In Short : Energy efficiency is vital to Ukraine’s post-war recovery, helping rebuild homes and infrastructure that are resilient, affordable, and sustainable. With nearly 80% of housing energy-inefficient, adopting insulation, modern heating, and renewable systems can cut energy use by up to 60%. This approach reduces costs, boosts energy security, creates jobs, and strengthens Ukraine’s long-term resilience.
In Detail : Ukraine’s building stock presents both challenges and opportunities
Ukraine’s building stock has faced unprecedented challenges since Russia’s full-scale invasion in 2022, with extensive destruction of critical infrastructure and the displacement of millions of people. An estimated 13% of the total housing stock has been damaged or destroyed, affecting more than 2.5 million households. Reconstruction needs in the housing sector are the highest among all long-term priorities, at nearly USD 84 billion. Estimates of the number of affected buildings range from 236 000 to 400 000, underscoring the enormous scale of the impact on the sector.
Amid the devastation, the priority is not simply to replace buildings as they once were, but to rebuild in ways that improve people’s daily lives and strengthen communities. Putting energy efficiency at the heart of Ukraine’s recovery ensures homes that are warmer, safer, and more affordable for families, while also creating jobs and boosting the economy. As a result, Ukraine’s buildings will be more resilient, comfortable and affordable, and align with the country’s climate and energy security goals as part of its long-term recovery.
The building stock is the largest energy consumer in Ukraine, accounting for close to 40% of total final energy consumption. In residential buildings alone, more than half the energy consumed is used for space heating, predominantly served by district heating networks, with energy losses between 20-30% on average. Almost 80% of the housing stock in Ukraine is considered energy inefficient, with the bulk constructed between the 1960s and 1980s, when energy performance standards for buildings did not exist. Ukraine’s building stock also presents significant potential for thermal modernisation with some estimates showing 10-20% savings from low-cost measures and 50-60% from deep renovation.
Ukraine is an Association country of the International Energy Agency (IEA), and the IEA works closely with the Government on key energy sector challenges, including resilience and energy efficiency. The IEA’s special report, Ukraine’s Energy Security and the Coming Winter, provides an energy action plan to help the country navigate the critical months ahead, while the report on Empowering Ukraine Through a Decentralised Electricity System outlines a pathway to rebuild and modernise Ukraine’s power sector. The IEA is supporting the Ministry for Development of Communities and Territories of Ukraine with analysis and policy recommendations to enhance energy efficiency in building reconstruction, aiding recovery and long-term resilience.
Recent policy developments support energy efficiency for building back better
Ukraine has established a comprehensive policy framework to improve energy efficiency in buildings, aligning its national strategies with international commitments. These commitments prioritise the implementation of the EU directives, forming the backbone of Ukraine’s action plan for aligning with European standards. Key regulatory instruments include mandatory energy performance certification, minimum energy performance standards, mandated energy audits, and smart metering.
The National Plan for Increasing the Number of Buildings with Nearly Zero Energy Consumption (nZEB) states that all national and municipal buildings meet nZEB standards by the end of 2025, expanding to all new buildings by 2027. In 2025, the government brought technical requirements for nearly-zero-energy buildings into force (Order No. 168, effective 1 April), which currently serve as voluntary criteria for design and certification rather than a mandatory standard.
The Thermal Modernisation Strategy by 2050 targets a two-thirds reduction in heating and cooling demand. This year, the Cabinet also adopted a State Targeted Economic Programme for thermal modernisation to 2030 (≥30% housing energy-use reduction) and approved a procedure to channel state and donor funds into public-building upgrades – starting with municipal healthcare – via grants that can co-finance up to 50% of a project (capped at €300 000 per facility).
Resources are needed to scale energy efficient reconstruction
Ukraine’s recovery and reconstruction, guided by the 2022 National Recovery Plan, emphasise energy efficiency and digitalisation as pillars of resilience and growth. Through international collaboration, domestic expertise and strong policies, the country aims to rebuild better, strengthening both energy security and economic sustainability.
Launched in 2019, the Energy Efficiency Fund has been central to this effort, offering grants for energy audits, building renovations and renewable installations. Its GreenDIM programme has supported homeowners with efficiency upgrades but is insufficient to transform Ukraine’s building stock alone.
Donor backing is key for scaling up reconstruction efforts. In June 2025, the EU and Germany added €18 million to support the Energy Efficiency Fund’s programmes for homeowner associations and war-damaged buildings, while an EIB/EIF package of ~€600 million includes €100 million in municipal loans for decentralised heat, renewables and energy-efficiency in public buildings. Complementing these efforts, in 2024 the State Fund for Decarbonisation and Energy-Efficient Transformation was established and has since financed 36 projects, though mainly focused on construction of solar power plants rather than energy efficiency.
Modernising building envelopes and heating systems is critical to rebuilding better. Pilot projects are showcasing innovative solutions. Prefabricated renovation building elements, such as straw and hemp panels used in Nizhyn, offer high-quality thermal modernisation while reducing energy use, environmental impact and construction time. In Kyiv’s Podol, renovation of a multi-family house cut energy consumption to 24 kWh/m² (over 80% below a typical building), with more than half supplied by on-site solar energy.
Speed, affordability and resilience are key for emergency building repairs. Windows, often damaged during shelling, are in especially high demand. Insulate Ukraine effectively integrates energy efficiency into emergency response by deploying low-cost, insulated, breakage-resilient windows free of charge in war-damaged homes, while also creating local jobs.
However, a severe shortage of skilled workers in the construction sector, exacerbated by the war, complicates rebuilding efforts. Over a quarter of the country’s workforce has been lost to military service or displacement. The construction industry faces critical shortages – reaching up to 40% in some companies. To address this, businesses are adapting by hiring those not historically involved in the construction sector, including women, students, and retirees while launching training initiatives such as the Skills4Recovery program. However, despite these efforts, Ukraine is projected to face a deficit of over 500 000 skilled workers in 2025, posing a major obstacle to recovery.
Upgrades of building envelopes and heating systems offer significant benefits
Rebuilding and refurbishing Ukraine’s building stock with energy efficiency in mind can yield significant savings. For example, using a common 1960s nine-story panel building and installing an individual heating substation alone can cut energy consumption by over 20%, given that the baseline efficiency of district heating is quite low. Adding to that, moderate upgrades of the building envelope such as insulating roofs and basements, replacing windows, and sealing frames, can than double these energy savings, almost meeting Energy Class C – the level of energy performance required by current standards.
Full insulation of all building elements boost savings close to 70%. The same level of energy savings can be achieved through switching from district heating to heat pumps even without major insultation upgrades. However, combination of improved insulation and heat pump can take a building’s energy performance close to zero-carbon readiness (80-90% energy savings). With about a quarter of Ukraine’s multi-apartment buildings sharing similar design features, upgrading them all to zero-carbon ready could save 25 TWh annually, which is equivalent to powering 2.5 million Ukrainian households for a year or avoiding the use of approximately 28,500 diesel generators running 24 hours a day for an entire year, saving approximately 6.25 billion litres of diesel annually.
Energy efficiency in buildings improves people’s well-being and cuts energy bills
Results for estimation of annual energy costs in the case of implementation of different energy efficiency measures show meeting current energy efficiency standards could almost halve operational energy costs, while adding high-performance insulation and heat pumps could cut energy bills by close to 70%. However, installing a heat pump without improving the building envelope results in limited cost savings. Although energy-efficient measures require upfront investments, they deliver the greatest long-term cost savings and energy use reductions.
Results for Ukraine are in line with the analysis for other countries – narrowing the price gap between district heating, gas, and electricity by adjusting energy tariffs would make electrification of heating with heat pumps even more financially viable. While such reforms remain challenging in the current context, pairing them with comprehensive thermal modernisation and incentives for citizens to improve energy efficiency of their homes would help offset additional costs and reduce reliance on natural gas.
Switching from inefficient district heating to heat pumps provides higher energy cost savings over time (a 20-year horizon was assumed) than envelope upgrades alone. Conversely, improving the envelope without switching to a heat pump or simply adding individual heating sub-stations, and maintaining existing district energy systems, offers limited energy and energy cost savings, especially under current gas tariffs.
While initial investments are required and can be sizable, comprehensive upgrades enhance building resilience, reduce energy demand, ease pressure on the electricity grid and improve people’s thermal comfort and well-being.
Policy development and international support are crucial
Scaling energy efficient reconstruction, renovation and electrification of heating in Ukraine will require a balanced mix of regulation, finance, and information measures. Expanding programmes for insulation, high-performance windows, and heat pumps, combined with tariff reforms to narrow the price gap between gas and electricity, can unlock large-scale energy and cost savings. Technical priorities include optimising building envelopes, upgrading heating and ventilation systems, and integrating renewables such as solar PV and heat pumps with storage and smart controls. Reconstruction offers a chance to future-proof Ukraine’s buildings, integrating grid-interactive capabilities, such as demand response, to enhance grid resilience and reduce peak loads. Aligning these efforts with smart grid expansion strengthens energy security while cutting reliance on fossil fuels.
Recent policy steps, including the adoption of nearly zero-energy building (nZEB) requirements, are important milestones. While their current voluntary status is likely to have limited impact on buildings energy performance, a clear roadmap to make nZEB standards mandatory, paired with targeted workforce training and supply-chain development, will help deliver quality renovations at scale. Standardised design solutions, robust monitoring, and consumer awareness campaigns can ensure energy savings materialise in practice and build public trust in efficiency programmes.
International backing remains indispensable to close financing gaps and sustain momentum. Donor support is helping scale up reconstruction efforts. With stronger institutional coordination and transparent implementation, Ukraine can rebuild its housing stock to be efficient, resilient, and low-carbon – setting a benchmark for smart recovery that improves lives today while advancing long-term climate and EU integration goals. The IEA continues its ongoing collaboration with the government of Ukraine to support the rebuilding process with policy-oriented analysis and technical expertise.
