14 GW available vs 17 GW demand: Ukraine’s industrial shutdown winter

Ferrexpo, Ukraine’s largest iron ore pellet producer and a key supplier to steelmakers in Austria, Germany, and the Czech Republic, cut pellet production by 47% in 2025 as Russian strikes on energy infrastructure left its Poltava plants starved of power, the company reported on 14 January.

Acting CEO Lucio Genovese called Q4 2025 “one of the most challenging for the business and employees since the full-scale invasion.” Output fell to 3.2 million tons from 6.07 million the year before. Black Sea export routes are now blocked by strikes on port infrastructure, forcing the company onto rail-only shipments to European customers.

The collapse at Ferrexpo is part of a pattern emerging across Ukraine’s industrial heartland: cumulative damage to the power grid now causes disproportionate economic harm with each new strike.

Russia’s new targeting strategy

This winter, Russian forces shifted tactics. Instead of bombing power plants—many already destroyed or damaged beyond quick repair—they concentrated on Ukraine’s roughly 3,500 electrical substations, according to Russia Matters, citing The Economist. Substations are harder to protect, faster to hit, and their destruction cascades through the grid.

The campaign has pushed Ukraine’s available generating capacity to roughly 14 gigawatts. Cold-weather demand reaches 17 GW. That 3 GW shortfall—equivalent to Denmark’s entire peak demand—is forcing emergency shutdowns at factories that survived three previous wartime winters.

“Ukraine’s energy system is not broken, but it operates in a mode of constant degradation and patching,” Olena Lapenko, general manager for security and resilience at DiXi Group, told Euromaidan Press. “Russians haven’t achieved their strategic goal, but they have tactical successes—creating chronic instability. This is a war of attrition.”

The pattern is wave-like: escalation, stabilization, new strikes. Recovery to pre-war conditions is not a matter of weeks but months and years, Lapenko said. The situation will persist depending on the intensity of attacks, repair speed, and temperatures—cold weather drives up consumption while making repairs harder.

Steel mills dark, mines evacuated

On 7-8 January, Russian drone attacks triggered a near-total blackout across Zaporizhzhia and Dnipropetrovsk oblasts—Ukraine’s industrial core. Zaporizhstal, the country’s only remaining full-cycle steel producer after Russia seized Mariupol’s mills, suspended all operations.

It was the plant’s second emergency shutdown in two weeks, following a similar stoppage on 23 December. ArcelorMittal Kryvyi Rih halted production lines. Eight mines across Dnipropetrovsk lost power; workers were evacuated in the dark.

Other systems are buckling too. Water utilities depend on electric pumps. Mobile networks and the internet require constant power. Cold storage for food logistics fails without it. Backup systems in hospitals and schools were designed as reserves—not for weeks of continuous operation. Prolonged use raises the risk of breakdown, Lapenko said.

Smaller manufacturers in western Ukraine, closer to generation sources, told Euromaidan Press that conditions remain manageable—some haven’t experienced blackouts at all.

Yet manageable doesn’t mean easy. One machine shop owner in Lviv said his business has outgrown its generator. “At first it was easier—the business was smaller, and a small generator was enough,” he told Euromaidan Press. “Now we’ve grown, we have more machines needing more power. I’m looking at buying a bigger generator.” He monitors blackout schedules and plans work around them. Some small repair jobs he stopped taking entirely in summer 2024—no longer worth the trouble.

But the industrial giants concentrated in the east and center face repeated shutdowns that damage equipment, break contracts, and drain cash reserves with each cycle of stopping and restarting heavy machinery.

Exports halt, factories scale back

Ukraine hasn’t exported electricity since early November—the longest gap since September 2024, according to the Centre for Economic Strategy tracker. A country that was selling power to Europe last summer now imports at emergency levels while its own factories go dark.

The National Bank has capped GDP growth forecasts at 2% for 2026. Not because of funding gaps—energy and workforce shortages are now the real limits. Industrial companies have no priority in power supply—they face the same scheduled and emergency outages as households, Bohdan Serebrennikov, deputy research director at DiXi Group, told Euromaidan Press.

The deficit raises electricity prices for businesses, increasing costs and eroding the competitiveness of Ukrainian goods. Most affected are energy-intensive sectors: mining, chemicals, and metallurgy—exactly where Ukraine’s largest exporters operate. December inflation fell to 8% partly because businesses that can’t find workers or electricity are simply scaling back.

Fuel prices buck the trend. Across Ukraine, generators burn diesel to keep homes, shops, and water pumps running—and gasoline and diesel prices rose in December while everything else flatlined.

The investment dilemma

Direct damage to Ukraine’s energy sector is estimated to exceed $20 billion through 2024, with lost revenue exceeding $72 billion. Rebuilding to EU standards would cost $68 billion.

Investors are watching. At the Ukraine Recovery Conference in Rome last year, energy deals worth over €1.2 billion were signed. But the fundamental question remains: who puts billions into infrastructure that gets bombed weekly?

Some adaptation is underway. Cities like Zhytomyr have built distributed generation networks—smaller gas-powered units spread across the city—that kept lights on during attacks that blacked out Kyiv. The model works, but scaling it takes time and money that Ukraine may not have before the next strike.

No end in sight

Ukrainian military monitors warn that another massive combined strike is expected in the coming days, again targeting critical infrastructure. Strategic aviation may not be involved, but MiG-31K jets carrying Kinzhal missiles could be.

Each attack destroys the capacity that took decades to build. The economic potential lost—the contracts unfilled, the exports unmade, the investments deferred—doesn’t show up in damage assessments. It simply vanishes.

How long can Ukraine sustain this? The answer depends on air defense systems, continued Western support, and how much industrial base remains when the strikes finally stop.