On July 28 the European-Ukrainian Energy Agency held an expert discussion on energy efficiency on the topic “Post-war challenges in the energy efficiency sector.” During his speech,  Serhiy Porovskyy, Energy Efficiency Financing and Policy Expert for the UNIDO/GEF UKR IEE Project, noted:

Increasing energy efficiency should be at the core of the post-war recovery strategy of Ukraine’s economy! About this we (UNIDO) formally noted in working groups under the National Recovery Council. Of course, the main tasks that need to be solved now are: support of operational business processes, provision of energy resources and stabilization of the financial sector/reduction of the cost of capital. However, it is important to have a correct “perception” of energy efficiency and the economic effect of the implementation of energy efficiency measures, which primarily concerns industry and energy industry, and not thermal modernization of buildings.

In the UNIDO/GEF UKR IEE Project “Introduction of Energy Management System Standard in Ukrainian Industry”, we work in 3 main areas:

  • development of the regulatory and legal framework for energy efficiency: where we provide technical support to central executive bodies for the nationalization of international standards and the development of relevant laws and by-laws;
  • creation of an expert database: we had a powerful training program for training experts, and for improving the qualifications of specialists and certification institutions;
  • creation of a financial mechanism and other support tools: together with UKRGASBANK, we launched the Loan Guarantee Fund – this Fund is working; together with the EUEA, we launched the All-Ukrainian Award: Pacesetters for Energy Management – currently, due to martial law, the selection and awarding of participants is suspended, but we will definitely resume the process after our victory! I also hope that it will be possible to develop and implement a scheme of “Voluntary Agreements” on energy efficiency.

We conducted a survey of enterprises regarding the impact of the war on their activities and the possibility of implementing energy efficiency measures. At the moment, the following things are happening with enterprises: 1 – transfer of production from zones of active hostilities; 2 – the problem of providing energy resources; 3 – financial problems and lack of desire/ability to invest – business is focused on survival and covering basic operational needs, the recently high cost of capital, caused by the increase of the NBU key rate to 25%, only significantly complicates the situation.

Therefore, it is extremely important to create special (guarantee) financial instruments to support business, and directly increase energy efficiency in the industrial and energy sectors of the economy. It is also important to correctly structure the work of such financial instruments / Funds in order to create opportunities not only for attracting donor international aid but also private foreign capital (which, by volume, is the largest). In the pre-war period, state guarantees were enough, now it may not be enough.

However, investment in improving energy efficiency in industrial sectors should be a priority, because it is a constant reduction of operating costs and reduction of energy resource shortages. The implementation of the energy management system will not only allow for correctly predicting and evaluating the results of energy efficiency measures but will also provide an opportunity to implement so-called “zero-cost” measures: changing the behaviour of workers and optimizing operational processes, controlling defects, forecasting energy consumption, increasing the value of the brand – the financial result from which is estimated at (additional) 40% of capital investments in energy efficiency measures.

“In addition to the Loan Guarantee Fund, which is currently operating, and under which enterprises can obtain preferential loans for the implementation of the energy management system and energy efficiency measures, we can help with the involvement of highly professional national and international experts. There was information that state-owned enterprises were instructed to implement an energy management system, but they do not know how to do it (correctly). Contact us, we can help!” – said Serhiy Porovskyy.

In addition, Serhiy Porovskyy commented on the energy intensity index of GDP, which is often considered to be 2-3 times higher in Ukraine than in neighbouring EU countries:

“I consider this to be a false statement because we have two indicators of energy intensity of GDP: 1) energy intensity of GDP in purchasing power parity and 2) simply energy intensity of GDP. If we take into account the energy intensity of GDP without purchasing power parity, our indicators are 8-10 times higher than in the EU countries. Our low purchasing power evens out this figure. However, this points to another social problem and the issue of energy poverty.

In my opinion, it is the Ministry of Economy of Ukraine that should be engaged in the activities of the energy efficiency sector, because this is precisely what affects the energy efficiency of our GDP. If measures are not implemented in all sectors of the economy, the energy intensity of GDP will not change.”

Regarding the question mentioned in the chat before Mr. Porovskyy’s speech in the chat: “what is the importance of energy efficiency for the economy of Ukraine?” – he commented:

“If we ask what energy efficiency has to do with our economy, it applies to all sectors of the economy; energy efficiency is not (only) about thermal modernization of buildings, but primarily about increasing energy efficiency in industry and PEK! That is why it is so important to develop tools to encourage businesses to energy efficiency. Moreover, it is not SMEs that have a special influence on our economy, but the top 10 per cent of large industries. Their influence on consumption, pricing and availability of energy resources is the most significant, and in terms of economic effect, the implementation of energy efficiency measures in them will have a more significant result than in housing and communal services.

In my opinion, it is the Ministry of Economy of Ukraine that should be engaged in the activities of the energy efficiency sector, because this is precisely what affects the energy efficiency of our GDP. If measures are not implemented in all sectors of the economy, the energy intensity of GDP will not change.”

More details in the video recording of the discussion: https://cutt.ly/bZgD9YR [27:00-47:00]