The overall project strategy is to promote municipal energy efficiency in Ukraine, through demonstration schemes in a pilot municipality and to facilitate the replication of successful experience in other medium and large-sized Ukrainian cities. This will be done by reducing major institutional and financial barriers at municipal level.

Experience gained by UNDP and other donors in Ukraine and in the CIS region shows that many of the barriers to energy efficiency improvement, particularly a lack of relevant capacity, can be mitigated by adopting a municipal (or local) approach. This approach also allows the forging of local partnerships and increased ownership that are critical for successful implementation. This project aims to create an enabling environment for implementation of municipal energy efficiency initiatives in a pilot city while reducing green house gas emissions. Positive results and experience gained in the course of the project will be replicated in other cities of Ukraine.

Accordingly, the project will focus on capacity building at the municipal level through the establishment of a municipal energy service company (ESCO). While capacity building will focus on institutional requirements, it will also be linked to the phased implementation and demonstration of the municipal energy saving program. All these will include district heating supply and demand side energy efficiency activities on a sustainable basis. The experience in developing the institutional capacity and demonstration schemes for energy efficiency will be further utilized, as a second phase of assistance, to launch a city-wide energy efficiency program and, as mentioned, in replicating the experience to other cities in Ukraine.