Energy Efficiency Projects for Ukraine

Energy efficiency has to play a key role in the efforts to reconstruct and rebuild Ukraine. The energy intensity of the Ukrainian economy has been three to four times higher than the European Union average, driven by high demand in residential heating, and industrial structure that was concentrated in energy-intensive activities, with energy-inefficient technologies and decades of under-investment. By ensuring energy efficiency improvements, Ukraine could ensure a significant decrease in energy intensity, estimated by up to 60% by 2050.

One of the areas of low efficiency in Ukraine is the residential buildings sector, which is in a critical situation. Around 85% of the buildings date back to the pre-1991 era of the USSR, leading to outdated infrastructure and high energy consumption. The average energy consumption in the residential sector is 2-3 times higher than EU standards. Additionally, the damages caused by russian brutal illegal invasion into Ukraine have further worsened the state of housing stock, with estimated replacement costs of $53.6 billion - over 150,000 residential buildings had been damaged or destroyed, alongside more than 3,000 schools and over 1,500 hospitals and health care facilities. 

To tackle these challenges, numerous projects and initiatives are fortunately being initiated, to ensure that Ukraine will not only be renovated and rebuild, but that it will be rebuild in as energy efficient way, as possible, alongside the efforts to build renewable energy capacities and use climate friendly technologies whenever possible.

One of the key activities in this field includes the establishment of the State Fund for Decarbonisation and Energy Efficiency Transformation, which will support Ukrainian government programmes for energy efficiency, alternative energy sources and decarbonization, and coordinate financial instruments to support energy efficiency, such as international loans and grants for the implementation of investment projects as well as direct foreign investments. For the first time, the "polluter pays" principle has been encoded into the respective law: the Fund will be replenished through an environmental tax on CO2 emissions, paid for mainly by the large industrial enterprises. It is expected to start operation from January 2024.

Another institutional example includes The National Decarbonization Platform, launched by the State Energy Efficiency Agency of Ukraine, with the aim to become the main platform where a number of financial instruments, services, as well as modern equipment and technologies will be introduced for communities and businesses.

A number of international, multinational and bilateral partnerships are also already being negotiated and planned, aiming to restore Ukrainian energy system and economy, while increasing the energy efficiency and the use of renewable energy sources.

One example of such projects includes the European Commission support: Ukraine is expected to receive PVE panels with a total capacity of 200 MW. The panels will be installed to meet the needs of key public buildings and critical infrastructure, including hospitals. European Commission also finances the supply of up to 30 million LED light bulbs for Ukraine estimated to save 1 GW – an annual electricity output of a nuclear power plant.

Just to name a few other emerging initiatives, these include the New European Bauhaus, which together with Ukrainian partners (Covenant of Mayors East, Ro3kvit, ReThink) launched a capacity-building programme for Ukrainian municipalities to prepare the reconstruction. A “Phoenix” initiative, financed by the EU’s LIFE Programme, then aiming to develop and put at the disposal of Ukrainian cities cutting-edge expertise affordable and sustainable reconstruction and to connect Ukrainian cities with like-minded ones in the EU to exchange experiences on their way to climate neutrality and more energy efficiency.

With a focus on municipalities, the Covenant of Mayors East (CoM East) is an EU-funded project aimed at introducing the EU climate and energy initiative to the Eastern Partnership countries. Cities that join the Covenant of Mayors have to develop and implement their Sustainable Development Action Plans for Climate and Energy (SECAP) – 268 signatories are already in Ukraine, covering municipalities with over 20 million inhabitants.

The Nefco Green Recovery Programme for Ukraine will provide financial and technical assistance to municipalities to conduct repairs and rebuild in an environmentally sound way and support them in accommodating internally displaced people and designing Local Green Recovery Plans with Nordic support and competence. It is a multi-donor programme aiming to work long term towards a green recovery in Ukraine. Nefco has partnered with over a hundred Ukrainian municipalities and successfully financed and implemented environmentally sound projects in energy efficiency, district heating and other municipal services. The aim is to achieve a 30% improvement in the energy efficiency of the renovated buildings compared to their former state.

Bilateral cooperation programmes include the German-Ukrainian Energy Partnership, and a Renewables for a Resilient Ukraine – R2U project, that aim to select 20 communities for energy audits of critical infrastructure buildings, and to help equip the buildings with renewable energy sources as well as the “Promotion of Energy Efficiency and Implementation of the EU Directive on Energy Efficiency in Ukraine” programme by GIZ Germany, that will assist Ukraine to implement the EU directive in energy efficiency; ensure national energy monitoring base, primarily in the public sector; or launch projects for energy independence of public buildings in Ukrainian communities.

The State Energy Efficiency Agency of Ukraine, together with the Slovak Innovative Energy Agency, agreed to exchange experience regarding ways of implementing European directives into Ukrainian legislation; possibilities of simplifying accreditation procedures and recognition of qualifications of energy auditors in the EU, sharing a Slovak educational program, which is designed not only to develop the creative thinking of junior and senior high school students, but also to introduce the principles of energy efficiency into everyday life from a young age.

Under a Danish support, Danish energy solutions and technologies in the field of green energy, as well as the transfer of Danish experience in the modernization of district heating systems will be shared with Ukrainian partners, as well as an incentive scheme for supporting energy efficiency projects in the industrial sector in Ukraine.

These and other initiatives, projects and programmes have the common aim to assist Ukraine in rebuilding its economy and society into a more energy-efficient one. These actions are important for improving the lives of citizens and increasing efficiency of businesses, protecting the local air quality and preventing climate change, and to make sure that Ukraine and the EU will never again be dependent on any fuel imports from russia.

Olha Khabatiuk

Published:    16.10.2023