Implementing Energy Efficiency projects and energy conservation measures was once an expensive proposition for Ukrainians, and it was difficult to find the money for it. In most cases, lack of financing forced Ukrainians either to lay aside their ideas indefinitely or sometimes altogether. But commercial banks have helped to improve this situation. Bank Lviv was one of the first in Ukraine to start supporting energy efficiency projects.


At the end of 2014, a company called Technoinform came to Bank Lviv with a request to provide a loan for the installation in several village schools of the new highly efficient boilers fired with wood and wood fuel briquettes. The company wanted to modernize the outdated school heating systems this way. Most of the boilers in the systems were gas-fired, rather inefficient, and did not ensure proper temperatures inside the schools. In addition, the permanent increase of gas prices increased the schools’ heating expenses which, in turn, was a difficult burden for the local budgets. The first to receive the new heating systems from Technoinform were schools in the villages of Mshana and Kernytsia of Horodotskyi District in Lviv Oblast.


To receive the loan, the company developed and presented to the bank a project business plan, and by January 2015 had received UAH 600,000 at 24% per annum for 2 years. The company invested an additional UAH 1 million of its own funds into the project. All this allowed Technoinform to buy two 250 kW and 450 kW solid fuel boilers and to install them in the same location as the old equipment. In order to re-connect the school heating systems, the company also participated in a tender to rent the school boiler house premises, won the administration’s open public procurement tender of heating services, received a license from the Lviv Oblast State Administration for heat energy generation and supply, and arranged for an adjacent building to be built in order to create and store a monthly supply of biofuel. These procedures delayed the start of project implementation for a whole year.


Implementing this Energy Efficiency project became possible due to support of the USAID Municipal Energy Reform Project in Ukraine, which involved Bank Lviv in the Development Credit Authority (DCA) Program of the United States Agency for International Development (USAID). This program is aimed at strengthening commercial banks’ capacity to provide loans to small and medium companies (including private businesses, condominiums and communal utilities) for implementing clean energy, energy efficiency, and energy conservation projects. Participation in the USAID Development Credit Authority Program allowed the bank to reduce its collateral requirements, and increase the lending period. The guarantee is provided by the U.S. State Treasury, is recognized by the National Bank of Ukraine, and covers up to fifty percent (50%) of the borrower’s net losses from the loan principal. The project implemented with the loan funds by Technoinform is one of 15 energy efficiency initiatives which received funding from Bank Lviv under the Development Credit Authority Program.

The key outcome of this project is the fact that the schools now receive heat energy at the quite low tariff of UAH 1,300/Gcal. The company pays for renting the premises and for the electricity consumed. Also, 4 new jobs were created in each school to ensure the operation of the boiler houses. The old equipment was also preserved for the cases when there will be a need to use gas-fired boilers temporarily. With the support of Bank Lviv employees, the company management received important experience in preparing and implementing such energy efficiency projects by taking out loans. By October 2016, another school in Lviv Oblast had commissioned a 400 kW boiler house on solid biofuel. In the future, the company plans to implement similar initiatives in other districts of Lviv and neighboring oblasts, and to start producing its own fuel briquettes.

In the course of preparing and implementing this project, the entrepreneurs encountered a number of problems. Because of the lengthy procedure of receiving the permits and conducting the tenders, project preparation lasted an entire year. Also, in the majority of cases, the tariffs for heat energy set by the authorized body do not cover its cost, and this does not incentivize the company to make further investments in clean energy, energy efficiency and energy conservation projects. These and other problems are in fact quite common in Ukraine, and their resolution is an important task not only for the USAID Municipal Energy Reform Project but also for government institutions.

Legislative change is on the way. The development of bill # 4334 was initiated to incentivize heat generation from alternative energy sources. It was given preliminary adoption by the Verkhovna Rada in the first reading on 22 September 2016, and on 8 February 2017 was recommended by the VR Committee of Fuel and Energy Complex for final approval by the national deputies in the second reading. In addition, the USAID Project is working on a policy for creating a heat energy market in Ukraine. These and other important initiatives must settle the issues encountered in heat energy generation from alternative fuels, including those issues that were encountered by the entrepreneurs from Lviv Oblast.