Investment risk increases the burden of financing energy projects in Ukraine by 3-4%, compared to other countries in the region, such as Romania, because the cost of insurance policies is added, Oleksiy Feliv, Managing Partner, Integrites, told Energynomics. The return on investment varies between 15% for foreign investors and 20% for local ones (IRR). Political and war risk is accompanied by the risk of expropriation, but also by the risk of devaluation of the national currency.
“Only those who are ready to bear the risk are ready to invest in Ukraine. Covering political risk is essential and will be necessary for some time after the war,” Oleksiy Feliv said at Energy Week Black Sea event.
As Russia destroys Ukraine’s energy infrastructure, investors are turning to new alternative solutions, such as solar or wind energy. Ukraine has 4GW of wind and 700 MW of solar capacity in projects and is trying to develop a system of bilateral contracts (PPA). The positive side is that new investments benefit from the latest technologies on the market, and the investors’ effort is doubled by international financial institutions.
In 2024, 835 MW of new decentralized energy installations were connected to the grid, the Institute for Economic Research (IER) estimated in its year-end report “2024 – A year of challenges and changes: the perspective of the MEMU team”.
The massive construction of distributed energy resources became a response to Russia’s attacks on large power generation facilities, which began in the fall of 2022 and continued until 2025. During the year, 835 MW of decentralized facilities were connected in Ukraine, the majority in cogeneration and fossil fuel, with financing secured for another 430 MW under state support programs.
