Despite daily challenges related to attacks on energy infrastructure facilities, Ukraine continues to maintain the operation of its energy system. At the same time, an equally serious threat to its stability is the accumulated debts to producers of electricity from renewable sources. They limit the business’s ability to invest, undermine trust in the state and call into question the future of the «green» transformation.
Debts that have evolved into a systemic threat
As of July 2025, the debt of the state enterprise «Guaranteed Buyer» (GarPok) to renewable energy producers amounts to UAH 23.3 billion.
In September 2024, a specific peak in the debt was reached at UAH 35.7 billion. However, since last September, the situation has begun to improve gradually and the debt has been reduced by 35%.
According to Guaranteed Buyer, funds for 2023 have been fully paid (99.2%), while the debt for 2022 amounts to over 34% of the state’s obligations.
The problem of debt is not only historical but also continues to renew itself. In the first half of 2025, the level of payments for current obligations reached an average of 90%; however, in June, this indicator dropped again.
How and when did the problem arise
The roots of the debt crisis lie in the events of 2020, when the government signed a Memorandum of Understanding with investors. Producers agreed to a reduction in the «green» tariff in exchange for the gradual repayment of debt and guaranteed future payments.
However, the state failed to comply with the terms – violating its obligations both in terms of tariff formation and the regularity of payments.
The situation was drastically worsened by the start of the full-scale war. In 2022, problems with electricity accounting arose: due to the occupation of regions, damage to networks and generation operating in «island» mode, accurate recording of output became almost impossible. Since the legal mechanism for accounting under such conditions has still not been regulated, the settlements for 2022 have effectively been «put on hold».
The imbalance formula as one of the causes of the debt crisis
Another hidden reason for the accumulation of debts was the imbalance calculation formula introduced in 2021. It was applied to renewable energy (RES) producers operating under the «green» tariff and artificially reduced the volume of electricity for which payments were made. This led to systematic underpayments.
The market repeatedly challenged this formula in the courts. And in the summer of 2024, the Supreme Court declared it illegal. This means that the «Guaranteed Buyer» must recalculate the obligations for 2021-2022 based on actual data, without applying reduction coefficients.
This creates another line of state liability: the debt to renewable energy (RES) was increasing not only due to underfunding but also due to flawed calculation approaches.
Chronology of debt accumulation: how the level of payments changed
The debt problem in the renewable energy sector has a clear dynamic, which can be traced using the official data from SE «Guaranteed Buyer» and market reports:
- 2021 – significant debt accumulation was recorded. Throughout the year, the payment level fluctuated within the range of 75-85%. The situation was only partially stabilized through the issuance of Ukrainian Domestic Government Bonds (OVDP).
- 2022 – the most critical period. Due to the full-scale invasion, electricity accounting was disrupted, part of the generation operated in «island mode» and the payment level dropped sharply. The debts for 2022 remain the largest: over 34% of the electricity generated was not paid for.
- 2023 – a period of gradual improvement. 99.2% of the annual obligations to renewable energy (RES) producers were settled, yet the debt from previous periods remained unresolved.
- 2024 – the settlement rate for the year reached 95.5%, however, a portion of the payments was deferred.
- First half of 2025 – the average payment level was up to 90%, but in June it stood at up to 71.6%, which caused concern among investors and market players.
Who is responsible
The key players in the settlement system are NPC «Ukrenergo», SE «Guaranteed Buyer» and electricity consumers. The financial imbalance begins at the level of the transmission tariff: it does not fully cover Guaranteed Buyer’s needs for payments to RES producers. In turn, non-payments by end consumers (with an average settlement rate of 80%) prevent Ukrenergo from accumulating the necessary funds.
At the same time, the state, as the regulator, is failing to fulfill its obligations regarding compensatory support for the system. The problems are further exacerbated by the market’s complex structure: when the «Guaranteed Buyer» is forced to sell energy on the balancing market at a significant loss, this only increases the deficit. All of this is a consequence of the lack of a systemic strategy and imperfect financing mechanisms for renewable energy.
Consequences of delays for the market and the economy
The continuation of untimely settlement practices leads to a loss of investor confidence and a de facto halt to new projects. This is especially critical in a situation where restoring the energy system requires diversification of generation and an increase in the share of renewable energy.
The reduction in investment volumes impacts Ukraine’s ability to adapt to new challenges, particularly the risk of deficit during peak periods. Furthermore, the lack of payments exacerbates social tensions: producers cannot guarantee stable employment and lack the resources to repair damaged facilities.
At the macro level, the debt crisis is blocking the transformation of the energy sector towards decentralization and a «green» economy. Ukraine risks losing the opportunity to integrate renewable energy into its future energy balance model and to comply with European standards.
Therefore, the main consequences are as follows:
- Loss of investors. RES investors are not prepared to invest in a country where basic obligations are not fulfilled.
- Reduction in capacity. Without a stable cash flow, enterprises cannot service their loans or launch new projects.
- Threat to Energy System Stability. Renewables already represent a significant portion of generation and their gradual phase-out reduces the power system’s maneuverability and flexibility.
- Damage to the State’s Reputation. Court disputes, failure to meet obligations and non-transparent settlement schemes harm not only the RES sector but the entire economy.
What would resolving the problem achieve
Clearing the debt to producers would send a direct signal to investors: the state acknowledges its obligations and is capable of fulfilling them. This would pave the way for new capital inflows into the sector, as the majority of Ukrainian companies have already demonstrated their readiness to reinvest the returned funds into expanding or modernizing their capacities.
Furthermore, stabilizing the settlements will help reduce the burden on the state budget in the future – by attracting private capital and international financing. Restoring trust will also strengthen Ukraine’s position in negotiations with donors.
Possible resolution scenarios
Various legislative initiatives are currently under consideration that would allow for the resolution of the debt problem, taking into account the special conditions of wartime. For example, creating a mechanism to establish the facts of facility operation interruptions, record the periods of operation in «island mode» and provide documentary evidence of losses.
The repayment of old debts can be financed through the issuance of domestic government bonds (OVDP). Such a mechanism has been used before and allows for the accumulation of funds without putting pressure on the current budget. However, the adoption of the corresponding decision depends on political will.
To ensure sustainable payments, it is necessary to review Ukrenergo’s transmission tariff, taking into account the current needs of the Guaranteed Buyer. This will stabilize cash flows and reduce dependence on additional sources of funding.
Part of the debt could be repaid using donor funds – directly or through mechanisms similar to the Ukraine Energy Support Fund. The total volume of donor contributions has already exceeded 1.2 billion euros, which opens the possibility of earmarking a portion of them for restoring the solvency of the state-owned energy company.
It’s not just a debt, it’s a signal of trust
However, repaying the debts in the green energy sector has become more than just a financial issue. This is an indicator of the state’s attitude towards an investor and, at the same time, a source of stabilization for the energy sector. If the state acknowledges its obligations and demonstrates a readiness to fulfill them, it builds trust, opens up new opportunities and launches new projects.
Ukraine has proven that it is capable of restoring infrastructure after shelling. However, debts to RES (Renewable Energy Sources) producers are also a form of damage, merely a financial one. And for the energy sector to remain resilient, it is crucial to restore not only power lines but also financial obligations.
Author: Yevhen Korf, CEO of NVP «ENERGO-PLUS» LLC
Source: the publication «Mind».
