Ukraine businesses struggle to cope as Russian attacks bring power cuts and uncertainty

Ukrainian Businesses Fight to Survive Amid Persistent Power Outages and War Challenges

In the pre-dawn darkness of Kyiv’s historic Podil district, baker Oleksandr Kutsenko carefully shapes dough at Spelta bakery-bistro when suddenly the lights go out and the ovens shut down. Without hesitation, he steps outside into the freezing night to switch on a generator, a ritual that has become essential for Ukrainian businesses struggling to operate during Russia’s ongoing attacks on the country’s power grid.

“It’s now more than impossible to imagine a Ukrainian business operating without a generator,” says Olha Hrynchuk, Spelta’s co-founder and head baker. The 28-year-old opened the bakery 10 months after Russia’s full-scale invasion in 2022, meaning she has never experienced running her business under normal conditions.

The cost of purchasing and maintaining generators represents just one of many challenges facing Ukrainian enterprises after nearly four years of conflict. The generator at Spelta burns through approximately 700 hryvnias ($16) of fuel hourly, with the bakery relying on it for 10 to 12 hours daily. “You have no fixed schedule — you have to adapt and refuel it at the same time,” Hrynchuk explains.

Beyond power issues, businesses face acute labor shortages due to military mobilization and war-related migration, along with security risks, diminished consumer purchasing power, and complicated logistics networks.

Olha Nasonova, who heads the Restaurants of Ukraine analytical center, describes the current situation as the industry’s most difficult period in two decades. While businesses had prepared for electricity disruptions, the unusually cold winter has been especially devastating for small cafés and family-run establishments with limited financial resources.

The “Best Way to Cup” coffee project exemplifies this struggle. Co-founder Yana Bilym, who opened the venue in May, saw her business severely damaged in August when a Russian attack shattered all windows and glass doors. The renovation cost 150,000 hryvnias (about $3,400), with half financed through a bank loan she only recently finished repaying.

After consecutive large-scale Russian attacks on Ukraine’s energy infrastructure last month, Bilym’s building lost water supply and sewage functionality. “We were forced to close. We believe it’s temporary. Businesses in December and January, unfortunately, operate at a loss,” she says. Despite these challenges, Bilym holds onto hope that the closure will be short-lived, especially since her husband volunteered for military service on the front lines, and she wants him to have something to return to.

Many Ukrainian businesses have become community lifelines during the crisis. The government has allowed some firms to operate during curfew hours as “Points of Invincibility,” providing free electricity for charging devices and offering warm spaces where people can escape the cold.

Tetiana Abramova, founder of Rito Group, a clothing company producing designer knitwear since Ukraine’s independence in 1991, invested 500,000 hryvnias ($11,500) in a powerful 35-kilowatt generator and a wood-fired boiler to maintain operations. “At work we have heat, we have water, we have light — and we have each other,” she says.

However, running on generators increases production costs by 15-20% compared to standard electricity. Simultaneously, customer numbers have dropped by approximately 40% as many Ukrainians have left the country. “Profitability has fallen by around 50%, partly due to power outages,” Abramova notes. “This affects both the volume and efficiency of our work. We simply cannot operate as much as we used to.”

The broader economic impact is significant. According to a macroeconomic forecast by the Kyiv School of Economics, strikes on the energy system represent the most acute short-term risk to Ukraine’s GDP. If businesses manage to adapt, output losses could be limited to 1-2% of GDP, but prolonged energy system failures could increase losses to 2-3%.

Abramova, drawing on her three decades of entrepreneurial experience, reports spending nearly 100,000 hryvnias ($2,300) over just two months on generator maintenance. Yet she cannot pass all these costs on to retailers in the current economic climate.

“For us now, the main goal is not to be the most efficient, but to survive,” Abramova concludes, capturing the resilient but precarious position of Ukrainian businesses navigating multiple crises simultaneously as the war approaches its fourth year.