Debts in the Ukrainian electricity market

by Green Deal Ukraina

2022 Russian invasion of Ukraine brought devastation and shocked the electricity sector. A third of demand was lost, electricity prices increased, electricity bills were left unpaid, and debt accumulation accelerated. Most of the debts are ultimately owed to and sit in the balance sheet of the system operator Ukrenergo, arising from three different revenue streams: balancing market (imbalance energy), transmission tariff and dispatch tariff.

Total consumer-side debt tripled from 2021 to end 2023, peaking at around UAH 68bn, and decreasing to around UAH 66bn (~€1.5bn) by end 2024 driven by crisis-mode policies designed to protect consumers and ensure uninterrupted operation of critical infrastructure—regardless of costs or payment discipline.

Pre-existing issues in the electricity sector were significantly worsened after 2022, highlighting gaps in policy design and the need for timely manual interventions. Debt accumulation slowed in 2024 after some protective policies were lifted and revenues from other sources reallocated.

Focus must now shift to tackling root causes and closing financing gaps.

The accumulation of debt poses critical risks:

• Revenue instability and weakened trust in government support mechanisms discourage investment in both renewable and flexible generation.

• Limitedresources for grid repairs and maintenance increase reliance on external donor support.