Economic Viability of Distributed Generation Projects in Communities: Meeting Summary and Key Findings

28.02.2025

The issue of developing distributed generation (DG) in Ukraine, especially amidst war and terrorist attacks on energy infrastructure, is extremely relevant. The meeting “Economic Viability of Distributed Generation Projects in Communities” served as a platform to discuss key achievements, challenges, and prospects for DG development in Ukraine. Participants—representatives from government, business, and communities—shared their insights and expertise, allowing for the formation of a comprehensive view of the situation and the identification of pathways for further development.

Distributed Generation in Ukraine: Context and Challenges

Distributed generation, the production of electricity (and heat) directly near consumers, plays a crucial role in enhancing Ukraine’s energy security. DG reduces dependence on centralized energy supply, ensures the stability of critical infrastructure, and minimizes electricity losses during transmission.

The development of distributed generation in Ukraine faces several challenges, including:

• Limited access to financing: Communities and businesses often lack sufficient funds to implement DG projects, particularly to cover connection costs to networks.
• Sustainability of simplified connection procedures: Despite significant current simplifications, the process of connecting DG facilities to energy networks may become more complex in the future, creating potential obstacles for the sector’s development.
• Insufficient information support: Communities and businesses do not always have access to complete and up-to-date information on DG development opportunities, connection procedures, available support programs, and financing options.
• Legislative and regulatory barriers: Despite significant simplification of DG facility development procedures, some legislative norms and regulatory acts still create obstacles for the sector’s development.

Key Topics of Discussion

The meeting highlighted several important aspects of distributed generation development in Ukraine. Key topics included:

• Importance of distributed generation: Valerii Bezus emphasized that “distributed generation has been a key topic in energy for the past two years. It is crucial for national energy development, particularly amidst energy security challenges, full-scale military aggression, and terrorist attacks from an inadequate neighbor.” He also noted, “Distributed generation must find its place in Ukraine’s unified energy system under the difficult conditions of terrorist attacks and overall energy transformation.”
• Achievements and challenges: Valerii Bezus noted that “to date, there have been no critical failures in the operation of critical infrastructure and the energy system.” However, he acknowledged that “we realize that due to the emphasis on urgency and security, the economic and legal field has become somewhat fragmented. There is a need for defragmentation in various contexts related to the economic viability of distributed generation projects.”

One of the biggest challenges is financing the connection of community facilities to the grid. Many communities receive equipment under international programs, but do not have the resources to install and connect it.

“Unfortunately, connection financing is often left out of donor programs. We need to develop a mechanism that will allow communities to receive the necessary funds without delay,” emphasized Stanislav Ignatiev.

• Role of business and communities: Stanislav Ignatiev emphasized that “business is already able to plan and evaluate its projects based on feasibility.”
  • Valerii Bezus noted that “the main challenge is to create conditions for business in economically viable projects.”
• Importance of training and information support: Discussions highlighted the need for training and information support for both communities and businesses. Stanislav Ignatiev stressed the importance of training energy managers, noting, “Energy managers need to be trained. This requires ongoing support and the development of relevant projects.”
  • Olha Savchenko emphasized that “the main problem today that all market stakeholders must address is information provision.” Communities need training in interacting with businesses and donors, as well as information on how to develop promising distributed generation projects.
• Legislative and regulatory aspects: Olha Savchenko pointed out that “the constant simplification of distributed generation construction raises some concerns among lawyers and businesses.” This concern may be related to the insufficiently clear definition of responsibility for DG facility safety, potential risks to the energy system, and insufficient control over equipment quality. She also emphasized the need to “monitor secondary regulations for the correct implementation of new norms and the development of distributed generation.”
• International aid and cooperation: Valerii Bezus expressed gratitude to international partners, noting, “Our partners have done a tremendous amount of work. They have provided us with financial, logistical, and organizational resources.” This assistance and further cooperation are crucial for the restoration and modernization of Ukraine’s energy infrastructure, including the development of distributed generation.

Key Findings

Analysis of discussions and participant presentations allows for the following conclusions:

• Distributed generation is a key factor in Ukraine’s energy security, especially during wartime.
• Significant challenges exist in the development of distributed generation, related to financing, network connection, legislation, and information support.
• It is necessary to strengthen cooperation between the state, business, and communities for the effective development of distributed generation.
• International aid plays a crucial role in providing Ukraine with the necessary equipment and technologies.

Recommendations

For the successful development of distributed generation in Ukraine, it is necessary to:

• Continue to develop mechanisms to support distributed generation, particularly at the level of territorial communities.
• Ensure the sustainability of simplified procedures for network connection and obtaining construction permits for distributed generation facilities.
• Strengthen information support for communities and businesses on distributed generation development opportunities.
• Provide transparent and effective financing mechanisms for distributed generation projects.
• Continue cooperation with international partners to attract investment and technology.

Conclusion

The meeting “Economic Viability of Distributed Generation Projects in Communities” is a step in consolidating the efforts of government, business, and communities to develop distributed generation in Ukraine. The conclusions and recommendations formulated based on the meeting results form the basis for the development and implementation of effective solutions aimed at ensuring energy security and sustainable development of the country.

The development of distributed generation is strategically important for Ukraine, and the joint efforts of all stakeholders will overcome challenges and realize the potential of this sector to ensure a sustainable energy future for the country.