EBRD provides €30 million for district heating infrastructure in Lviv

By Anton Usov

The EBRD is continuing its drive to modernise Ukraine’s district heating sector with investments aimed at increased energy and cost efficiency, improved financial sustainability and regulatory reform of municipal utilities.

Its latest project in this sector, in the largest western Ukrainian municipality of Lviv, will consist of an EBRD loan of up to €20 million, supplemented by grant funding of up to €10 million from the Eastern Europe Energy Efficiency and Environment Partnership (E5P). The financing package will be provided to the communal enterprise Lvivteploenergo, which will use the proceeds to modernise and rehabilitate the existing district heating infrastructure in the city.

The loan will finance the introduction of individual heating substations, the rehabilitation and modernisation of heat distribution networks, the installation of natural gas fired mini-combined heat and power plants, the replacement of obsolete main transmission pipelines and the installation of necessary monitoring systems. It is expected that upon completion of the project almost half of Lviv’s population of 760 thousand people will benefit from better quality and environmentally friendly heat and hot water services.

The €10 million grant will be the largest grant to date provided by the E5P to a Ukrainian municipality. The E5P* fund was established by international donors to co-finance investments in the Ukrainian municipal sector and the EU Eastern Partnership countries with a focus on demand-side efficiency improvements.

By implementing this project the municipality of Lviv will reduce the consumption of natural gas by 6.9 million cubic metres, electricity by 2,900 MWh and water by 15,900 cubic metres per year. CO2 emissions will also be reduced by almost 80 thousand tonnes per year through more efficient utilisation of fuel.

The important technical assistance necessary for the project preparation and implementation was provided by the government of Sweden.

The EBRD is the largest financial investor in Ukraine. As of 31 March 2013 the Bank had committed over €8.63 billion (US$ 11 billion) through 337 projects in Ukraine.

*The Eastern Europe Energy Efficiency and Environment Partnership - E5P is a Euro 90 million multi-donor fund managed by the EBRD designed to promote energy efficiency investments in Ukraine and other eastern European countries and was set up under the initiative of the Swedish government during its presidency of the European Union in 2009.The fund will complement energy efficiency loans provided by financial institutions including the European Bank for Reconstruction and Development, the European Investment Bank, the Nordic Investment Bank, the Nordic Environment Finance Corporation and the World Bank Group. Contributors to E5P are European Union (€40 million), Sweden, Ukraine, USAID, Denmark, Norway, Finland, Poland, Estonia, Iceland, Lithuania and Latvia.