Boost for energy efficiency in Ukraine

Senior Adviser Johan Willert.

The Ukrainian energy efficiency sector is attracting lots of interest and foreign investment, and opening up new business opportunities for Nordic companies and expertise. In this interview, NEFCO’s Senior Adviser, Johan Willert, throws some light on recent energy efficiency developments in the country.

NEFCO is involved in a number of projects related to energy efficiency in Ukraine. Tell us more about it.

In 2011, a multilateral partnership for energy efficiency and environment, called E5P, was operationalized. Under E5P rules, grant financing can be disbursed, together with loan funding from financial institutions like NEFCO, to finance energy efficiency projects in Ukraine. So far, NEFCO has focused on developing district heating projects as part of the E5P financing scheme. Together with the Swedish International Development Cooperation Agency, Sida, NEFCO has established a special program called DemoUkrainaDH, to support district heating projects in the country. On its own, NEFCO also finances various energy efficiency enhancing measures in the public and private sectors.

You are in charge of the DemoUkrainaDH initiative that was signed by NEFCO and SIDA last year. Is this initiative making any progress?

The program has been fully operational since January this year, and is managed by NEFCO and the Ukrainian Ministry for Regional Development, Construction, Housing and Municipal Economy. One consulting team works with the Ministry to coordinate the program and disseminate information as well as experiences gained from the venture. A second consulting team has recently been recruited to support project design and implementation. Up to now, seven project proposals have been approved for further development, and it is anticipated that three will come on stream. So all in all, there will be ten replicable DemoUkrainaDH projects utilizing modern technology and demonstrating Nordic experiences in improving energy efficiency and reducing emissions of greenhouse gases.

The E5P-partnership program is already up and running. What is happening on the ground?

Many projects are now being prepared by District heating utilities with assistance from institutions such as NEFCO and the European Bank for Reconstruction and Development (EBRD).District heating utilities need municipal guarantees in order for them to implement the projects, since NEFCO can’t grant loans without security.
There is, however, a risk that the guarantee approval process within the Ministry of Finance can delay the implementation of the well needed investments.

What kind of projects is NEFCO particularly interested in?

NEFCO supports cost effective environmental projects, which are relevant to the Nordic countries. In the district heating and overall energy sector, this generally translates to the reduction of harmful emissions such as carbon dioxide and other greenhouse gases detrimental to the environment. Investing in energy efficiency in district heating systems fulfils NEFCO’s funding criteria because it is a cost efficient way to reduce emissions of greenhouse gases by applying Nordic experience and know how in this sector.

Do you think these initiatives will make a difference on a national, macroeconomic level in Ukraine?

Compared to other countries, Ukraine is currently spending, proportionally, large amounts of its budget on energy in general, and district heating in particular. Improving energy efficiency will have a short-term positive effect on the overall performance of the economy. From a long-term perspective, investments in environmental infrastructure
will be a necessary step for Ukraine to continue to harmonize its development to comply with the EU’s environmental norms and legislation as well as international conventions. Ukraine has also set an ambitious goal to increase the share of energy produced from renewable energy sources to 20% by 2020, a process that will further reduce emissions, and contribute to a more environmentally sustainable energy sector in Ukraine.

What is the environmental benefit of all these projects which you have described?

The reduction of greenhouse gas emissions will contribute to the pressing global initiative to mitigate climate change – the greatest environmental challenge of our time.

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