Demo project addresses a key issue in the reduction of greenhouse gas emissions through large-scale improvements in energy efficiency in Ukraine's communal heat supply sector. These improvements will result from a four-part approach:
- capacity buding to create the basis for systematic energy efficiency activities at the local level;
- an integrated approach of supply and demand-side improvements to achieve maximum fuel savings and emissions reduction;
- attraction of external investment resources for an energy efficiency program in a pilot city;
- project-specific replication measures including development of relevant procedures, guidelines, information materials and their dissemination, and public awareness-raising through the involvement of NGO's, in particular those concerned with environmental and energy efficiency problems.
The project consists of two main components:
- establishment of the municipal energy service company (ESCO);
- demonstration of the energy saving program.
The potential municipality selected, in consultation with the government and executing agent, is Rivne.
Implementation of the energy saving program will be done in two phases:
- implementation of the demonstration program through funding available in this project;
- implementation of the city-wide energy saving program in Rivne and its replication to other cities through investments allocated in addition.
The full project is divided into the two stages.
Stage 1 includes establishment of the municipal energy service company (ESCO), demonstration implementation of energy efficiency measures, and part of project replication and dissemination activities.
Stage 2 starts upon successful completion of the Stage 1 and includes implementation of city-wide energy efficiency investment program and larger replication activities. Reference to Stage II has been included in this project document to provide information on the context of the larger project; however, the financial commitments included in this project document are limited to Stage I activities only.
The pilot municipality, which has been selected in consultation with the government and executing agency, is Rivne. The full project is divided into the two stages. Stage 1 includes establishment of the municipal energy service company (ESCO), demonstration implementation of energy efficiency measures, and part of project replication and dissemination activities. Stage 2 starts upon successful completion of the Stage 1 and includes implementation of city-wide energy efficiency investment program and larger replication activities. The duration of the first stage is expected to be 12 months and the second stage 46 months that follow the completion of the first stage.
Transition to the Stage 2 of the project is conditioned on successful fulfillment of the Stage 1 objectives and milestones. Major results to be achieved at the Stage 1 include fully functional municipal ESCO working on cost-recovery basis with its district heating supply and demand side clients, successful implementation of a demonstration project (from both technical and institutional viewpoint), and financial commitments for the Stage 2 in the ratio of at least 3:1 to expected UNDP/GEF financing. Preparation of the brief and project document for the Stage 2 project will begin at the end of the Stage 1 in coordination with UNDP and national executing agency, and with involvement of the project team that worked on the Stage 1 implementation. Major issues to be developed for the Stage 2 include: exact scope of UNDP/GEF participation in the city-wide energy efficiency program, provisions for usage of UNDP/GEF
grant funding and arrangements with other co-financing parties, detailed project replication plan. Prior to Stage 2 of the project, which is to be funded as a separate UNDP/GEF project that must be approved by the GEF Council, the results of the Stage 1 project will be verified through an independent technical and financial review.
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