EBRD finances new district heating upgrades in Ukraine

By Anton Usov

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The EBRD will provide a loan of up to €10 million to finance a priority investment programme aimed at reducing energy loss in gas and electricity consumption and improving the quality of heat and hot-water provision in the Ukrainian municipality of Zhytomyr.

A 10-year loan will be extended to Zhytomyr Teplokomunenergo, a municipal district heating utility enterprise, which supplies heat and hot water services to approximately 75,000 residential apartments in Zhytomyr. The loan proceeds will be used to install mini CHPs (co-generation plants for simultaneous generation of heat and electricity), introduce individual heating substations equipped with heat meters, rehabilitate and modernise boiler houses and replace obsolete network pipes with pre-insulated pipes.

This is the first municipal project in Ukraine to receive grant funding under the Eastern Europe Energy Efficiency and Environment Partnership (E5P), the establishment of which was ratified by the Ukrainian Parliament in July 2011. A €5 million grant from the E5P Fund will complement the EBRD loan and will finance the installation of bio-mass plants using mainly locally available wood waste as well as financing the installation of additional individual heating substations and subsequent conversion from 4- to 2-pipes distribution networks.

The project is expected to result in the significant reduction of gas consumption by 3.7 million cubic metres per year, electricity savings of up to 29,000 MWh per year and an overall increase in energy efficiency. The implementation of the project will also achieve substantial reductions in carbon dioxide and nitric oxide emissions (34, 381 tonnes and 6.2 tonnes per year, respectively).

“Investments into energy-efficient municipal infrastructure are among our top priorities in Ukraine and this project with Zhytomyr Teplokomunenergo demonstrates our commitment to this task. The fact that the project receives the E5P grant funding makes it even more important for the city and for the country in general,” said André Küüsvek, EBRD director for Ukraine.

Additional technical cooperation funds, provided by the government of Sweden helped finance the feasibility study for the project.

Dmitriy Rogozhin, Director of Zhytomyr Teplokomunenergo said: "EBRD loan is a unique opportunity to implement comprehensive reconstruction and modernisation of heat and hot-water provision in the city, aimed at improving efficiency, economical consumption of gas and electricity. It will help improve the quality and consistency of municipal utility services for the population of Zhytomyr.

The EBRD is the largest financial investor in Ukraine. As of 31 December 2011, the Bank had committed over €7.5 billion (US$ 9.6 billion) in 294 projects.

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