By Kyiv School of Economics
As a result of the full-scale invasion of the Russian Federation on the territory of Ukraine, the energy sector suffered direct damages and indirect financial losses in the amount of $56.2bn, while the needs for restoration, which involve the complete reconstruction of destroyed objects according to the principle of 'Rebuild better than it was', amount to $50.5bn
According to estimates of the analytical team of the Kyiv School of Economics (KSE), the direct losses of the energy sector of Ukraine as of May 2024 amount to more than $16.1bn. The greatest losses were caused by the destruction of electricity generation facilities ($8.5bn), main electricity transmission lines ( $2.1bn), as well as oil and gas infrastructure ($3.3bn).
During the full-scale invasion, more than 18 GW of electricity generating capacity was occupied, including the largest nuclear power plant in Europe, the Zaporizhzhya NPP. In addition, the Kakhovka and Dniprovska HPPs, as well as the Zmiivska and Trypilska TPPs, were completely destroyed.
Private thermal power plants, including Ladyzhynska, Burshtynska, Dobrotvirska, Kurakhivska, Kryvorizka, and Prydniprovska TPPs, suffered critical damage (more than 80%). About half of the high-voltage power transmission substations were damaged. Russian troops actually destroyed all oil refineries on the territory of Ukraine and a significant part of the infrastructure for storing oil and oil products.
Indirect losses of the energy sector are estimated at almost $40.1bn, the main share of this amount falls on the lost income of energy companies — $39.6bn. The rest belongs to the costs of dismantling rubble and carrying out dismantling work on damaged objects — $0.5bn.
The total needs for the recovery of the energy sector of Ukraine are preliminarily estimated by the KSE analytical team at $50.5bn, including the financial need for the full reconstruction of the destroyed and damaged energy infrastructure, taking into account the principle of 'Rebuild better than it was' ($48.5bn). The rest includes ensuring the liquidity needs of energy companies due to lost revenues due to the war ($2bn).
The needs to restore the electric power sector are estimated at a total of $33.8bn, including $29.3bn for generation facilities. Another $4.6bn is needed to restore the infrastructure of transmission and distribution of electric energy. The estimated cost of restoring the oil and gas sector reaches $14.8bn, and the district heating sector — $1.4bn, not including the restoration of large CHPs.
The assessment of direct and indirect damages was carried out by the analytical team of the Kyiv School of Economics (KSE) in accordance with the methodology of the World Bank, taking into account a significant amount of microdata collected by specialized authorities, local civil-military administrations, energy companies since the beginning of the full-scale war, as well as open sources in connection with limited access to data due to the high risk of dissemination of security-sensitive information.
Read the full report here (Rus).
The Kyiv School of Economics (KSE) is a bne IntelliNews media partner and a leading source of economic analysis and information on Ukraine. This content originally appeared on the KSE website.
