A deep dive into Ukraine’s imports of critical energy equipment and fuels since Russia’s invasion

Background 

Since Russia’s invasion of Ukraine in February 2022, the energy sector has been a critical battleground. The targeted attacks on Ukraine’s energy infrastructure, aimed at weakening the country’s resilience, have severely impacted Ukraine’s energy supply and overall security.

In response to the extensive damages, Ukraine has stepped up the imports of critical energy equipment and fuels to maintain energy supply and to restore its damaged energy infrastructure.

Approach 

The paper analyses customs trade data on energy equipment identified as essential for energy security. It aims to assess the impacts on Ukraine’s energy sector and the shifts in its energy import patterns. Using this data as a proxy, insights into how disruptions and damages to the energy infrastructure have influenced Ukraine’s import patterns are provided, highlighting the country’s adaptive strategies in the face of ongoing aggression and the vital role that this equipment plays.

Findings

• The share of energy equipment imports within Ukraine’s total imports doubled from 1.4% in 2021 to 2.7% in 2023.
• Imports of non-renewable generation equipment saw the largest increase, from EUR 183 million in 2021 to EUR 732 million in 2023.
• Diesel generators have been prioritized due to their perceived reliability and fast deployment during outages, with imports reaching EUR 198 million in December 2022. The reliance on diesel generators imposes risks given the reliance on imported oil products as a result of the destructed domestic oil refining capacities.
• Solar PV and wind-based generation equipment imports have lagged behind, with share of renewable generation equipment within energy equipment imports decreasing from 38% in 2021 to 15% in 2023.

Recommendations 

To ensure the continuous expansion of renewable energy generation capabilities and avoid lock-in effects of unsustainable capital investments, we propose a number of measures:

• Prioritizing the deployment of renewable-based generation at both small- and utility-scales.
• Liberalising the wholesale electricity market to remove price distortions and attract investment in renewables and flexible generation and storage capacities.
• Addressing the high levels of debt within the in the renewable energy and balancing markets to restore investor confidence.
• Implementing de-risking measures to lower the cost of capital for renewable energy investments.
• Promoting the development of decentralized energy systems and supporting prosumers to strengthen the market for renewable energy in Ukraine.

Read the full report and explore how Ukraine is navigating these unprecedented challenges through critical energy equipment imports and what steps are crucial for ensuring its long-term energy resilience.

You can access the full Policy Paper here.