Why a decentralized grid is central to Ukraine's efforts to rebuild

In the two and a half years since Russia invaded Ukraine, Ukraine’s energy system has been a regular target, with attacks on thermal and hydro assets, substations, and solar units. A recent United Nations Human Rights Monitoring Mission’s report estimates that the country has lost at least 18 gigawatts of electricity capacity, half of which was destroyed in summer 2024 alone. 

So as winter sets in, Ukraine is rushing to rebuild its grid and restore its power generation. But the new grid will be markedly different from the old. The country’s developers are aiming to make it both more resilient and more modern through the use of distributed energy resources, digital twins, and smart meters. 

Before 2022, Ukraine produced roughly 44 GW of available electricity, over half of which came from nuclear sources. Coal was the source of around 23% of the country’s generation, followed by natural gas (9%), hydroelectric (6.5%), solar (4%), and wind (2%).

Today, however, Zaporizhzhia, the country’s biggest nuclear power plant, is under Russian occupation, which alone reduced Ukraine’s generation capacity by 6 gigawatts. Hundreds of thousands of electricity distribution lines, substations, and high-voltage transformers have been destroyed, and power generation plants of all kinds remain targets for Russian strikes. Blackouts have become a regular way of life in Ukraine, with Kyiv facing daily blackouts of eight to 20 hours.

Yuliana Onishchuk, founder of Energy Act for Ukraine Foundation, a nonprofit building behind-the-meter solar and storage systems across the country, thinks decentralization is necessary to contain further attacks and build a more resilient system. If Ukraine doesn’t decentralize, she said at a conference in Milan last month, “we are very fragile, and we cannot protect ourselves, and we cannot guarantee electricity supply to people.” 

Once the Russian invasion is over, Ukraine plans to keep relying heavily on nuclear, according to a source familiar with the thinking of the country’s main energy players. However, they told Latitude Media that Ukraine aims to replace the coal in its generation mix with DERs — and especially renewables — in a “strategic shift” that was brought on by the war.

The urgency of this effort is turning the country into a testbed for the promise and challenge of deploying DERs and new renewable and digital assets as fast as possible. If Ukraine is successful, it could set a precedent for what a nationwide, supercharged transition to a greener, decentralized energy system could look like — especially as other countries are able to decommission their fossil infrastructure on a much more controlled timeline. 

From gigawatts to megawatts

Russia’s systematic destruction and neutralization of Ukraine’s energy system have shown the vulnerability of a centralized power system. 

Serhii Zuiev is the chief financial officer of DTEK Grids, a major electricity distribution company in Ukraine and a subsidiary of DTEK, which is also the largest private-sector energy business in the country. Also speaking at the conference in Milan, he noted that connecting customers to megawatts of generation, rather than gigawatts, is the key to resiliency, since smaller generation assets are harder to hit in an attack, less dependent on the overall health of the grid, cheaper to fix, and less vulnerable to cyber risk. 

“Conventional, large coal thermal generation with huge power stations, with three or four gigawatts of capacity, is not for the future,” he said. “The overall trend for the transition is the exploration and development of renewables, and most importantly of distributed energy.”

That vision for Ukraine includes small and medium gas-powered cogeneration units with an output of electric power of around 20 MW, which USAID is assisting in deploying in district heating systems across the country. City authorities in Kyiv are also weighing the use of “mini” thermal power plants with capacities ranging from 20 MW to 324 MW. 

Of course, rebuilding the country’s power infrastructure requires a lot of money. According to a study by the Kyiv School of Economics, “total damages to Ukraine’s energy sector exceed $56 billion, including $16 billion in direct physical destruction and over $40 billion in indirect financial losses.” 

Some aid is coming from the European Union and the U.S. In September, the European Commission announced a loan of up to $39 billion to be spent “primarily on energy” and the Biden administration announced $325 million in energy assistance. That said, public funding may be most of what the country can count on. Aspleaf said it’s unlikely the private sector will make any meaningful investments for at least five years. And Trump’s reelection to the presidency has made the future of any U.S. aid to Ukraine uncertain.

Meanwhile, extreme weather and other crises are damaging the energy infrastructure of countries thousands of miles from Ukraine — including the U.S. — and the imperative of transitioning away from coal grows stronger by the day. War is of course an extreme case, but the lessons of Ukraine’s efforts to build resiliency into a distributed energy system are sure to have broad applications.

As Amir Orad, CEO of the energy management platform Kraken, said during a fundraising dinner the company hosted last month, if Ukraine actually manages to embrace the shift as quickly and efficiently as it needs to, the precedent becomes undeniable. 

“Ukraine is an extreme example of this, but this lesson is for all of us,” he said. “If we can build resilient clean energy in a war zone, there's no reason we cannot build it in all of this during peace times.” 

Editor's note: This story was updated on November 12 to add comment from Leonid Moskalenko, who’s in charge of the digital twin pilot project for DTEK Grids.