Iceland & UNDP Fund Kyiv Energy Resilience with $3.25M Cogeneration Units
KYIV, – A new partnership between Iceland and the United Nations Development Programme (UNDP) aims to bolster Ukraine’s energy sector resilience with a contribution of ISK 400 million (approximately US$3.25 million). The agreement, signed as Ukraine faces a significant energy shortfall due to ongoing hostilities, will focus on decentralised energy solutions and the modernisation of critical infrastructure.
The initiative comes as Ukraine contends with a generation shortfall of at least 7 gigawatts (GW), a consequence of intensified attacks on its power systems. A key component of the project will be the delivery of cogeneration units with a capacity of 4-5 MW to the city of Kyiv, designed to ensure the continuity of heat, water, and electricity for residents.
Iceland’s Minister for Foreign Affairs, Thorgerdur Katrin Gunnarsdottir, reaffirmed her country’s commitment to supporting Ukraine. “Iceland remains committed to standing in solidarity with Ukraine as it defends its energy security and the well-being of its citizens,” she said. “Our contribution to this project will ensure that critical social services remain operational and that the most vulnerable populations in Kyiv and beyond are protected.”
The partnership builds on Iceland’s previous assistance to Ukraine’s energy sector, including the delivery of 15 high-voltage 330 kV bushings and gas engine units aimed at stabilising the electricity grid. This latest contribution signifies a continued dedication to addressing the urgent needs of a nation facing sustained infrastructure damage.
Auke Lootsma, UNDP Resident Representative in Ukraine, highlighted the strategic importance of the collaboration. “This partnership with Iceland is an important contribution to our efforts to fix and modernise Ukraine’s energy infrastructure amid persistent hostilities,” he said. “By deploying decentralised generation and strengthening the grid, we’re not just repairing damage but building a more resilient and sustainable future for the millions of people who depend on these essential services.”
The Ukrainian government has welcomed the technical support provided through the agreement. Denys Shmyhal, First Deputy Prime Minister and Minister of Energy of Ukraine, emphasized the urgency of restoring the national grid. “Restoring the stability of our national grid is our highest priority in the face of nearly daily attacks on our energy facilities,” he said. “The provision of high-voltage bushings and cogeneration units is a vital technical intervention that will directly prevent large-scale disruptions and help ensure the continuity of water and heat supplies.”
Beyond the immediate delivery of equipment, the project encompasses broader efforts to modernise energy governance. This includes refining the Energy Programme Information Management System (EPIMS) and establishing an Authorised Security System (AUSS) to enhance cybersecurity within the energy sector. The initiative also includes the procurement of high-voltage 750kV bushings and the installation of a dedicated backup power solution for the Ministry of Energy of Ukraine, featuring hybrid inverters and a battery energy storage system (BESS) to ensure uninterrupted critical operations even during external power outages.
The project operates under the umbrella of the UNDP Green Energy Recovery Programme, which aims to integrate urgent infrastructure repairs with a long-term commitment to green transformation, gender inclusion, and institutional growth. This approach reflects a broader strategy to “Build Back Better,” prioritising modernization and energy efficiency in the reconstruction process.
The scale of the challenge facing Ukraine’s energy sector is substantial. According to the Ukraine Fifth Rapid Damage and Needs Assessment (RDNA5), compiled jointly by the Government of Ukraine, the World Bank Group, the European Commission, and the United Nations, the country’s energy system has sustained approximately $24.8 billion in direct physical damage between February 2022 and December 31, 2025. The electricity sector alone accounts for $17.1 billion of this damage, with power generation assets representing the largest share at $14.2 billion.
The RDNA5 estimates that total recovery and reconstruction needs for the energy sector will reach $90.6 billion over the next decade. The UNDP’s Green Energy Recovery Programme, supported by partners like Iceland, is positioned to play a crucial role in meeting these needs and ensuring a sustainable energy future for Ukraine.
The ongoing support from Iceland and the UNDP underscores the international community’s recognition of the critical importance of energy security in Ukraine, particularly amidst the ongoing conflict. The focus on decentralised energy solutions and grid modernisation reflects a strategic shift towards greater resilience and independence, mitigating the impact of future disruptions and paving the way for a more sustainable energy landscape.