not only makes it possible to diversify energy sources but also to build a decentralized, resilient infrastructure less susceptible to attacks. For Ukraine, this is also an opportunity to integrate into the European energy space: in 2022 the country joined the ENTSO-E power system, which opened up prospects for exporting “green” electricity to the EU.

For international investors, Ukraine’s “green” energy is a market of high risk but also of exceptional opportunities. The European Union is moving towards the Green Deal, global financial institutions are shifting portfolios toward ESG assets, and Ukraine has unique resource potential for the development of wind and solar generation. The question lies elsewhere: what conditions are capable of convincing investors to commit capital to a country that is at war?

Global context: how global investors view renewable energy

In the world, “green” energy is no longer seen as something new — it has become a full-fledged part of the global economy. The European Union has set a course for the European Green Deal, which envisions reducing CO₂ emissions by at least 55% by 2030 and achieving climate neutrality by 2050. At the same time, global investment funds are increasingly integrating ESG principles into their portfolios. According to Morningstar, in June the combined assets of ESG funds exceeded $3.5 trillion, and the majority of these funds are directed toward renewable energy and related sectors.

International financial institutions actively support RES projects in high-risk countries. The IFC and the EBRD act as lenders and guarantors in dozens of energy projects across Central and Eastern Europe. Such involvement enables private investors to enter markets where they would not have dared to operate independently due to political or military risks.

Thus, for a global investor, “green” energy is not just a fashionable trend, but an investment strategy with a long-term horizon. The Ukrainian case, despite the war, fits into this picture: international players are ready to consider the country as part of European energy integration, provided conditions are created to protect capital.

Ukraine before 2022: the boom of “green” energy

Before the start of the full-scale war, the Ukrainian renewable energy market was developing at a rapid pace. The key stimulus was the “green tariff” introduced back in 2008, which guaranteed the purchase of electricity from RES at a fixed price pegged to the euro. In 2021, the total installed capacity of RES reached 9,656 MW, of which about 6,380 MW came from industrial solar energy, 1,670 MW from wind, and the rest from household solar, bioenergy, and small hydropower plants. Thus, renewable generation accounted for more than 13% of the country’s total energy balance. Foreign investors actively participated in the development of the sector. Chinese companies were building solar parks in the south, German and Danish firms were constructing wind farms, while Polish groups were entering into joint projects.

However, even in the pre-war period, the sector remained burdened by problems of financial stability. State debts to producers accumulated due to a lack of funds in the “Guaranteed Buyer.” In 2020, arrears in payments under the “green tariff” exceeded 26 billion UAH. This undermined the confidence of some investors, although demand for new projects remained high.

Consequences of the war for “green” energy

After 2022, the development of renewable energy in Ukraine faced unprecedented obstacles. Massive attacks on energy infrastructure led to the damage or complete shutdown of a significant share of generation facilities. According to the IEA, both traditional thermal and hydro plants, as well as substations and networks to which solar and wind farms are connected, became targets. This creates a double risk — even if a facility is not physically damaged, it may lose the ability to deliver electricity into the grid.

An equally serious problem has been the state’s financial debts to producers. As of October 2024, arrears to RES operators exceeded 32 billion UAH (over €740 million). This undermines investor confidence and complicates the attraction of new loans or grant funding.

Adding to this is the uncertainty of regulatory policy. The question of whether the “green tariff” will be preserved or replaced with an auction system still has no final answer. Investors view such a situation as especially risky: it is difficult to make decisions about multimillion-dollar investments without a clear long-term state strategy.

Credit conditions represent a separate factor. Due to high interest rates in Ukraine and significant currency risks, raising loans domestically is practically impossible. Therefore, investors place high expectations on international support mechanisms: state or donor guarantees, political risk insurance, as well as concessional financing from institutions such as the EBRD, IFC, or the World Bank. Without these, private capital in the sector remains limited.

Thus, the war has created three critical barriers for “green” energy: physical danger to infrastructure, the burden of debt, and financial-credit restrictions amid regulatory uncertainty. Overcoming these problems will be key to restoring international investor confidence.

What attracts investors despite the risks

Despite wartime destruction, debts, and regulatory uncertainty, international interest in Ukrainian renewable energy has not disappeared. Moreover, a number of players consider this sector one of the key directions for the country’s future reconstruction. The market’s attractiveness is explained by several factors.

1. Enormous natural and technical potential
Ukraine has unique conditions for large-scale development of “green” energy:

• Solar: average annual insolation in the southern and central regions reaches 1,200–1,700 kWh/m². The potential of rooftop solar panels alone amounts to over 238 GW of installed capacity and around 290 TWh of annual production.
• Wind: the coastal regions of the Black and Azov Seas, as well as the Carpathians, possess significant wind resources. Ukraine has already launched several large wind farms that have become examples of cooperation with European development banks.
• Bioenergy: thanks to the agricultural sector, the country has a large volume of biomass that can be used for heat and electricity production.

2. Prospects of post-war reconstruction
According to UkraineInvest, by 2030 the country plans to increase RES capacity by another 21.1 GW, which will require more than $20 billion in investments. An additional stimulus is the political context: Ukraine is integrating into the EU’s power system (ENTSO-E) and can become the “green battery of Europe.” The export of clean electricity could reduce the EU’s dependence on fossil fuel imports, aligning with the course of the Green Deal.

3. International support and new financing mechanisms
European partners are already working on the creation of instruments that will reduce risks for private investors:

• In 2025, the EBRD and its partners announced the Ukraine Renewable Energy Risk Mitigation Mechanism (URMM). This platform aims to attract up to €1.5 billion in investments and ensure the construction of up to 1 GW of new capacity.
• The European Investment Bank (EIB) and the United Nations Development Programme (UNDP) entered into a partnership to support the “green” transition, recognizing that energy sector losses exceeded $20 billion.
• Political risk insurance through institutions such as MIGA (a World Bank Group member) can become an important additional protection mechanism.

4. The geopolitical component
For the EU, investments in Ukraine’s renewable energy are not only about the economy but also about security strategy. Restoring Ukraine’s energy sector reduces the risks of energy blackmail from Russia and contributes to the creation of a united European “energy shield.” This is why EU governments are eager to support donor and credit programs for Ukrainian RES.

Investor expectations

Despite the strategic attractiveness of the market, international companies remain cautious in making decisions about investing in Ukrainian renewable energy. For them, the main issue is not so much technical potential as the quality of the institutional and financial environment. The most critical factor investors name is the predictability of state policy: they expect the preservation of investment conditions and guarantees of the immutability of already concluded contracts, since the past revision of the “green tariff” seriously undermined trust in the sector. Equally important is the transparency of procedures — clear rules for issuing licenses, connecting to the grid, and conducting land auctions. The transition to a competitive auction model can be viewed positively only if the procedure is clear, non-discriminatory, and predictable in the long term.

Investors also pay particular attention to the debt problem. According to the OECD, as of October 2024 the debt of the “Guaranteed Buyer” and “Ukrenergo” to RES producers exceeded 32.2 billion UAH (€740 million). Such a situation undermines confidence in the market and constitutes a serious barrier to new deals. An important signal will be a clear government plan for debt settlement — whether through budgetary resources, donor funds, or specially created mechanisms. At the same time, investors expect guarantees for the future: a transparent payment system, timely settlements, and independent financial monitoring. Only a comprehensive resolution of this issue and the creation of an effective control mechanism can restore confidence and confirm that the Ukrainian market is reliable for long-term investments.

In addition, for large-scale investments, what matters is not only the construction of generation facilities but also the ability to integrate them effectively into the energy system. Investors expect the development of transmission networks and the creation of new interconnectors with the EU, which would make it possible to export surplus electricity while also ensuring the stability of the domestic market. A key prerequisite is the emergence of balancing capacities and energy storage systems, without which large volumes of solar and wind generation cannot be integrated without the risk of disruptions. Hydrogen projects also spark additional interest: thanks to its natural resources and existing gas transmission infrastructure, Ukraine has the potential to become part of the European hydrogen market, but for this a clear strategy for green hydrogen development and concrete roadmaps for its export to the EU are required.

Conclusion

Today, Ukrainian renewable energy is at a unique turning point in its development. On one hand, the war has brought serious losses: destroyed generation and grid infrastructure, accumulated debts to investors, high lending rates, and regulatory uncertainty. All this significantly restrains private capital and forces international companies to act cautiously. On the other hand, these very challenges have laid the foundation for a new energy model — decentralized, resilient, and integrated with Europe.

For the EU, Ukraine can become not only part of the common energy market but also a strategic partner in achieving climate goals. The concept of the “green battery of Europe” is not a metaphor but a fully realistic scenario that includes large-scale solar and wind farms, energy storage systems, and the development of green hydrogen for export. With the support of international donors and development banks, this potential can be realized within the next decade.

Foreign investor interest, despite all risks, persists. But it is concentrated around key expectations: stability of the rules of the game, settlement of the debt problem, transparency of procedures, and the presence of guarantees for capital protection. It is precisely the state’s ability to fulfill these conditions that will determine whether Ukraine becomes an attractive market for long-term investments. If that happens, “green” energy can become one of the main drivers of post-war economic recovery, create thousands of new jobs, and strengthen the country’s energy independence.

Thus, this is not only about the energy sector, but about a strategic choice. Renewable sources can become the foundation of Ukraine’s new economy, its integration into the European market, and its credibility with international partners. This is a path that will require time, political will, and significant investments, but it is precisely this path that can make the Ukrainian economy more resilient, modern, and competitive on a global scale.