Enhancing Ukraine’s Energy Security through Municipal Energy Efficiency and Mitigation of GHG Emissions
Since 2013, USAID’s Municipal Energy Reform Project has helped Ukraine make major strides toward energy reform.
Since 2013, USAID’s Municipal Energy Reform Project (MERP) has helped Ukraine make major strides toward energy reform, introduce international energy efficiency and energy management standards, attract investments for municipal energy efficiency (EE), and develop a renewable energy market. The Project has promoted incentives for consumer energy efficiency that helped the Government of Ukraine mobilize $195 million in residential energy efficiency investments in only three years.
Ukraine’s energy and utility sectors faced many challenges in the past. Ineffective legislation, excessive energy consumption by buildings, outdated heating equipment and networks, a lack of energy market competition, lack of investment in energy efficiency and complaints from utility consumers who have to pay bills they can’t afford were all pressing problems. The country had one of the world’s highest rates of energy use and greenhouse gas emissions, impeding its economic growth. Ukraine needed a consistent and sustainable approach to address these critical issues and undertake fundamental reform of its energy and utility sectors.
The MERP project’s approach and methodology focused on two levels: national and municipal. At the national level, the project assisted the Government of Ukraine with program development, and the adoption of major strategic reforms to establish the energy efficiency framework in Ukraine, improve efficiency and transparency of the tariff formation system, and increase levels of social protections of the population. In addition, the project team supported the development and adoption of the Low-Carbon Development Strategy of Ukraine – the first such long-term strategic document in Ukraine until 2050.
In parallel, MERP worked with 36 municipalities, covering 44 percent of the urban population, to improve clean energy and EE project planning and personnel training for project implementation. MERP audited the energy use of hundreds of buildings and municipal infrastructure systems to help cities develop Sustainable Energy Action Plans (SEAP). These strategic documents contain more than 800 projects with estimated investment demand of US$2 billion for implementation of EE measures and use of alternative energy sources in key sectors: public and residential buildings, municipal transport, lighting, and solid waste management.
The project team also developed some 60 investment projects totaling about $560 million, including in-depth audits of municipal infrastructure, investment feasibility studies, and business plans. As of March 2018, 22 of these projects, worth about $200 million, are being implemented or proceeding through approvals.
Understanding that municipalities need modern approaches to manage energy resources, the MERP team offered to improve or develop energy management systems according to the provisions of the International Organization for Standardization (International Standard 50001*), an approach aimed at systematically improving energy-related performance and energy efficiency and identifying energy reduction opportunities.
The project trained more than 100 specialists and city council leaders, who then developed and implemented effective energy policies, and set their objectives and tasks for energy efficiency improvements. In just two years, these cities secured $150 million in financing to boost energy efficiency. If all SEAP projects are implemented in full, the cities will be able to reduce annual energy consumption by 760.1 million MWh and cut annual carbon dioxide emissions by 492 million tons.
All these efforts at the national and municipal levels improve government legitimacy in the public’s eye. They also encouraged individuals to adopt responsible home ownership practices and change their behavior toward energy efficiency. The project implemented a multi-faceted nationwide outreach campaign promoting the “Warm Loans” Program, in which the Government of Ukraine reimbursed 30 to 70 percent of home owner association and household costs for EE measures and materials. From its inception in 2015 through 2017, there have been more than 474,000 EE projects worth $195 million financed in the residential sector.
