Power shortages led to widespread shutdowns of large enterprises

The electricity shortage has become one of the biggest challenges for Ukrainian businesses. Steel giants, building materials manufacturers, and energy-intensive enterprises have all faced large-scale downtime due to Russian shelling.

Eighty percent of companies are feeling the effects of the energy shortage: production is declining, costs are rising, products are becoming 10–30% more expensive, and factories are operating at reduced capacity. Even generating their own power is not a solution—it is technologically impossible to replace industrial power supplies with mobile generators. Industry needs systematic state support — otherwise, the economy risks grinding to a halt along with the factories.

Consequences of power cuts

The electricity shortage significantly affects not only the well-being of the population, but also Ukrainian business. According to the IER, energy supply disruptions (42% of responses) in December 2025 were the third major obstacle to doing business. The top two spots were taken by labor shortages (62%) and “unsafe working conditions” (57%).

The results of a survey by the European Business Association (EBA) show that power outages complicate business operations (80%). Among the main consequences of power outages, companies most often mention:

• increase in production costs – 61%;
• changes to work schedules – 58%;
• decrease in production volumes or services provided – 50%;
• downtime – 48%;
• a rise in product prices by 10–30% (primarily).

In recent months, Russian shelling has become more widespread and systematic, leading to the interruption of production processes at large enterprises for several days or more:

1. Interpipe shut down the Interpipe Steel electric steel melting complex in early November 2025 due to the consequences of the shelling of the Dnipro energy infrastructure. The downtime was extended into January 2026.
2. Ferrexpo halted operations due to power outages following Russian attacks on January 20, 2026, and in November 2025. Due to constant power restrictions, the company reduced its iron ore production in October-December 2025 by 29% compared to the previous quarter, to 1.07 million tons.
3. The Zaporizhstal steelworks halted all production processes at the end of December 2025 and in early 2026 due to emergency power cuts. A technological accident was avoided thanks to the coordinated actions of personnel to safely shut down the equipment. In both cases, production was halted for up to two days.

In January, after large-scale attacks on thermal power plants and significant damage to power grids, many Ukrainian industrial enterprises, building materials manufacturers, and factories in other energy-intensive industries that had not installed alternative power generation systems shut down and went into forced downtime. For many, installing their own power generation systems is very expensive. Companies are shutting down and waiting for an opportunity to return to normal operations.

Large industrial consumers are being disconnected despite being classified as critical infrastructure and the fact that they import at least 60% of their total consumption from the EU to ensure a stable energy supply.

“The import PSO mechanism does not work if, on the instructions of the dispatcher of NPC Ukrenergo, special emergency shutdown schedules are introduced to protect critical infrastructure,” Interpipe told GMK Center in a comment.

It is important to add several consequences of the electricity shortage for business in a broader context:

1. The energy shortage significantly affects the operation of energy-intensive industries, whose products become uncompetitive in domestic and foreign markets due to rising costs.
2. Power outages (especially emergency ones) lead to increased wear and tear on production equipment in the best case scenario and can cause technological and man-made accidents in the worst case scenario.

«A sudden power outage is a disaster for a mining and processing plant. Stopping a ball mill loaded with ore causes the pulp to solidify. To restart it, hundreds of tons of rock must be unloaded manually, which takes days. The shutdown of drainage pumping stations in deep quarries (up to 400 m deep) creates a threat of flooding and the loss of expensive equipment (excavators, dump trucks),» Ksenia Orynchak, executive director of the National Association of Mining Industry of Ukraine, emphasized in a comment to GMK Center.

The problem of electricity shortages became very acute at the end of 2025, although it had a significant impact on production throughout the previous year.

«Our production results in 2025 reflected a difficult reality – with high electricity costs, expensive logistics, limited export markets, and forced production downtime. We were forced to constantly reschedule the operation of key units and were unable to operate two blast furnaces continuously, as we had planned from the outset,» said Mauro Longobardo, CEO of ArcelorMittal Kryvyi Rih.

Only one-fifth (20%) of business respondents to the above-mentioned EBA survey said that the blackouts had not affected their work. The survey showed that most companies are still able to meet their obligations. Only 9% of the businesses surveyed said that the lack of electricity had led to the breach of contracts.

What businesses are doing

In these conditions, Ukrainian businesses are actively investing in energy independence—90% of the companies surveyed by the EBA have their own alternative energy sources or generation facilities. Among the energy security tools that businesses are already implementing or planning to implement are the following:

• energy storage systems – 35%;
• solar generation – 26%;
• new networks and infrastructure – 21%;
• other types of generation: gas – 5%, biogas – 3%, wind – 1%.

Only a quarter of companies have been able to achieve complete energy independence. Another 38% of business respondents said that they are mostly or partially able to compensate for the electricity shortage. Some companies in energy-intensive industries have already ordered generating equipment or are in the process of deploying their own energy capacities.

The use of alternative sources results in high electricity costs (in addition to the direct costs of implementing projects) generated by industrial generators. It amounts to 18–20 UAH per kWh, while the standard option for energy supplies to industry is 14 UAH.

For technological reasons and due to high energy consumption, not all Ukrainian companies can implement relevant energy independence projects.

«Interpipe has thoroughly studied the issue of possible alternative sources of electricity and has concluded that mobile generators are not suitable for our industrial assets and their operating modes. This is a way for small and medium-sized enterprises to solve their problems,» Interpipe said in a comment to GMK Center.

Large irona and steel enterprises are critically dependent on centralized energy supplies. Alternative sources of generation perform a purely auxiliary function and can only partially provide electricity for production processes.

“Production processes in the iron and steel sector require stable industrial electricity supply with high capacity, which technically cannot be replaced by decentralized solutions without risking production stoppages, accidents, and irreversible equipment damage,” explained Metinvest.

What business needs

A survey conducted by the European Business Association (EBA) showed that under current conditions, a significant portion of business respondents does not count on government assistance. Those who do expect support from the state hope for certain measures:

1. Introduction of mechanisms for compensating expenses on backup power sources, exemption from tariffs and VAT on equipment, accessible lending including under the “5-7-9%” program.
2. Establishment of clear outage schedules and prompt communication to enable production planning.
3. Simplification of permitting procedures for installing generation equipment and a moratorium on inspections that impede operations.

Businesses require an adequate level of funding under existing industrial support programs.

“Those programs (”5-7-9» and others) allocated 6-8 million hryvnia. It is impossible to purchase, for example, a kiln for firing ceramic bricks or serious energy equipment for 8 million hryvnia. Storage devices (batteries) currently imported from Europe and China are prohibitively expensive. In addition to purchasing them, you have to pay for connection and technical conditions. Even if 8 million hryvnias were allocated and the company bought storage devices, half of its own funds would have to be spent just to connect them,» said Kostyantyn Saliy, president of the All-Ukrainian Union of Building Materials Manufacturers.

Industry needs support

A prolonged shutdown of energy consumption by large industrial enterprises, in particular mining and metallurgical companies, will lead to significant economic losses that are currently impossible to calculate. Technogenic risks are growing significantly, as mining and metallurgical companies are classified as high-risk facilities. The country’s economic development and defense capabilities depend on business.

“Supporting the energy sustainability of industrial enterprises, developing decentralized generation, and restoring industrial power lines should become elements of the state’s economic sustainability policy,” said Anatoliy Kinakh, president of the Ukrainian Union of Industrialists and Entrepreneurs, in a comment to GMK Center.

The Ukrainian Association of Ferroalloy Producers (UkrFA) proposes that the Government consider providing energy-intensive enterprises with access to long-term electricity supply contracts, introducing mechanisms for compensating electricity tariffs through tax instruments, providing preferential loans for projects to build alternative energy sources (gas, solar, wind), as well as energy storage systems, and setting a preferential gas tariff for metallurgical enterprises that use cogeneration plants.

UkrFA’s proposals are based on the high cost of electricity, the significant share of electricity in the cost of ferroalloy products (40%), and the location of the industry’s plants in frontline regions. Similar instruments can also be used to support enterprises affected by power outages.

The electricity shortage caused by shelling has affected the population and businesses equally. The suffering of ordinary people in cold homes evokes empathy, although the working conditions of most Ukrainian companies are now no less difficult.

“Small, medium, and large enterprises now need a lot of support. No one wants to bring these problems out into the open because everyone understands that the population is suffering just as much,” said Kostyantyn Saliy.