EBRD supports major renewable energy project in Ukraine

By Anton Usov

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The EBRD is extending a €200 million, 15-year sovereign loan to Ukrgidroenergo (UHE), Ukraine’s state-owned operator of large hydro generating and pump storage facilities.

This is the largest renewable energy project financed by the Bank in Ukraine to date, which will see the upgrades of hydro- and electro-mechanical equipment at UHE’s hydropower plants (HPPs).

The funds will cover the modernisation of 28 power units at 6 HPPs on the Dnieper River, thereby extending their lifetime by 30 years. Hydraulic turbines, generators, and dam safety and auxiliary equipment will be supplied and installed at the Kremenchug, Dnieprodzerzinsk, Dnieprovska and Kaniv HPPs, as well as at the Kiev pump storage plant. The new equipment is expected to improve reliability and operating costs of HPPs, optimise the use of water resources and improve the safety of the power plants and dams.

The EBRD loan is part of a larger project which envisages similar-sized parallel financing from the European Investment Bank.

Riccardo Puliti, EBRD Managing Director for Energy and Natural Resources, said: “We believe hydropower generation will play a key role in the Ukrainian power sector stability. This country needs to develop and maintain reliable sources of renewable energy. That is why energy efficiency, energy security and open market principles remain key elements of our policy dialogue with the Ukrainian authorities and private investors.”

“The Bank supports this project because it is in line with the EBRD power sector strategy for Ukraine, which focuses on commercialisation and efficiency improvement of the transmission network, as well as on the improvement of performance and reduction of carbon footprint of generation facilities,” he added.

Technical cooperation funds for the project were provided by the EU Neighbourhood Investment Facility and the UK government.

Ukraine has great potential to develop sustainable and renewable energy projects and this transaction should be a significant contribution to the Bank’s efforts to make the country more energy efficient. To date, the EBRD has invested over €4 billion under the Sustainable Energy Initiative framework in 27 countries, with a project value of more than €20 billion. The total annual reduction in carbon emissions achieved by these projects is estimated at around 27 million tonnes.

This signing brings total EBRD commitments in Ukraine’s power sector to almost €750 million (more than US$ 1 billion). In 2011 alone the Bank has invested almost €300 million in projects in power and natural resources. The EBRD is the largest financial investor in Ukraine. As of 1 September 2011, the Bank had committed over €6.7 billion (US$ 9 billion) through 281 projects.

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