The Path to Wind Energy Expansion Runs Through Parliament
Andriy Konechenkov, Chair of the UWEA Board
Ukraine has endured the second toughest winter since the full-scale russian invasion. Despite relentless attacks, significant infrastructure damage, and temporary blackouts, our air defense forces and energy workers succeeded in stabilizing the national power grid.
To quantify the devastation: since 2022, the enemy has destroyed 10 GW of power generation capacity and about 40% of gas production—equivalent to billions of cubic meters of gas. Consequently, Ukraine now relies not only on electricity imports but also on record-breaking volumes of gas. Over 500 million cubic meters were imported only in February—twelve times higher than January’s figures.
Russia’s aggression has deepened Ukraine’s dependence on imported energy resources, exacerbating the challenges of surviving future winters. This reality compels us to prioritize not only the restoration of damaged infrastructure but also the rapid development of new generation capacity—particularly renewables like wind energy, which does not require any fossil fuels and can be swiftly integrated into the grid. While progress has been made in repairs and reconstruction, the pace of constructing new green energy projects remains unacceptably slow. Regulatory barriers continue to stifle Ukraine’s vast potential for wind and solar power—locally sourced, secure, and sustainable energy solutions.
As of 2024, Ukraine has a 4 GW pipeline of wind projects ready for construction. Yet, only 45 MW were added in the past year—a mere fraction of what is needed. Tellingly, half of this capacity comes from pre-owned wind turbines procured by small and medium-sized businesses across different sectors, underscoring the private sector’s urgency to achieve energy independence.
However, while smaller projects with pre-owned equipment can proceed without state incentives, large-scale industrial wind farms face starkly different challenges. Their high capital intensity demands robust government support mechanisms, especially during wartime. Crucially, this is not about subsidies (as it’s seen in fossil fuel sectors) but about creating favorable conditions to attract private investment—streamlining regulations, reducing bureaucratic hurdles, and offering tax incentives.
Herein lies the paradox: In July 2024, the Parliament abolished import duties and VAT for most energy equipment—except for those needed for wind energy. Investors hoped this disparity would be swiftly addressed amid summer blackouts, yet no action followed. Shortly after, draft law №11455 was registered to extend these exemptions to wind energy turbines. Regrettably, it has yet to reach the parliamentary floor.
When discussing tax incentives for importing equipment needed to restore the power sector, it is important to understand that such measures do not result in any loss of budget revenues that finance our military. This is because import VAT is initially paid into the budget upon the equipment's entry into the country but is later refunded by the government from the same budget. This is the fundamental principle of this tax.
In other words, the VAT paid is funds that merely transit through the state budget. Eliminating this "transit" would significantly simplify the development of wind energy and stimulate economic activity across all sectors that depend on electricity.
Current tax exemptions for all other types of energy equipment remains in effect until the end of 2025. A positive outcome of the exemptions from import duties and VAT on imported equipment has been the acceleration of construction for solar power plants, energy storage systems, and gas-piston power stations. The results are already evident.
At the same time, despite having a portfolio of 4 GW of ready-to-construct wind projects in Ukraine, only a few of them will be implemented this year. Military risks, UAH 25 billion of debts for previously produced and supplied electricity, a significant deterioration in logistics conditions, difficulties in attracting bank loans for capital-intensive projects, and, of course, the lack of tax incentives - all hinder the rapid deployment of wind energy in Ukraine.
However, according to estimates by the national grid operator Ukrenergo, the country needs more than 10 GW of new capacities. Specifically, 8 GW of wind and solar generation, 1 GW of energy storage systems, and several gigawatts of highly maneuverable capacity for balancing—such as gas pickers and biomass-fired thermal power plants.
In fact, under favorable conditions, wind farms can be built relatively quickly. Moreover, wind energy technologies operate most efficiently during the colder months. Additionally, wind power has repeatedly proven to be more resilient to shelling compared to other energy-generating technologies.
Delays in introducing incentives for wind deployment in Ukraine play directly into the hands of our enemy. Notably, russia is the only country that has officially classified the development of wind and other renewables as a threat to its national security.
Under these circumstances, the only correct decision for Ukraine would not only be to expand tax exemptions on the import of wind turbines but also to extend their validity for another 2-3 years — until all necessary energy infrastructure projects are completed to ensure the stability of the energy system and Ukraine’s energy security.