Руслан Делідон — 20.03.2026
Following the widespread attacks on energy infrastructure, Ukrainian businesses are actively seeking solutions to achieve energy self-sufficiency. One such technology is cogeneration — a system that enables the simultaneous production of electricity and heat with an efficiency of over 85%.
The roll-out of cogeneration in Ukraine is only just gaining momentum. Although the technology has long been in use worldwide, it is still in a phase of active development on the Ukrainian market. This is precisely why, when implementing projects, businesses encounter certain organisational and technical challenges that require careful planning.
In this article, we will examine the key challenges facing cogeneration in Ukraine, their impact on business, and possible practical solutions for overcoming barriers to cogeneration.
Despite these barriers, cogeneration projects are being actively implemented in Ukraine. Provided there is a proper technical audit, sound design and an experienced EPC partner, most risks can be managed as early as the planning stage. That is why the team overseeing the project from concept to commissioning is a key factor in the successful launch of a cogeneration plant.
According to estimates by the State Agency for Energy Efficiency, the power system requires at least 1,400 MW of flexible distributed capacity. It is cogeneration in Ukraine that can provide this reserve — the technology simultaneously generates electricity and heat, achieving an efficiency of 85–92% compared to 35–40% at traditional power stations.
In 2024, 68 cogeneration plants with a total electrical capacity of 77 MW were commissioned in Ukraine. In 2025, the pace of development increased significantly. In the first five months, 29 new plants with an electrical capacity of 377 MW and a thermal capacity of 1,625 MW were commissioned. For 2026, the government announced the implementation of at least 260 projects with a total capacity of 825 MW. The market is therefore entering a phase of scaling up.
By way of comparison:
The cogeneration market in Ukraine is still in its infancy, so the technology is being rolled out gradually.
| Factor | What to bear in mind | How is this resolved? |
| Initial investment | The projects require capital investment | Leasing, the 5–7–9 scheme, international financing |
| Preparation of documentation | Coordination with network operators is required | Support for the engineering team |
| Financial model | It is important to calculate the load correctly | Energy audit and feasibility study |
| Integration into the infrastructure | This needs to be adapted to the specific site | Preliminary technical design |
| Engineering assessment | Specialists in energy systems are required | EPC companies with a track record of successful projects |
| Market awareness | Some businesses are only just getting to grips with the technology | Industry case studies and consultancy |
The cogeneration market in Ukraine is developing rapidly; however, when implementing such projects, businesses face a number of organisational, financial and technical challenges. Most of these are typical of energy investment projects and can be effectively managed with the right planning. Let us consider the main ones.
One of the key features of cogeneration projects is the significant initial investment required. The cost of a CHP unit with a capacity of 100–500 kW is approximately €180,000–495,000. For small and medium-sized businesses, this represents a substantial investment, but it is offset by savings on electricity and heating throughout the plant’s operational life.
The cost of credit is also a key factor. In 2026, the average lending rate in Ukraine is estimated to be between 18% and 25% per annum, which may extend the project’s payback period. At the same time, businesses are increasingly turning to alternative financing mechanisms that help reduce the investment burden.
Common solutions:
Thanks to such models, an increasing number of businesses are implementing cogeneration projects without placing a significant strain on their own capital.
The development of cogeneration in Ukraine is gradually being supported through the creation of a favourable regulatory environment and integration with the EU energy policy. The government has declared its commitment to decentralising the energy system and creating conditions for investment in high-efficiency generation.
As of 2026, natural gas-fired cogeneration plants operate under standard market conditions without a separate tariff surcharge. At the same time, investors may make use of other support mechanisms, including international funding programmes, preferential loans and grant components.
The State Agency for Energy Efficiency is also working to create favourable conditions for the development of such projects. Key areas of focus include streamlining permitting procedures, aligning legislation with EU directives, and introducing customs and VAT incentives for energy-efficient equipment.
By way of comparison, EU countries have more sophisticated support mechanisms in place, such as feed-in tariffs for cogeneration, tax credits for investment in equipment, and preferential fuel taxation. It is precisely these mechanisms that have enabled the scaling up of CHP technologies within European energy systems.
In Ukraine, most cogeneration projects are currently being implemented thanks to savings from in-house energy generation, improvements in the energy efficiency of businesses, the attraction of international funding, and the gradual development of mechanisms for state support for cogeneration.
An important stage in the implementation of a cogeneration project is the preparation of technical documentation and the approval of the terms for connection to the utility infrastructure. Depending on the specific nature of the facility, the company will need to liaise with distribution system operators, gas distribution companies and other relevant organisations.
In practice, this process is greatly simplified when coordinated by an experienced engineering team. For example, when implementing projects, Pro-Energy takes charge of preparing the necessary documentation, liaising with network operators and managing the approval process. This approach allows for the systematic organisation of all stages and ensures that the project is completed on schedule.
The following technical aspects are usually taken into account when preparing a project:
Further market development will involve improving regulatory procedures and harmonising the rules for connecting distributed generation in line with European standards, which will facilitate the faster implementation of cogeneration projects.
Another important step is the integration of the cogeneration plant into the existing electricity and gas infrastructure. Some local electricity networks were originally designed for one-way electricity consumption, so connecting distributed generation sometimes requires additional technical solutions.
Specifically, this refers to:
At the same time, the government has already taken several steps to simplify the process of connecting new generation facilities. For example, during the period of martial law, the time taken to issue technical specifications was significantly reduced, and the connection fee for new generation capacity was temporarily waived.
High-quality preliminary design plays a key role in project implementation. The Pro-Energy team analyses the grid infrastructure, assesses connection options and optimises equipment configuration as early as the project preparation stage. This helps to minimise additional costs and speed up the commissioning of the CHP plant.
The challenges involved in implementing CHP are sometimes linked to the high demand for qualified engineers and specialists. Cogeneration plants require engineers with experience in the design, installation and commissioning of power generation equipment. In Ukraine, the number of such specialists is gradually increasing, but demand for them remains high.
This is precisely why businesses often engage companies with their own engineering teams and practical experience in delivering energy projects. This approach helps to minimise the technical factors that need to be taken into account and ensures the equipment operates reliably once commissioned.
Pro-Energy supports CHP projects at every stage — from feasibility studies and design through to installation and maintenance.
Despite the growing demand for autonomous energy sources, many businesses are only just beginning to explore the possibilities of cogeneration. Due to a lack of information, misconceptions sometimes arise regarding the complexity or high cost of the technology.
In practice, the economic efficiency of CHP largely depends on the correct calculation of load and the use of thermal energy. When these factors are taken into account, cogeneration often demonstrates stable economics and a predictable payback period for cogeneration in Ukraine.
What helps businesses make decisions:
Take a look at our completed cogeneration projects to see how it works in practice, what payback periods the case studies demonstrate, and what financial benefits businesses are achieving.
The war introduces additional factors that investors take into account when planning energy projects. At the same time, the market is gradually adapting to the new conditions, with international risk insurance schemes emerging, logistics chains for equipment supply being optimised, and projects increasingly being implemented as distributed generation schemes.
Attacks on energy infrastructure are raising the bar for the protection of power generation facilities and investment insurance. In some regions, this may make it more difficult to ensure power generation facilities or lead to higher insurance premiums. Currently, these may be in the range of 3–5% of the project’s value per year, whereas in peacetime this figure was approximately 0.5–1%.
At the same time, the market is gradually adapting: international insurance and investment guarantee schemes are emerging, which help to partially cover war risks for energy projects.
Most of the equipment for the CHP is supplied from EU countries. Military factors, restrictions on transport routes and pressure on customs infrastructure are causing delays in deliveries. Transport and insurance costs have risen. In some cases, project timelines are being extended by several months due to delays in importing critical components required for grid connection.
Suppliers and engineering firms have adapted their supply chains, enabling them to plan project implementation whilst taking potential delays into account and minimising their impact on construction timelines.
Sharp fluctuations in natural gas prices make it difficult to forecast operating costs. As fuel accounts for a significant proportion of the cost of generating electricity from natural gas, market volatility has a direct impact on the project’s payback period. This creates additional risks for financial models, particularly in the case of long-term financing.
Possible solutions:
You can read more about the importance of biogas solutions for energy security in our article on the role of biogas plants in the post-war energy recovery.
Despite the systemic challenges facing cogeneration in Ukraine, the market is showing signs of structural growth. A number of factors are creating a more favourable environment for the roll-out of cogeneration in the medium term.
For many businesses, cogeneration has already become a tool for energy efficiency and a key component of their energy security strategy. The growing number of projects being implemented indicates that the market is moving from the experimental phase to the roll-out of the technology.
Ukraine is aligning its energy legislation with EU standards. The implementation of Directive 2012/27/EU establishes a legal framework for the development of high-efficiency cogeneration and introduces clear criteria for its classification. Alignment with EU standards also opens up access to grants, preferential financing and technical assistance under decarbonisation and infrastructure renewal programmes.
Rising electricity tariffs are shortening the payback period for CHP plants, particularly for businesses with a stable heat load and round-the-clock operations. Following blackouts, businesses are investing more actively in their own power generation as a means of ensuring energy security. An additional incentive is EU export requirements and the need to reduce the carbon footprint, which is boosting interest in biogas cogeneration.
EU programmes provide funding for distributed generation and energy efficiency projects. In addition to financial support, Ukraine receives technical expertise and assistance in reforming the regulatory framework.
The cogeneration market in Ukraine is already yielding tangible results. We have implemented a number of projects for industrial enterprises, district heating and cooling facilities, and commercial property. In particular, we commissioned 1 MW plants for manufacturing companies in 2024–2025, and a 1 MW project for a district heating and cooling company with the aim of decentralising heat supply.
All projects have been implemented on a turnkey basis, with ongoing maintenance support. Practical experience shows that cogeneration is already an effective tool for enhancing the energy independence of businesses and communities.
To minimise the risks associated with cogeneration projects, it is advisable to proceed systematically.
Before investing, it is necessary to analyse the facility’s actual electrical and thermal loads, the seasonality of consumption, and the number of operating hours per year. The key task is to determine the base electrical load, as this is what determines the economics of cogeneration. Based on this data, the actual payback period is calculated, taking into account the cost of gas, electricity, heat and potential downtime.
The success of the project depends on the contractor’s experience in the Ukrainian context, taking into account regulatory requirements, grid connection and military risks. It is important to verify the availability of an after-sales service, the stock of spare parts in Ukraine and the warranty terms for equipment and installation work.
For businesses with no experience of on-site power generation, it is advisable to start with a smaller capacity, test the integration into the existing infrastructure and assess the actual economic benefits. Once the results have been confirmed, it is possible to scale up to the optimal level.
If a business generates organic waste, it is worth exploring the possibility of biogas-based cogeneration. It is also advisable to consider leasing arrangements or ESCO models, which can help reduce the initial investment burden and link payments to the energy savings achieved.
A comprehensive approach to planning significantly increases the likelihood that cogeneration will become a strategic tool for enhancing business competitiveness.
To find out more about practical solutions for different types of farms, see our resources:
Cogeneration is gradually becoming one of the key tools for energy efficiency in Ukrainian business. Despite the organisational and technical challenges involved in its implementation, most of these issues can be resolved during the proper design and technical audit stages.
This positive trend is driven by European integration, the implementation of EU standards, international funding and growing interest from businesses in on-site power generation. Provided that a professional energy audit is carried out, a sound financial model is in place, and an experienced partner is chosen, cogeneration becomes an effective tool for ensuring stability and long-term competitiveness.
Experience in recent years has shown that most of the factors involved in implementing cogeneration are organisational rather than technological in nature. With an experienced partner in place to handle the technical, regulatory and project-related aspects, the commissioning of a cogeneration unit becomes a manageable process with predictable costs.
How Pro-Energy is helping to implement the CHP project:
Are you considering cogeneration for your business? Before launching a cogeneration project, it is important to assess your business’s heat profile, grid connection options and financial model.
The Pro-Energy team carries out technical and economic audits of facilities and helps to determine the actual cogeneration potential for a specific enterprise.
Why is the roll-out of cogeneration in Ukraine proceeding gradually?
The cogeneration market in Ukraine is currently undergoing rapid development. The main factors influencing the pace of implementation are the need for initial investment (approximately €180,000–420,000 for a CHP unit with a capacity of 100–500 kW), the preparation of technical documentation, and the integration of the plant into the enterprise’s existing energy infrastructure.
At the same time, these issues are becoming increasingly easier to resolve thanks to the emergence of financial instruments such as leasing, business loan schemes (including the government’s ‘5–7–9’ programme), and international energy efficiency support programmes.
How long does it take to obtain permits for a CHP in Ukraine?
The duration of the planning and implementation of a cogeneration plant project in Ukraine depends on several factors: the purpose of the plant (generating electricity for sale on the market or for internal use), as well as the availability of a plot of land and the formalisation of usage or ownership rights. On average, the entire process — from the initial idea to the commissioning of the plant — takes between 6 and 18 months.
Key stages of the project:
Consequently, the duration of each stage may vary depending on the scale of the project, technical requirements and the specific details of the connection to the energy infrastructure.
Is there any government support for cogeneration projects in Ukraine?
Cogeneration projects can make use of various financing instruments. These include:
Such mechanisms enable companies to implement energy projects with less strain on their equity capital.
How can risks be minimised when implementing the CHP unit in Ukraine?
To ensure the project is cost-effective, it is worth following a few practical steps:
This approach makes it possible to establish a stable and economically predictable energy supply system for the company.
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