WHY REBUILD UKRAINE’S INFRASTRUCTURE UNDER FIRE?

UKRAINE AND THE EU #9 // THEME – Even as the war grinds on, the Nordic Green Bank Nefco is investing €350 million in Ukraine’s heating, water, and power systems, funded by grants and loans from Denmark and the other Nordic countries. The bigger problem, says Nefco Investment Director Bo Eske Nyhus, isn’t the daily drone attacks, but the steady breakdowns of a worn-out network.

Original article in Danish by Carsten Steno, Business journalist | 05.05.2026

Danish and Nordic taxpayers are currently helping to fund new water mains and a solar-powered pumping station in the town of Krasyliv, between Kyiv and Lviv. New district-heating pipes are also due to be laid in Mykolaiv. Some of the components are supplied by Danish companies.

Those two projects are among many financed through Nefco in Helsinki, the Nordic Green Bank established by the five Nordic countries in 1990. Over the next three years, Nefco plans to invest about €350 million to upgrade Ukraine’s utility sector, using a mix of grants and loans from the Nordic countries. Comparable European institutions, supported by EU funding, are pursuing similar programs.

Nefco – estimated to account for roughly 20% of Ukraine’s market for heating, water, and power infrastructure – puts the minimum investment need for modernising the utility sector at around €1.2 billion, potentially with financing backed by EU instruments.

But does it make sense to pour money into utilities while a war is still being fought?

Every day brings reports of drones and missiles hitting combined heat-and-power plants, pumping stations, and power facilities. By that measure, the winter that has just passed was the worst in the war’s more than four years.

Investments make sense despite the war

Yet Nyhus, who has worked on financing Ukrainian infrastructure for 15 years, argues that the war itself is not what creates the biggest day-to-day problems for companies and civilians. Much of the immediate damage from strikes can be repaired.

The deeper issue, Nyhus says, is the condition of the network itself. When Ukraine became independent in 1991, it inherited a utility system that functioned reasonably well. “But since then, it has been kept going on maintenance budgets closer to what you see in parts of Africa. That’s why breakdowns are constant – and it doesn’t necessarily have anything to do with the war.”

From his perspective, investing in essential upgrades is not optional. Without work alongside the war effort to secure a modern, energy-efficient, and reliable supply of electricity, heat, and water, civil society risks buckling. And if civil society falters, so does the ability to fight a war that is not only about Ukraine’s independence, but also Europe’s security.

A huge market

While the grants help keep Ukrainian communities running, Nyhus stresses that this is not charity for Denmark and the other Nordic countries. Quite the opposite.

Ukraine’s utilities sector is one of the largest – and potentially most attractive – markets for Danish engineering consultancies and component suppliers. It was already promising before the full-scale invasion in 2022, but the war and Europe’s subsequent support have made it possible to get projects moving at scale.

That should put the market squarely on the radar of Danish firms in energy, heating, and water. Engineering groups such as Rambøll, Krüger, and COWI are natural partners on Nefco-backed projects. So are component makers like Grundfos (pumps), Danfoss (heat exchangers), Logstor (district-heating pipes), Kamstrup (meters), and AKV (valves), among others.

Even so, Nyhus says it can be hard to persuade Danish suppliers to take the step. Some judge the upfront costs of entering a market like Ukraine’s to be too high.
It can feel safer to double down on familiar European markets such as Germany or Scandinavia instead.
“But if you approach it the right way, Ukraine offers strong opportunities,” Nyhus says.

Ukraine can pay

For Danish companies, the key is to work with the 10–15 larger Ukrainian main contractors that deliver infrastructure projects. The projects are initiated by municipalities, which apply for financing from institutions such as Nefco.

Nefco only joins once a project has been fully assessed by an engineering consultancy – Rambøll, NIRAS, or a similar firm. It then closely monitors delivery to ensure the project meets the standards required for grant-funded financing administered by the bank.

“As a Danish company, you shouldn’t be knocking on the doors of Ukrainian municipalities. They’re not the ones buying components. The counterpart you need is the Ukrainian main contractor.”

For now, most projects are funded through grants. Over time, however, financing will have to shift toward loans, something that might sound unrealistic at first glance.

Nyhus points out that, before the war, Ukrainian municipalities repeatedly repaid project loans provided by Nefco. He believes they will be able to do so again once the war ends.

Nor does he think Danish suppliers should stay away because of corruption concerns.
“It was much worse ten years ago. A lot has changed. Today, the risk is far more manageable, and in the projects we finance, we do everything we can to make sure it doesn’t happen.”

Unless you are chasing a quick win, taking a serious, long-term position in Ukraine’s infrastructure market ultimately depends on one assumption: that Ukraine will endure as an independent state.

“But if we don’t believe that, can we really assume that other- more accessible- markets in Europe will remain safe forever?” Nyhus asks.

The English version of this article was produced with AI assistance and reviewed by DBDH.
Original Danish version here