Energy expert says Ukraine's energy market is comparable to Japan or West Germany in 1945

Ukraine's energy security has been in a precarious situation since the start of Russia's full-scale war. Constant targeted bombardments of the country’s energy infrastructure have made managing the power grid extremely challenging. Even so, Ukraine has the potential to become a European leader in the development of new energy system technologies. 

Märt Ots, an energy and competition consultant and the former director general of the Estonian Competition Authority, has led a pilot project for the Estonian Centre for International Development (ESTDEV) to strengthen Ukraine's energy security. According to Ots, Ukraine's energy market faces several bottlenecks caused by the war and an outdated overall approach. 

"Before the war began, Ukraine had a very bureaucratic and hard-to-understand Soviet-style system that resembled Estonia in the 1990s. There was no real market as such, overregulation was rampant and there was no transparency," said Ots.  

"When a country is at war, the main objective is that there is electricity tomorrow, no matter where it comes from or how. That is why Ukraine cannot be compared to Estonia when substations and power plants are being destroyed every other day. Talking about the organisation of the energy market is not possible." 

Despite this difficult situation, Estonian support means there may be light at the end of the tunnel. 

As part of the pilot project that lasted from beginning of 2024 until the end of 2025, a platform was created to assess and monitor the condition of critical infrastructure facilities and investment needs. This increases transparency and operational efficiency in the sector and enables faster collection of information about infrastructure damaged by the war. 

"From a future perspective, this gives Ukraine a very good starting position. They could become a European leader in developing new technologies, such as the digitalisation of investment control and price regulation. The situation is the same as Japan or West Germany in 1945. Massive destruction combined with strong will make it possible to build better systems after the war than those currently in Europe," said Ots.  

According to Ots, Estonia also has the potential to learn from cooperating with Ukraine, especially regarding the security of supply and service exports. "We have gained unique experience from our Ukrainian colleagues in ensuring the security of supply under conditions of military conflict. We have a very strong IT solution, and if Estonia wants to develop exports of services and technology and, more broadly, find a platform from which to start, Ukraine could be a very good place to demonstrate this as a model," he said. 

According to Eva-Maria Liimets, ESTDEV’s Programme Manager for Democracy and Rule of Law, the systematic destruction of Ukraine’s energy infrastructure is a tragic reality, but it also creates a rare opportunity. “If reconstruction is designed together with digitalisation from the start, Ukraine can rebuild an energy system that is more efficient, transparent, and fully aligned with European Union requirements, accelerating its path toward EU membership,” she said.