Analysts at Ukraine Facility Platform and the Netherlands Organisation for Applied Scientific Research (TNO), commissioned by the Netherlands Enterprise Agency (RVO), have examined the full cycle of energy projects: from Hybrid Renewable Energy Systems (HRES) development models to practical deployment in Ukrainian communities.

We present a comprehensive four-step methodology: 

  • community energy audit: what assets the community has, how much it consumes, and what the real capacity of its grid is.

  • energy mix design: which technologies to deploy for a specific consumption profile and against which economic benchmarks.

  • legal and organizational structuring: who owns the generation, where it is located, and how it is connected.

  • aggregation: single projects are assembled into an interconnected portfolio with clearly delineated market roles.

The output of each step is an optimal decision on where to build, which technology to select, and what objective can be achieved. The methodology is universal – technology-neutral and suitable for projects of different scales.

What blocks the deployment of energy projects:

UAFP and TNO analysts identify five key bottlenecks. 1) The missing universal offtaker willing to enter into long-term contracts covering the full output of generated electricity. 2) Asymmetric commitment between the parties: the investor commits CAPEX upfront, while the municipal utility commits to pay over a 10-15-year horizon, funded by tariff revenue it does not control. 3) Underused grid capacity creates limited connection opportunities, while the regulatory framework for local distribution is fragmentary. 4) The natural offtakers – water and heat utilities – operate at a planned loss due to ineffective tariff regulation. 5) Every project requires bespoke contractual structuring, compounded by annual re-tendering requirements.

UAFP and TNO recommendations

  1. Political Risk Insurance. The principal source of foreign investor anxiety is political risk, which can be bridged through Political Risk Insurance instruments during the transition period. This partially substitutes for the missing universal offtaker: the investor receives protection even without a long-term contract covering the full output.

  2. Cross-guarantees balance the asymmetric commitment. Both parties post financial commitments. The investor provides a performance bond guaranteeing that the facility will be commissioned on time and will deliver the contracted volume. The municipal utility provides a payment guarantee. Where its creditworthiness is weak, the guarantee can be substituted with one from the local self-government body.

  3. Local distribution systems reform. The legislation on local distribution systems needs to clarify the rights, obligations, and tariff base of local distribution systems operators, how they connect to the main distribution system operator (DSO) network, and the boundary conditions for island operation. In parallel, the rules for building and operating networks that parallel DSO infrastructure need to be liberalized.

  4. Solidary liability for sub-cost tariffs. Water and heat utilities operate at a planned loss because the local self-government body often sets tariffs below cost-reflective levels. The logical fix: where tariffs do not cover the utility's operating costs, the local authority bears solidary liability for its electricity debts.

  5. Regulatory streamlining. Every project today requires separate agreements for installation, connection, electricity offtake, storage services, and guarantees, compounded by annual re-tendering. The fix is procedural: amend the relevant Cabinet of Ministers Resolution to create an explicit mechanism for leasing state and municipal property as an installation site for generation and energy-storage assets.

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