EBRD arranges financing package of €14 million to improve district heating in Lutsk

The European Bank for Reconstruction and Development (EBRD), the Eastern Europe Energy Efficiency and Environment Partnership (E5P)* and the Clean Technology Fund (CTF)** are providing further resources to modernise district heating systems in Ukraine, which account for 20 per cent of the country’s total CO₂ emissions and consume almost 44 per cent of its resources for heat energy. These investments in district heating systems aim to increase energy and cost efficiencies, improve financial sustainability and support the regulatory reform of municipal utilities.

The latest of these projects will be implemented in the western municipality of Lutsk, for which the EBRD will provide a loan of up to €7 million, which will be supported by a €3 million loan from the CTF to the communal enterprise “Lutskteplo”. The project will also receive a grant of up to €4 million from the E5P to which the European Union is the largest contributor. The proceeds will be used to improve energy efficiency, reduce energy losses, gas and electricity consumption and improve district heating services for almost 150,000 residents in Lutsk in almost 55,000 households

The loan will finance the installation of 210 individual heating sub-stations and a bio-fuel boiler with a net capacity of approximately 2.5MW. It will also help decommission 11 inefficient basement boilers; replace 19 obsolete small boilers with modern high efficiency gas boilers; modernise 15 boiler houses; and replace almost 13 kilometres of distribution network pipes with pre-insulated pipes. Loan proceeds will also be used to install a computerised monitoring and dispatching system, which will control the network operations.

Technical assistance, in the form of consultancy services, necessary for both the preparation and implementation of the project was provided by the government of Sweden.

The EBRD is the largest financial investor in Ukraine. As of end September 2014 the Bank had committed almost €9.8 billion (US$ 12.4 billion) through 337 projects in the country.

*The Eastern Europe Energy Efficiency and Environment Partnership (E5P) is a €90 million multi-donor fund managed by the EBRD and designed to promote energy efficiency investments in Ukraine and other eastern European countries. The fund was established under an initiative of the Swedish government during its presidency of the European Union (EU) in 2009. E5P complements 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 the EU and the US, as well as Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, Poland, Sweden and Ukraine.

**The $5.5 billion Clean Technology Fund (CTF) provides middle-income countries with highly concessional resources to scale up the demonstration, deployment, and transfer of low carbon technologies in renewable energy, energy efficiency, and sustainable transport.