During wartime and with the challenges Ukraine is currently facing, a stable energy supply is critical. The USAID Energy Security Project (ESP), together with the Ministry of Communities, Territories and Infrastructure Development of Ukraine (Ministry of Infrastructure), is carrying out a project on implementation of distributed generation to support local communities.
“The project involves installing of cogeneration units (CGUs) that will ensure uninterrupted energy supply (both heat and electricity) to critical infrastructure during emergencies and independence from Ukraine’s power grids. These so-called “energy islands” will be organized around critical infrastructure facilities which ensure that communities’ vital activities will draw power from distributed generation sources,” says Oleksandr Filippov, USAID ESP’s Municipal Infrastructure Director.
“First, we conducted a preliminary analysis of heat supply companies to assess their technical capabilities,” said Ievgen Glushak, USAID ESP’s Chief Heat Supply Expert, describing the project’s implementation phases. “Then we moved on to assessing the economic feasibility of installing CGUs to replace gas-fired boilers.
This technical analysis showed that the city of Vinnytsya’s utility company Vinnytsiamiskteploenergo meets all the necessary criteria. A financial model was developed that evaluates various scenarios to carry out this project with projected cost savings for the company. On July 30, 2024, ESP conducted training for Vinnytsiamiskteploenergo employees implementing the proposed model.
During the training, Nadiia Iermolenko, USAID ESP Senior Financial Expert, presented the key scenarios of the financial model, focusing on its sensitivity to changes in key parameters, including gas prices, the period of CGU operation, and the duration of CGU operation in energy island mode.
“The financial model allows us to calculate the economic results taking into account various options for investment projects for the utility as a whole,” explains Ms. Iermolenko, “namely, the use of the new CGUs in combination with the units previously procured with USAID funds. The proposed financial model makes it possible to analyze the results of an investment project involving the procurement of new CGUs that will ensure operation in energy island mode. The model also allows us to calculate the costs associated with the operation of the energy island and assess various options for reimbursing these costs in order to ensure the liquidity and profitability of the utility.”
Using practical tasks, Vinnytsiamiskteploenergo staff were able to better understand how to structure an investment project to make it financially viable for the utility and attractive to potential investors or international banks.
Maksym Bilyk, Vinnitsiyskmiskteploenergo’s CEO, praised the flexibility of the proposed financial model, which allows for analysis based on numerous indicators.
“We are carrying out a project that will not only meet energy needs but also serve as an example of resilience and innovation for other cities,” explained Mr. Filippov.
Additional information on the potential for implementing distributed generation at Vinnytsiamiskteploenergo.