Building back better or faster: this was the central question of the 15th Annual European-Ukrainian Energy Day, held on 29 October in Vienna. Organised by the European-Ukrainian Energy Agency (EUEA), the Ukraine-based association for foreign investors in Ukrainian renewables and energy efficiency and the Austrian Federal Economic Chamber, the event brought together stakeholders to discuss Ukraine’s reconstruction and energy transformation amidst ongoing challenges.

Reconstruction efforts in Ukraine: urgency and opportunity

Contrary to common misconceptions, Ukraine’s reconstruction efforts have been ongoing since the first day of Russia’s full-scale invasion and are not postponed until the end of the war. The same applies to investments.

In his opening speech, His Excellency Vasyl Khymynets, Ambassador of Ukraine to Austria, emphasised the urgency of reconstruction efforts, stating that there is no room to choose between building better or faster—both must be achieved simultaneously. Addressing potential investors, he underscored that the key to achieving the highest return on investment lies in timing. “That moment is now,” he said.

The Role of private investments and the Ukraine facility

Private investments are pivotal to Ukraine’s reconstruction. Charles de Crombrugghe from the European Commission introduced the Ukraine Facility, a unique instrument supporting both reconstruction and EU accession. Structured around three key pillars, the Facility provides:

• Pillar 1: Budget support for sustaining government operations through flexible EU funding;
• Pillar 2: The Ukraine Investment Framework, designed to attract private capital by leveraging de-risking mechanisms, even amidst the war;
• Pillar 3: Assistance programs and technical support for aligning Ukraine with EU standards.

Lessons from reconstruction: insights from the EBRD

The European Bank for Reconstruction and Development (EBRD) shared crucial lessons learned during the nearly three years of full-scale war. As an active lender in Ukraine, EBRD highlighted:

• Capacity Building: sustaining technical expertise in Ukrainian institutions is essential;
• Building Back Better: reconstruction presents an opportunity to modernise systems, prioritising distributed generation, renewables and storage over centralised, fossil-based systems;
• Financing Challenges: building back better requires incentivising policies to attract investments; financial support through grants and innovative instruments; mobilising large-scale private sector investments.

Decentralisation as a cornerstone of energy resilience

Ukraine’s energy infrastructure has been under relentless attack for three consecutive years, highlighting the vulnerabilities of centralized systems. Decentralisation has become the cornerstone of reconstruction, enabling communities to develop resilient energy solutions. First Deputy Minister of Communities and Territories Vasyl Shkurakov emphasised that energy resilience is integral to community recovery. The Ministry is actively collaborating with international partners to establish decentralized energy and heat supply systems.

Two key themes: reconstruction and renewables

The event’s discussions were divided into two main themes: reconstruction and energy efficincy and renewables, each addressing complex challenges and opportunities.

Reconstruction: practical solutions
Reconstruction efforts during wartime require adaptive strategies. Adjustments to procurement processes, such as lowering turnover requirements and implementing retention-based guarantees, have enabled projects to proceed despite financial challenges. Juliia Shevchuk from NEFCO presented the IDP Housing Program as a case study, showcasing how frequent monitoring and smaller payments facilitated construction under strict conditions.

Capacity building was a recurring theme throughout the event. Developing technical expertise across Ukraine is essential to successfully implement innovative projects. This is where donor-funded technical support can make a significant impact. Additionally, given the wartime shortage of the male workforce due to military service, reconstruction efforts must adopt an inclusive approach, utilising all available human resources. This includes engaging women, veterans, youth and other underrepresented groups to build a robust foundation for Ukraine’s recovery and future resilience.

Renewables: trends and investments

Ukraine has endured over 1,000 attacks on its energy infrastructure since 2022, with 70 per cent of non-nuclear generation either destroyed or significantly damaged. Despite these challenges, businesses are exploring solutions like behind-the-meter solar and gas-powered stations, as well as utility-scale renewables connected to the grid. While the first option is highly effective in the short term, the second approach is critical for ensuring the long-term stability and resilience of the energy grid.

Recent regulatory reforms, such as transitioning from feed-in tariffs to feed-in premiums and introducing guarantees of origin, have enabled developers to diversify revenue streams. However, project financing remains a key challenge. Investors must rely on corporate PPAs or assume limited merchant risk in a post-feed-in tariff era.

Innovative solutions: minimum price guarantee fund

EUEA and the Ukrainian Wind Energy Association have proposed a Minimum Price Guarantee Fund to address financing challenges. Supported by the Ukrainian Government, the European Commission and key financial institutions like the EBRD, the Fund would allocate donor resources to guarantee a minimum price for renewable projects for a period comparable to the terms of debt financing for the implementation of RES projects. This mechanism aims to enhance project bankability and unlock several gigawatts of much needed renewable energy capacity.

The 15th European-Ukrainian Energy Day underscored that building back better and faster is not just a necessity but also an opportunity to reimagine Ukraine’s energy future. By integrating energy efficiency, decentralisation and innovative financing mechanisms, Ukraine can transform its challenges into a resilient, sustainable energy system that stands as a model for the world.

Source: https://ceenergynews.com/voices/balancing-better-and-faster-ukraines-reconstruction-strategy-unites-innovation-and-urgency/