The European Bank for Reconstruction and Development, together with development partners, is creating a new mechanism to accelerate renewable energy investments in Ukraine and deliver secure, clean power to the country. The Ukraine Renewable Energy Risk Mitigation Mechanism is being developed in response to severe damage to Ukraine’s power sector from Russian attacks, which have created a significant deficit in generation capacity.
The initiative was highlighted at the Ukraine Recovery Conference in Rome, where the EBRD – responsible for structuring and managing donor funds – signed letters of intent with the European Union and The Netherlands to advance the project. The mechanism has been shaped through collaboration between the EBRD, donors, development partners such as the International Finance Corporation and the World Bank, and advisory input from the Ukraine Donor Platform’s Business Advisory Council, as well as industry associations including the European Ukrainian Energy Agency, the Ukrainian Wind Energy Agency, and Green Deal Ukraïna.
Once operational, the mechanism is expected to support 1 GW of new renewable energy capacity, potentially mobilising €1.5 billion in investments. Fundraising efforts are already underway, with the European Union committing €180 million under its Ukraine Investment Framework and The Netherlands planning to contribute €12 million in grants. Germany, Norway, Sweden, and Switzerland are also considering support.
The mechanism is designed to reduce investment risk by stabilising revenues for renewable energy developers, addressing the problem of price volatility that has deterred investors despite Ukraine’s significant renewable energy potential. Projects will be selected through competitive auctions, a process the EBRD has extensive experience in, having supported 17 similar auctions in nine countries for over 8 GW of capacity. All financial institutions will be eligible to lend to approved projects.
Alongside the financing mechanism, targeted technical assistance will be provided to the Ukrainian government to develop a permanent national support scheme for renewable energy, reducing reliance on the URMM in the future. This approach aligns with EU recommendations on accelerating reforms, particularly in the energy sector, and supports Ukraine’s EU accession-related commitments.
The European Union’s contribution to the URMM is one of three new EBRD-led programmes under the Ukraine Investment Framework. The other two are the Financial Inclusion Recovery Programme, which will provide €200 million in guarantees to support €2 billion in SME lending, and the SME Recovery Programme, which will offer €45 million to enable €135 million in SME loans. Since February 2022, the EBRD has invested €7.2 billion in Ukraine and secured approval for a €4 billion capital increase, enabling it to maintain annual investments of around €1.5 billion during wartime, with scope to increase further during reconstruction.
Subscribe to get the latest posts sent to your email.
