The Government of Iceland and the United Nations Development Programme (UNDP) have signed a new agreement on a project to significantly enhance the resilience of Ukraine’s energy sector. Through a contribution of ISK 400 million (approximately US$3.25 million), the partnership will focus on the procurement of decentralised energy solutions and the modernisation of critical infrastructure.
The intervention is being made under the “Strengthening Energy Sector Resilience in Ukraine” project, launched as the country faces a generation shortfall of at least 7 GW following intensified strikes on its power systems. A primary component of the project is the delivery of cogeneration units with a capacity of 4-5 MW for the city of Kyiv.
Ensure critical services
Thorgerdur Katrin Gunnarsdottir, Minister for Foreign Affairs of Iceland, reaffirmed her country’s steadfast support. “Iceland remains committed to standing in solidarity with Ukraine as it defends its energy security and the well-being of its citizens,” she said. “Our contribution to this project will ensure that critical social services remain operational and that the most vulnerable populations in Kyiv and beyond are protected.”
Auke Lootsma, UNDP Resident Representative in Ukraine, highlighted the strategic importance of the collaboration. “This partnership with Iceland is an important contribution to our efforts to fix and modernise Ukraine’s energy infrastructure amid persistent hostilities,” he said. “By deploying decentralised generation and strengthening the grid, we’re not just repairing damage but building a more resilient and sustainable future for the millions of people who depend on these essential services.”
Denys Shmyhal, First Deputy Prime Minister – Minister of Energy of Ukraine welcomed the technical support provided by the agreement. “Restoring the stability of our national grid is our highest priority in the face of nearly daily attacks on our energy facilities,” he said. “The provision of high-voltage bushings and cogeneration units is a vital technical intervention that will directly prevent large-scale disruptions and help ensure the continuity of water and heat supplies.”
Modernise energy governance
This new contribution builds on Iceland’s previous support, which included the delivery of 15 high-voltage 330 kV bushings and gas engine units to stabilise the electricity grid.
As part of the ongoing support, the project continues to modernise energy governance through the refinement of the Energy Programme Information Management System (EPIMS) and the establishment of an Authorised Security System (AUSS) to enhance cybersecurity.
Support also includes the procurement of high-voltage 750kV bushings and the installation of a dedicated backup power solution for the Ministry of Energy of Ukraine, which consists of hybrid inverters and a battery energy storage system (BESS) designed to ensure the continuity of critical operations in the absence of external power supply.
The project is implemented under the UNDP Green Energy Recovery Programme, ensuring a coordinated and strategic approach to Ukraine’s long-term energy security.
Background:
Ukraine’s energy system sustained approximately $24.8 billion in direct physical damage during the period from February 2022 through 31December 2025, according to the Ukraine Fifth Rapid Damage and Needs Assessment or RDNA5, which was jointly compiled by the Government of Ukraine, the World Bank Group, the European Commission, and the United Nations. The electricity sector alone accounts for $17.1 billion in damage, with power generation assets representing the dominant share at $14.2 billion. Total recovery and reconstruction needs for the energy sector are estimated at $90.6 billion over 10 years, according to the RDNA5. By applying “Build Back Better” standards, these efforts will prioritize modernization and energy efficiency. Supporting this vision, the UNDP Green Energy Recovery Programme bridges urgent infrastructure repairs with a commitment to green transformation, gender inclusion, and institutional growth.
