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EBRD pioneers green energy in Ukraine

By Lucia Sconosciuto

Making a profitable investment while contributing to environmental protection is a goal to which many entrepreneurs in EBRD countries aspire. But too often their business plans are hampered by a lack of finance, technological know-how and appropriate regulatory framework.

The EBRD’s strategy to encourage private sector participation in sustainable energy investments is therefore to connect the dots, providing financing, technical cooperation and policy dialogue to reform the sector and move towards green-energy solutions.

In Ukraine, for example, imported fossil fuels dominate the power market, leaving behind a heavy carbon footprint. Producing a unit of GDP here requires almost four times more energy than the EU average.

To counteract this, the EBRD supports the country’s carbon offsetting through its Ukraine Sustainable Energy Lending Facility (USELF). It is a credit programme worth €140 million, available for small and medium-sized renewable energy projects ranging from hydro, wind, biomass and biogas to solar energy ventures.

Among the entrepreneurs who have translated ‘green’ business plans into reality thanks to USELF is Narek Haryutyunan, the young Managing Director of Rengy Development. His company installed a solar power plant near the village of Porogy, in south-western Ukraine.

“This plant can power over 2,100 households. The emissions savings are the equivalent of taking 2,000 cars off the road,” said Mr Haryutyunan, a pioneer in the country’s renewable energy market.

“This was one of the first solar energy projects in Ukraine. When we started there was no expert advice, let alone bank funding. The EBRD provided both.”

The USELF, part-financed by the EBRD (€100 million), is co-financed by the Climate Investment Funds’ Clean Technology Fund (€40 million), as well as by the Global Environment Facility which paid for the technical assistance and policy dialogue components of the programme. Sponsors provide equity for their projects.

“The consultants helped us assess the impact that we could have on the environment and the community,” explained Mr Haryutyunan. His 200 high-tech photovoltaic panels lie discreetly on a hillside, blending in with the surrounding environment and causing no disturbance to local life.

“USELF’s support programme is opening up the market and improving national regulations for renewable energy,” said EBRD Senior Manager, Sergiy Maslichenko.

“For example, we helped draft the primary legislation, including the green tariff law that ensures the state will buy, at a preferential tariff, all renewable energy produced by private developers.”

This evolution has not gone unnoticed by investors like Mr Haryutyunan. “In recent years we have seen growth in the solar energy market and we have grown with it. Based on our initial success, we were able to construct four more facilities.”

In response to rising demand, and boosted by a track record of seven projects, USELF has been extended. Its investment pipeline is rapidly building-up. “Given the size of Ukraine’s agricultural sector there is great potential for biomass and biogas projects, but also solar, thanks to good levels of sunlight,” commented Mr Maslichenko.

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