Mayors or deputy mayors of four Ukrainian cities share their experiences implementing energy efficient measures at the local level. Modernization of facilities and progress in thermal insulation are among their achievements. Engaging civil society and establishing market-based conditions for energy resources are among the challenges.
Kyiv, July 26, 2016. Management in the energy sector combined with a well-thought development strategy and attracted donor financing allow for significant conservation of resources over a relatively short term. This conservation of resources is evident from the success stories presented by the mayors of Ukrainian cities Lutsk, Dolyna, Voznesensk, and Slavutych during a press briefing at Ukraine Crisis Media Center.
All the above cities are among the roughly 100 signatories of the Covenant of Mayors, which is a voluntary European initiative uniting regional and central level authorities to increase energy efficiency. All its participants commit to decreasing emissions of CO2 and fossil fuel by 20 percent by 2020, in addition to increasing their share of renewable energy sources. The key aspect is that they are all learning to efficiently use energy together to benefit the community.
“The recipe of their success is a combination of three key factors: a pro-active approach, motivated city authorities, a team of professionals, and – most importantly – engaging the city community. “If you do not explain to the community what you are doing, what you want to achieve and how the community itself will benefit from it, no result will follow,” noted Andriy Kyrchiv, executive director of the Association of Ukraine’s energy efficient cities.
In Dolyna, Ivano-Frankivsk region, the first projects were launched in 2010. Today, energy consumption of public institutions in the city are monitored online, with 60 percent of the institutions having been insulated to reduce thermal loss. Gas consumption in the public sector has been decreased by 62 percent; the share of alternative energy sources already constitutes 31 percent. A project for thermal insulation of condominiums with the budget of over 1 million euro is currently being implemented in the city. “Thanks to this project, in three years about one third of our housing facilities will be thermally modernized,” said Volodymyr Smoliy, deputy mayor of Dolyna.
In Lutsk, thanks to the activities for energy efficiency, 12,4 million hryvnia has been saved over the last year alone. The online monitoring program is operational for 250 public institutions. In 2012, an agreement signed with the European Bank for Reconstruction and Development (EBRD) on renovation of the heat supply system foresees a 4 million euro grant and a 10 million euro loan. Moreover, modernization of the water supply system is starting with a 500,000 euro grant from Nordic Environment Finance Corporation (NEFCO). “Associations of co-owners of an apartment house (OSBB in Ukrainian) are being actively created in our city. Back in 2013, we had 10 OSBB associations while today they are already 274. Around 20 of them took loans from banks for thermal modernization of their houses,” noted Taras Yakovlev, deputy mayor of Lutsk, Volynska region. Interest rate payments within these loans are being partly reimbursed from the budget. Program for the support of extensive renovation of housing facilities is also active.
In Voznesensk, Mykolayiv region, an energy audit for 24 public institutions was conducted in 2011. Based on this, online monitoring of energy consumption was introduced in 2012. Thermal modernization is being gradually implemented. Five educational institutions have switched to combined heating systems with solar collectors heating water having been installed in three of them. The largest energy efficiency project is a complete renovation and thermal modernization of the municipal hospital. The project’s budget exceeds 800 million euros and is being implemented with donor money. “I would not as heavily emphasize the attraction of financing, but rather on the education of the community. Although it does not produce an immediate result and requires a lot of work, it pays off in the long run,” noted Vitaliy Lukov, city mayor. He added that in Voznesensk, civil society organizations played a very active role in the process. Activists established a foundation that assists OSBB associations and provides legal consultations on loan agreements.
The system for online-monitoring of energy consumption of public institutions is also operational in Slavutych, Kyiv region. One of the largest projects is a pilot project for thermal modernization of a kindergarten and a school worth 975,000 euro, in which 721,000 euro is the input of the European Commission. A thermal power station working on alternative fuel is also being constructed. According to mayor Yuriy Fomichyov, to make the city management successful, it is crucial to introduce market-based principles into the energy sector to the largest extent possible. When there will be three thermal power stations in the city, authorities will be able to choose the supplier offering most advantageous conditions. “There is not a more efficient form of management than a communal one, it simply does not exist. Only privately-owned resources are used efficiently,” he emphasized. “A private company owing a private thermal power station that operates on solid fuel offers a tariff that is 15 percent less. They find an opportunity to offer a lower price and get a profit at the same time.” He added that since 2002, Slavutych has been living without public organizations that manage housing facilities (ZhEK in Ukrainian). Rather, a private company selected through the competition conducts management.
Motivations Behind Increased Energy Efficiency
According to the representatives of the cities, tariff increase is the most efficient motivation to introduce energy efficiency measures. “If there are clearly established educational and healthcare subventions, we will be either saving on energy sources and thus improving the quality of services in the framework of the government subventions, or we should additionally disburse this money from our budget […]. The main challenge that authorities are facing is an honest dialogue with the people without indulgence and populism, saying that the tariff needs to be objectively grounded and educating the people by saying that everyone needs to do something him/herself for the changes,” emphasized Lukov. As a result, following the uneasy period of modernization communities, they will have more money “freed” that was previously wasted on inefficient energy consumption.
“We need to adopt long-term strategic plans, it is realistic now as after decentralization takes place, more financing will stay at local level,” noted Volodymyr Smoliy.
Mayors are of the opinion that an increase of energy efficiency should be started from introducing energy management and thermal insulation. Afterwards, when the city knows the actual volumes of efficient consumption, modernization of equipment and a switch to alternative power sources can be started. In order to attract donor financing, the main thing is to demonstrate the adequate approach and the ability to implement strategic projects. “Partners value consistency. […] When we developed the strategic policy, we have thus demonstrated to our partners that we are moving step-by-step, and they helped us finance these pilot activities at each of the steps. It helped us to later attract even bigger amounts of technical assistance,” noted Smoliy.
Representatives of the mayor’s offices also said that they expect as the gas, heat and power markets to emerge, the quality of service will improve. “Due to the non-competitive approach, relations between the supplier and the consumer are twisted: the supplier offers his product in such a manner as if the consumer already owes something to him,” emphasized Lukov. “As long as this market is not offering a choice, dictatorship will prevail,” stated Kyrchiv.
“State authorities are now forced to take to these unpopular steps. On our part, we at the local level have to support them – so that together we say the right things and each contribute our part of the job. The market is definitely needed,” added Smoliy.