Other financing activities in Ukraine

Nefco was established in 1990 to finance projects reducing harmful emissions to the environment. Particular focus was on increasing environmental awareness in the Eastern and Central European region through projects related to energy-efficiency and wastewater treatment.

Implemented programmes in Ukraine

Since pollutants do not recognise national borders, it was reasoned that it made better financial sense to support new investments in Eastern Europe – adjacent to the Baltic Sea – that aligned with the environmental priorities of the Nordic countries compared with the rising marginal cost of introducing increasingly stringent requirements at home.

In 2009, Nefco and Ukraine signed a framework agreement that provides a legal framework for Nefco’s operations in Ukraine. Since then, Nefco has financed over 300 projects in Ukraine related to energy efficiency for renovation of public buildings, such as schools, day-care centres, hospitals, street lighting and district heating. Our previous initiatives are briefly described below.

Due to Russia’s full-scale invasion of Ukraine, and the severe damage caused to municipal infrastructure, former initiatives funded by the Nordic countries and the EU have been repurposed to green recovery activities, including the repair and reconstruction of water supply, wastewater management, heating, electricity, housing, schools and health facilities. Read more at www.greenrecoveryukraine.org


The DemoUkrainaDH programme was established by Nefco in cooperation with the Ministry of Regional Development, Construction and Communal Services of Ukraine with financial support from Sweden and the Eastern Europe Energy Efficiency and Environment Partnership (E5P) fund. The main objective of the programme was to demonstrate modern and energy-efficient district heating technology to improve energy efficiency and reduce CO2 emissions. Demonstrating best practices in technical design, procurement and implementation of small-scale repeatable district heating projects has been a priority for the programme.

The implemented projects saved some 30% to 50% in yearly gas and electricity consumption prior to the full-scale invasion of Ukraine. These savings reflect what can be achieved with clear intentions, strong partners, visionary support and a desire to make a difference on the ground. As a result of the investments, district heating companies have prevented thousands of tonnes of CO2 emissions by reducing gas usage. Since its launch in 2012, the DemoUkrainaDH programme has financed a total of 12 demonstration projects. 10 projects were fully implemented before Russia’s full-scale invasion and 2 further projects completed during 2022. The projects have been implemented in: Berdychiv, Chernivtsi, Ivano-Frankivsk, Kamyanets-Podilskyi, Mykolaiv, Myrhorod, Oleksandria, Poltava, Ternopil, Vinnytsia, Zhytomyr, and Uman. The programme closed for new activities in the end of 2021.

Facility for Energy Saving Credits

The Energy Saving Credits (ESC) loan programme offered small scale financing to Ukrainian municipalities for refurbishment of public buildings, such as day-care centres, schools and healthcare institutions and modernisation of street lighting. Since 2010, Nefco has financed over 80 projects through the ESC facility in Ukraine. The facility is now mainly financing energy-efficiency projects in Moldova. Read more here.

Finland-Ukraine Trust Fund

The Finland Ukraine Trust Fund (FUTF) has provided grant financing to promote the cooperation in the fields of energy efficiency, renewable energy and alternative types of energy sources in power and heat generation and in district heating networks since 2018 between the two countries to support the green energy transition.

The purpose of the programme has been to promote cooperation between Finland and Ukraine and identify opportunities for projects, both consultancy services and investments, in the fields of energy efficiency, renewable energy and waste-to-energy and smart energy systems.

Grant funding has been provided to both public and private demonstration projects implemented by Ukrainian small and medium-sized enterprises, or for technical assistance. In total some 30 demonstration projects have been financed by the fund. Read more about completed projects here.

The FUTF programme is financed by the Ministry for Foreign Affairs of Finland and managed by Nefco. The local coordinator is the State Agency on Energy Efficiency and Energy Saving of Ukraine (SAEE).

The focus has been on the following fields:

  • Renewable energy and waste-to-energy
  • Power and heat generation
  • District heating networks
  • Energy efficiency in buildings and industry
  • IT solutions and distribution networks
  • Development of partnerships in the context of multilateral development programs and projects of International Finance Institutions.

Nordic Initiative for Energy Efficiency and Humanitarian Support

The Nordic Initiative for Energy Efficiency and Humanitarian Support has been financing energy efficiency improvements in public buildings in five regions in Eastern Ukraine between 2014-2022.

In October 2014, the foreign ministers of the Nordic countries, on the initiative of Norway, decided to establish a grant-financed programme for urgent investments needed to achieve quick and visible results for reconstruction in Eastern Ukraine. The NIU programme became operational the same year.

The emphasis was initially on fully grant-financed projects in the five regions closest to the conflict zone. Since then, the programme has grant-financed some 40 projects of which 33 completed projects for urgent renovations of public buildings and street lighting systems in over 20 cities.

The initiative has been financed by Finland, Norway, Sweden and the Nordic Environmental Development Fund, which include contributions from all Nordic countries, Nefco and the Nordic Council of Ministers, and which Nefco is the implementing agency for.

Norway-Ukraine Energy Efficiency Initiative

The Norway-Ukraine Energy Efficiency Initiative was established in 2018 between Nefco and the Norwegian Ministry of Foreign Affairs with the aim of scaling up the use of external municipal financing to achieve energy efficiency in public buildings, strengthened self-governance and sustainable procurement practices.

The focus has been on:

  • Renovation of socially important municipal buildings, such as schools, day-care centres and health care facilities. The aim is to reduce energy consumption and increase the lifetime of the buildings.
  • Demonstration projects that benefit vulnerable groups, including internally displaced persons from the conflict areas in South-Eastern Ukraine.
  • Reducing the consumption of energy generated from fossil fuels, reducing emissions of CO2 and contributing to increased energy security.
  • Enabling municipalities to govern themselves by attracting external financing and making local investment decisions.
  • Fighting corruption through best practices in procurement and project implementation.

The programme has been providing blended funding consisting of loans and grants as well as technical assistance and project support to Ukrainian small and medium-sized municipalities. So far, 10 projects have been financed under the initiative.

The initiative is financed by the Norwegian Ministry of Foreign Affairs and managed by Nefco.

Sweden-Ukraine District Heating Programme

The aim of the Sweden-Ukraine District Heating Programme has been to demonstrate development of modern and energy efficient district heating with a significant share of production based on renewable and waste heat sources, ultimately meeting the EU requirements for efficient district heating. The programme was announced in 2018 and started in 2019. In total, six funded projects were in various implementation stages when Russia’s full-scale invasion started in February 2022.

These demonstration projects provide a holistic approach to strategic reforms of the district heating system. The projects are typically designed to provide a starting point for development of long-term sustainable and customer-oriented district heating in Ukraine.

The focus has been on:

  • Creation of district heating systems large enough to enable effective use of renewable and waste heat sources;
  • Improved district heating services enabling the customers to control heat consumption in relation to their demand with improved indoor climate and hot water supply as a result;
  • Introduction of renewable and waste heat sources enabling efficient district heating production with low environmental and climate impact;
  • Savings in production, distribution and use of energy and water.

The implementation of the programme is based on experiences gained in the DemoUkrainaDH programme for demonstration of best practices for design, procurement and project implementation of modern and energy efficient district heating. The programme is financed by Sweden.

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