INVEST Ukraine Open for U
Yuliya Kovaliv 30 March, 2016
Energy sector: Challenges
Extremely high energy intensity of GDP
Only 60% of energy resources produced domestically
Households:
Household gas bills didn’t reflect modern reality Part of utility bills based on normative, rather than actual consumption
Energy intensity of GDP, 2014 0,35 0,30 0,25 0,20 0,15 0,10 0,05 0,00
0,32 0,20 0,11
Germany Romania
0,13
Poland
China
Ukraine
Drivers of inefficiency
Industry and infrastructure:
0,13
Obsolete equipment and technology High losses in power lines, hot water and central heating
Households
Industry
Infrastructure
Gas tariffs increased to cut out waste and eliminate pressure on state finances Natural Gas Consumption For Heating (bcm)
Household gas tariff evolution (UAH/m3) 8
3,6/7,19
25
7
23.4 0,75
6
-10%
21.1 0,61
20
8,4 7,2
5 15
14,3 1,18
0 2010-Apr 2014
2014-Mar 2015
from Apr 2015
13,2
10,6
0
2013
District heating companies Individual housholds
5
0,73
Public enteties
0,5
10
2 1
17.7 6,6
4 3
-16%
2014
2015
Power generation and transmission
Market-based tariff schedule till 2017 adopted
New Electricity Market Law
Seeking competition and diversification
Power generation structure by source* 39,43%
Coal & Gas
Privatization of regional power generation plants in 2016 (incl. Centrenergo 7,67 GWt)
Potential projects:
48,15%
7M2014
5,66%
7M2015
Renewables
Reconstruction of Northern and Dnipro Energy transmission system (€150m KFW loan) Construction of 6 Dnister hydropower stations with total capacity of 390 MWt Construction of Kaniv hydropower plant
Hydro
45,24% 54,77%
Nuclear 4
Required Investments in Energy Efficiency in Residential Sector Goal of Program
Total volume of investment required, € mlnмлн 2015-2030 Загальний обсяг необхідних інвестицій, євро
€35 billion of investment, including €7,7 billion of Government support
• •
Державна підтримка, млн євро€ mln Government support (subsidy),
€ 8,7 billon by 2020 2 624
25% of buildings
2 624
2 624
2 624
2 624
2 624
2 624
2 624
2 624
2 624
2 624
2 274
3
billion cbm
annual natural gas savings in 2020
12
1 924
billion cbm
annual natural gas savings in 2030 1 224 630
80
ths
6.5
mln
65 140
272
428
505
583
583
583
583
583
583
583
583
583
583
583
14
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
multi-dwelling buildings
individual houses
First steps in Energy Efficiency of Residential Buildings Loan Reimbursment Mechanism
70% of the principal
Total loan amount, UAH mln
304,4
for energy-efficient equipment and materials
Reimbursed in 2014 - 2015
UAH million
80
for non-gas boilers purchase
ths loans
for energy-efficient 40% of the principal equipment and materials for the recipients of 70% of the principal subsidies on utilities Jan-16
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
May-15
Apr-15
Mar-15
Feb-15
Budget of State EE Program UAH million in 2016
Jan-15
894
(since 27.08.15)
Dec-14
multifamily house
Nov-14
private house/ separate flat
30% of the principal 20% of the principal
for the recipients of subsidies on utilities (since 27.08.15)
State EE Program Dynamics
Energy Efficiency of public bodies’ buildings Program description
Renovation is consistent with EU requirement The new Directive 2012/27/EU (Oct-25, 2012) on energy efficiency
100k
requirement to renovate at least 1% of the central public bodies’ buildings annually (for Energy Community members).
public bodies’ buildings are to be renovated
4.4
Bln EUR
Investments needed
700
Ukraine selected “Shared savings” ESCO agreement model Public body’s energy spending
Net savings (≈50% of initial value)
ESCO payment (80-90% of savings)
million cbm
annual natural gas savings
Net savings (10-20% of savings)
Before ESCO
During ESCO (< 10y)
After ESCO
Legal framework and next steps Steps done
1st step: Parliament
The Concept of Energy Efficiency Fund “Turning Subsidies to Investments in Energy Efficiency“ («S2I»)
• EPC Procurement • Long-Term Budget Guarantees for Private Investor
State budget of Ukraine
International Donors Funding
2nd step: Government • Sample Energy Saving Performance Contract was adopted on Oct 21, 2015
Subsidies reduction (budget economy)
Next steps • Developing of guidelines for Contracting Parties (on public purchasing procedures etc.) • Creation of incentives for ESCO-market development (Bank involvement etc) • Information campaign (Spring -2016)
S2I
Loans funding and return
Subsidies Grants
Government Political and economic reasons for subsidies reduction
Consumers Energy Efficiency Projects
Financial Institutions Preferential loans and their return