The USAID Municipal Energy Reform Project in Ukraine (USAID Project) has evaluated the readiness of 17 partner cities for implementing clean energy projects on a Public Private Partnership (PPP) basis. It was found that all the selected clear energy projects have significant economic potential and can be realized using the PPP mechanism. Some cities have already launched activities to create the prerequisites for attracting private investments.

For instance, the USAID Project has started preparing a Preliminary Feasibility Study for an investment project of building a biofuel-fired boiler house rated for 10MW to be based at the gas-fired Tavriiska boiler house. It is expected that the investment required for its implementation will be about €4 million, and the simple payback period, taking into account a reduction in the current heat tariff for the population, will be five to six years. The USAID Project is also working on alternative technical solutions, such as building a biofuel CHP, to identify the option that will be the most economically attractive for potential investors.

The Tavriiska Boiler House in Kherson

A preliminary technical survey of buildings of two educational institutions was conducted in Lviv. Based on the survey findings, the USAID Project has developed preliminary solutions for implementing clean energy projects. They involve the partial thermal modernization of the buildings (complete thermal modernization is impossible, as the buildings have some architectural value) and the installation of systems using alternative energy sources (water-air heat pump for the Lviv Technological Lyceum, and solar collectors for Preschool Educational Institution No.14).

The amount of investment needed for project implementation and its feasibility based on a PPP arrangement will both be determined after developing a feasibility study according to the requirements of the effective standard building documentation.

For the city of Kyiv, based on the gathered information and technical survey of additional institutions suggested by the city, the USAID Project has prepared a preliminary technical and economic estimate for replacing natural gas with biomass in the heating systems of public buildings, including such institutions as:

1) Svyatoshyne Psychoneurological Residential Facility at 16 Kramoskoho St;

2) Darnytsia Children's Boarding House at 58/60 Yalynkova St.;

3) Sanatorium Boarding School No.19 at 55 Bilytska St.; 

4) Kyiv Assisted Living Facility for Veterans of Work at 2 Zhukova St.

For the city of Dnipro, the development of a Preliminary Feasibility Study is in progress for the Reconstruction and Modernization of the O.M. Makarov DP VO PMZ Combined Heat and Power Plant project. The design and estimate documentation prepared in 2004 did not take into account any fuel alternatives to gas; therefore, its technical solutions will be reworked by the USAID Project.

The Public Private Partnership is an extensively tested (and proven effective) worldwide mechanism of attracting private investments primarily in economic sectors of social importance that which require significant financial investments, even though they are often not too profitable.

For the cities selected in the course of the evaluation, the USAID Project will deliver seminars and workshops on the issues related to implementing clean energy projects based on the PPP system. In addition, the USAID Project will provide technical assistance to the cities in:

•             preparing the respective set of documents (technical and economical, legal, and bidding documentation) required for implementing clean energy projects based on PPP terms;

•             organization of public discussion regarding the implementation of PPP clean energy projects in cities;

•             support and consultative assistance to the process of preparing and implementing clean energy projects.