The Cabinet of Ministers of Ukraine has approved the allocation of almost UAH 939 million for the development of distributed gas generation under the Finnish-Ukrainian Investment Fund, established in accordance with the intergovernmental framework agreement between Ukraine and Finland. The decision was made upon submission by the Ministry of Energy of Ukraine.
This was announced on June 4 by First Deputy Prime Minister and Minister of Energy Denys Shmyhal, who noted that the financing raised will accelerate the implementation of projects aimed at increasing power generation capacity and strengthening the resilience of the country’s energy system.
The funds will be directed, in particular, to support projects of PJSC Ukrnafta, which is actively developing electricity generation based on natural gas from its own production. Under the program, the company plans to install new gas-fired reciprocating power plants in western regions of Ukraine with a total capacity of up to 60 MW.
In particular, the construction of distributed generation facilities with a capacity of up to 40 MW in Ivano-Frankivsk region and up to 20 MW in Lviv region is planned. The implementation of these projects will increase local generation capacity and improve the reliability of electricity supply in the regions.
According to Denys Shmyhal, support from Finland is important for the restoration and modernization of Ukraine’s energy infrastructure. He emphasized that the financing will allow new generation facilities to be commissioned faster and will strengthen the country’s energy security amid ongoing challenges.
The development of distributed generation has become one of the key areas of Ukraine’s energy policy following Russia’s large-scale attacks on energy infrastructure in 2024–2025. As a result of the damage, the country lost a significant part of its thermal and hydropower capacity, which required the accelerated creation of new sources of electricity.
In response, the government and energy companies have focused on building gas-fired reciprocating power plants, cogeneration units and other flexible generation capacities, which are characterized by shorter construction timelines and greater resilience to potential damage due to their decentralized placement.
According to government plans, Ukraine intends to commission 1.5 GW of new distributed gas generation in 2026, which will become one of the largest stages of modernization of the energy sector in recent years.
To accelerate the implementation of energy projects, the Cabinet of Ministers also adopted additional measures at the beginning of the year to overcome the consequences of the energy crisis. In particular, procedures for connecting backup generation to the grid were simplified. The National Energy and Utilities Regulatory Commission was recommended to reduce the timeframes for approving project documentation, technical specifications and related procedures to two days.
In addition, on May 15, the government initiated the creation of a national reserve of autonomous generation and further simplification of procedures for the construction and restoration of energy infrastructure. The initiative provides for the formation of a decentralized reserve of mobile power plants, cogeneration units, boiler houses, transformers and other equipment needed to ensure the uninterrupted operation of critical infrastructure facilities.
