Energy intensity of GDP in Ukraine was 2.5 times higher than in Poland, 3.3 times higher than in Germany and twice higher than the average in the world in 2018, according to the Global Energy Statistical Yearbook.
Ukraine is the most energy intensive economy in the world, consuming the highest amount of energy sources for production of 1 to of its GDP than all other countries, according to the International Energy Agency (IEA)
Ukrainian industry consumes
around 30% of energy with the metallurgy being the largest consumer. In 2018, the energy losses
due to low energy efficiency of the companies were estimated at $1.5 billion a year, which is the same amount as an IMF tranche, according to the Economy Ministry of Ukraine.
Residential sector is the largest consumer in Ukraine, accounting for 32% of the total final consumption (16,203 thousand toe
in 2018). There are over 6.5 million households and over 80,000 high-rise apartment buildings in the sector. To encourage Ukrainians to save energy in the residential sector, the Agency is implementing a nationwide “warm loans” program. The Energy Efficiency Fund has been launched together with the EU for multi-apartment buildings with housing cooperatives.
In 2018, Ukraine topped the list of the countries with the most ineffective and expensive thermal power generation, according to a study by Carbon Tracker, a British analytical center.
Energy efficiency as a solution
In 2019, thanks to the reduction of gas consumption by 7 billion cubic meters by households, budget-funded institutions, enterprises in municipal heating companies compared to 2014, EUR 1.3 billion was saved
Porovskyy points out that introduction of energy efficiency measures must be multisectoral, and is, probably, what is needed the most to strengthen the economy of Ukraine, improve energy system stability, prevent energy poverty and reduce CO2 emissions. “If Ukraine fully implements multisectoral energy efficiency measures, the freed energy sources would have been enough to provide for annual energy consumption of such country as Spain.
The total energy consumption in Ukraine dropped 20% compared with 2013.
The initiatives aimed at reduction of CO2 in the residential sector, which are being implemented at the local level, as also important. The Covenant of Mayors is one of such initiatives. As of today, there are 245 signatories in Ukraine covering over 20 million residents.
The communities that signed the Covenant of Mayors before 2016 committed to reduce emissions of CO2 by at least 20% by 2020. Those that signed the Covenant of Mayors after 2016 – by at least 30% by 2030.
Oksana Kysil, Covenant of Mayors Project Coordinator, notes that the signatories with commitments by 2030 are implementing projects not only to alleviate the climate change, envisaging reduction of CO2 emissions (energy saving, energy efficiency and RES), but also measures of adjustment, and factually cover all areas of the Green Deal, except for agriculture.
Big cities attract funding from international organizations (World Bank, EIB, KfW, EBRD, IFC, NEFCO) to finance energy efficient projects, and private ESCO for rehabilitation of public buildings, grants from the EU and other donors.
Smaller cities and towns mainly use the funding of the EU, NEFCO and private ESCO. The EU allocated over EUR 14 million in grants to fund 17 projects.
The main areas of introduction of energy efficient measures include public buildings, street lighting, heat and electricity generation, replacement of fixed assets at the water services companies that consume electricity.
“We have achieved quite a progress compared to 2005. We have a good legislative base – The Law
On Energy Efficiency of Buildings, a draft law on energy efficiency, which is based on the European directives. Speaking about the municipal level, Ukraine has many programs, for example the Energy Saving Program 70/30. The program has been implemented for five years, and every year, more funds are allocated from the local budgets and more housing cooperatives submit their applications. The cities have many assistance programs, under which the residents are compensated for the interest on their loans or part of loan principal,” said Ima Khrenova-Shymkina, Deputy Project Director, Energy Efficiency Reform in Ukraine, GIZ, at the 11th Energy Day.
Many cities have established energy management departments tasked with attracting financing from the local budgets and international organizations, according to her.
According to Olena Rybak, Managing Director of iC consulenten, there are a number of good examples of projects and financial products on the market. “What is now needed is to scale this up, significantly. The reduction of the project cycle in this aspect is the most important thing. Currently it takes between 3 to 6 years to implement a project on i.e. simple building refurbishment or partial district heating system modernization with IFI financing. Here is where the turbo regime and systematic changes are really needed, we have to shorten this”.
The signatories with a commitment until 2020 – all of them, all 100%, stay true to their commitment, reducing the emissions by at least 20%,
The ESEEA together with the Energy Ministry have developed a draft concept of the new 5-Year National Energy Efficiency and Green Energy Development Policy (2022-2026). The new policy will aim at supporting energy efficiency in different sectors of the economy, for example, encouraging companies to implement energy efficient measures, thermal modernization of public buildings (implementation of the Energy Efficiency Directive, driving energy service market growth for implementation of thermal modernization of public buildings owned by the state or municipalities, development of the charging stations for electric cars, renewable energy facilities, development of biogas production from agricultural wastes.
“Fulfillment of the tasks the ESEEA is faced with requires huge funds. This is possible with private investments, as the RES sector was developed thanks to private investments. Nearly all public buildings and a majority of the residential sector are old Soviet buildings. We need up to $100 billion for the modernization of the private sector and $10 billion for thermal rehabilitation of the public buildings,” says Kostyantyn Hura.
Of course, this is not a truthful picture, but it does expose a number of issues, such as accounting of energy sources and produced energy consumption, and, clearly, the level of energy sources consumption for ensuring economic processes. Also, reducing the sufficiency (including at affordable prices) of energy sources is and will be a real challenge. Excessive energy consumption is an indicator of energy poverty, when the country is already lacking energy sources for economic development
Energy Efficiency Financing and Policy Expert, UNIDO