17.09.2026
An Energy System That Does Not Yet Exist
The Ukrainian energy sector currently requires massive investments at a time when planning its future is more difficult than ever before. The paradox is that precisely now—when the country must rebuild destroyed infrastructure, create new capacities, modernize grids, and shape an energy system capable of operating within the European market—the forecasting horizon has become extremely volatile.
For an investor, this is a fundamental problem. To make a decision about building a new energy facility, one must understand the system this facility will be part of in five, ten, or fifteen years. It is necessary to foresee the future generation mix, consumption dynamics, grid development, the need for balancing and dispatchable capacities, market rules, and prospects for integration with the European energy network.
Such a vision does exist in Ukraine. The Transmission System Operator and other market participants regularly produce documents, forecasts, and scenarios for energy system development. They serve as a necessary foundation for planning. However, today, no single document can provide an investor with the level of certainty that would be sufficient for a traditional long-term investment planning model.
The reason is obvious: the Ukrainian energy system is evolving under the simultaneous influence of several massive processes, each capable of fundamentally altering the market structure. The war and subsequent attacks on energy infrastructure dictate not only the physical state of the system but also the geography of future investments. Recovery will mean not merely restoring lost capacities, but the opportunity to rebuild the system on new principles. European integration will gradually change market rules and the nature of interaction with the European energy system. Concurrently, the global energy transition is underway, altering generation economics and elevating the role of renewable energy sources (RES), energy storage, flexibility, and digital management.
Therefore, today’s investor must plan not for one uncertain future, but effectively at the intersection of several possible futures.
When Forecasting Is Not Enough
In a stable environment, long-term energy planning heavily relies on forecasting. One can estimate demand growth, predict the commissioning of new capacities, determine the necessary grid development, and form an investment program on this basis.
The Ukrainian reality forces us to look at this differently. The problem is not that forecasts have become unnecessary. On the contrary, they are needed more than ever. The issue is that today it is no longer sufficient to have a single baseline forecast and build an investment decision around it.
The scale of the gap between the traditional model and reality is demonstrated by the numbers: during the spring and summer of 2024 alone, the energy system lost over 9 GW of generating capacity. The most painful blow was the destruction not just of megawatts of electricity, but of the balancing dispatchable core—thermal power plants and regulating hydropower capacities. As a result, the daily load profile has morphed into a chronic structural imbalance: the gap between daytime hours with a surplus of solar generation and evening peak hours on the day-ahead market has reached 300–400%. This highlights a simple truth: the energy system does not merely lack energy in general—it lacks energy during specific, clearly defined hours of the day.
An investor must simultaneously consider what will happen if the war lasts longer than expected; if specific energy infrastructure facilities are damaged again; if the recovery follows a “build back better” approach and the system’s structure changes significantly; if the pace of RES development is higher or lower; if European integration accelerates; if the demand structure or market rules change.
This means that the quality of an investment decision is increasingly less determined by the ability to accurately predict a single scenario. What becomes vastly more important is the ability to build an asset—or a portfolio of assets—that remains economically viable across multiple possible scenarios.
In my view, this is exactly where one of the most crucial dividing lines between the traditional and modern approach to managing energy investments lies.
Seeking Footholds, Not Forecasts
If the future cannot be accurately predicted, it does not mean investment planning becomes impossible. We simply need to change its logic.
Instead of trying to determine as accurately as possible what the energy system will look like in ten years, we should look for those characteristics and needs that are highly likely to remain relevant across various scenarios.
Ukraine will, in any case, need a more resilient energy system. It will require sufficient grid capacity, redundancy, decentralization, and the ability to respond rapidly to shifts in supply and demand. A growing share of variable generation will dictate a need for balancing. Further integration with European energy will require the compatibility of market and technical mechanisms. The restoration of destroyed infrastructure will inevitably be tied to modernization and the search for more robust architectural solutions.
It is precisely these long-term needs that can serve as “footholds” for an investor.
This is a fundamentally different approach. It assumes that we are investing not so much in a specific future scenario, but in the business’s capacity to operate across different scenarios.
Why Flexibility Becomes Crucial
I consider flexibility to be one of these footholds.
I have written separately about the changing role of flexibility in the energy sector. Today, it is important to take the next step and view it not just as a distinct segment of the energy business, but as a method to mitigate investment uncertainty.
The harder it is to predict the future structure of the system, the higher the value of an asset capable of adapting its operational mode to that structure.
This is exactly why energy storage systems, demand-side response, dispatchable generation, hybrid energy complexes, and digital management systems can play a special role in Ukraine’s future energy landscape.
There is an important paradox here. Flexibility is valuable not because we know exactly where and when it will be needed. On the contrary—its value largely increases precisely because we do not know.
BESS (Battery Energy Storage Systems) is a very illustrative example. The same storage system can perform different functions depending on market and system conditions: it can help integrate RES, shift consumption in time, respond to price volatility, provide ancillary services, or enhance the power supply reliability for a specific enterprise. Therefore, its investment value is determined not only by the number of megawatts and megawatt-hours but by the asset’s ability to shift its economic function alongside the market.
An indicative attempt to create a market foothold was the first long-term special auctions held by Ukrenergo in August 2024, where 99 MW of primary regulation (FCR) and over 500 MW of fast secondary reserves (aFRR) were contracted with a fixed euro tariff for 5 years. However, this experience provided the market not only with hope but with a sobering lesson. Today, there is every reason to expect that a significant portion of the contracted projects risks remaining only on paper.
A 5-year ancillary services contract alone does not guarantee bank financing if the bank sees a systemic debt hole in the balancing market, unresolved grid connection constraints, and tight construction deadlines. The experience of mature markets—such as the UK or Texas (ERCOT)—proves that BESS does not survive on a single service. When the frequency regulation sector becomes saturated, the share of revenue from it drops sharply from 70–80% to 20–30%, and the asset is forced to transition to comprehensive revenue stacking: arbitrage, capacity markets, and balancing. The capacity for such multi-market migration is the key to project viability in Ukraine.
From a Single Project to an Asset Portfolio
From this stems another shift that, in my opinion, will gradually become defining for the energy business. It will increasingly be insufficient for an investor to evaluate a single energy project in isolation from the rest of the business.
For an enterprise, the question is no longer necessarily “what generation should we build?”. It is much more accurate to ask: “What energy portfolio will allow us to ensure the required level of reliability, control costs, and simultaneously maintain the ability to adapt to market changes?”
Here, businesses must shift their fundamental financial optics. Evaluating the feasibility of BESS or on-site generation solely by comparing the tariff with the day-ahead market is a flawed path. The key metric for industry is becoming the Value of Lost Load (VoLL) from sudden power interruptions. For continuous technological processes—metallurgy, chemical synthesis, food processing, or modern data centers—losses from spoiled raw materials, damaged equipment, and downtime range from $2,000 to $10,000 per MWh of unsupplied energy.
In this context, a behind-the-meter energy storage facility ceases to be merely an energy investment requiring quick ROI based on tariffs. It becomes an insurance policy for business continuity.
In such a portfolio, a solar power plant can operate alongside storage, cogeneration with external supply, backup generation with demand management systems, and a digital platform can unite all of this into a single, manageable energy asset. The battery neutralizes the main drawback of a gas reciprocating engine—the ramp-up time during a sudden grid outage—and removes the risk of imbalances for an industrial solar plant.
This is no longer a question of choosing technology. It is a question of capital allocation.
And it is precisely here, in my view, that a gradual shift in the role of energy management is taking place. An executive must evaluate not just the technical specifications of the equipment, but its contribution to the overall value and resilience of the business.
Feasibility Studies Must Test Resilience, Not Forecasts
This shift in approach directly impacts the feasibility study (FS).
Traditionally, an FS is viewed as a document necessary to make a decision on project implementation. But under conditions of high uncertainty, its role must be broader. An FS should demonstrate not only that the project is economically viable under a baseline scenario, but also how resilient its economics are when key parameters change.
Today, a financial model must simulate not rosy optimism, but rigorous stress tests:
All of this means that quality investment analysis should demonstrate not so much the project’s potential profitability as the limits of its resilience.
And this represents an entirely different culture of making investment decisions.
Ukraine as a Complex Yet Highly Promising Investment Market
For a foreign investor, the Ukrainian energy sector today is undoubtedly a high-risk market. Yet, at the same time, the sheer scale of the changes creates opportunities here that are practically non-existent in mature markets.
Ukraine is effectively gaining the opportunity not just to rebuild a damaged energy system, but to design its new architecture. The only question is how consistently we can integrate state planning, private capital, international financing, and modern business models. We have the foundational legislative framework—recognizing the energy storage system operator as a fully fledged, independent market participant. The next horizon is the full implementation of ENTSO-E regulations (CACM, EBGL) and integration into pan-European balancing platforms (MARI, PICASSO), which will open up cross-border service opportunities for Ukrainian storage systems.
For an investor, this means the necessity of viewing the Ukrainian energy sector not only through the prism of the current risk level, but through the ability of a specific project to adapt to future changes.
For Ukrainian business, the takeaway is equally important. One should not wait for the moment when the future energy system becomes completely clear. That moment, most likely, will simply never arrive. The market will change faster than the next long-term planning cycle concludes.
Therefore, the competitive advantage will not be the ability to predict the future with maximum precision, but the ability to make decisions that leave room for adaptation.
Investing in the Capacity to Adapt
The Ukrainian energy sector is entering a period where war, recovery, European integration, and the energy transition are all happening simultaneously. None of these processes, on its own, allows for building a sufficiently accurate forecast of the future. Together, they make the traditional approach to long-term investment planning even more difficult.
But this does not mean investments are impossible. On the contrary, the scale of the transformation is exactly what makes them essential.
The question lies elsewhere: what exactly are we building, and how well will this asset be able to survive in a future we do not yet know?
Perhaps this is exactly what should become the new logic for energy investments in Ukraine. Not trying to guess the single correct scenario, but finding footholds that will work across multiple scenarios. Not simply adding megawatts, but creating assets capable of shifting their function along with the system. Not evaluating a project solely by its baseline financial model, but testing its ability to survive a change in that model.
In this logic, flexibility is no longer just a characteristic of the energy system. It is a characteristic of a quality investment decision.
And perhaps the main advantage of the Ukrainian energy business in the coming years will not be the ability to accurately predict what the energy system will look like after the war, but the ability to build a business that is ready to operate under various versions of its future.
