On September 27, 2023, the USAID Energy Security Project (ESP) held the fourth webinar in a series of events that are intended to provide key district heating (DH) stakeholders with guidance on cogeneration units (CGUs)- their potential, technical details on implementation, and prospects to further develop distributed cogeneration based on the current DH infrastructure in Ukraine. The event gathered representatives from the State Agency for Energy Efficiency (SAEE), district heating companies (DHCs) from across the country, and local governments among other stakeholders.
During the seminar, USAID ESP with participants discussed ways to support the increased efficiency of cogeneration, per the current regulatory and market frameworks. Additionally, the USAID ESP team presented a developed by project team Institutional Development Program for local district heating companies as one more tool of the DHCs support.
In her opening remarks, Diana Korsakaite, DH Sector Lead at USAID ESP, expressed hope that the measures and tools discussed during the seminars would be of interest and use to district heating companies (DHCs).
In her speech, Olena Lenska, Director of the Renewable Energy Department at the SAEE, thanked USAID ESP for its efforts and the new direction of support for Ukraine.
“The experience of last year’s winter is extremely important. Diesel generators did not prove to be an effective solution (used for electricity generation during emergencies). We need small and medium-sized CGUs. This is something that is closely related to Ukraine’s future accession to the EU and, accordingly, the implementation of European standards,” said Ms. Lenska.
Ukraine’s implementation of Directive 2012/27/EU on Energy Efficiency and its commitment to the EU-Ukraine Association Agreement envisage the creation of favorable conditions for the use of high- efficiency cogeneration technologies. Specifically:
- Annex I “General principles for calculating the amount of electricity produced in the cogeneration process”;
- Annex II “Methodology for determining the efficiency of the cogeneration process”.
According to SAEE, which is responsible for implementing the above-mentioned European legislation, cogeneration currently provides 30 percent of electricity (total capacity of 28 gigawatts (GW)) and heat (total capacity of 40 GW). Every year the SAEE qualifies about 40 CGUs. In the future, only owners of high-efficiency cogeneration will be able to obtain the needed qualification certificate, which is expected to save about 10 percent of primary energy.
- The groundwork to incentivize the installation of high-efficiency cogeneration is described in the Law of Ukraine No. 2955-IX of 02.24.2023, which introduces:
- Administrative service “Qualification of highly efficient cogeneration”;
- A mechanism for guaranteeing the origin (GoO) of electricity produced by highly efficient CGUs;
- The principle to incentivize the installation and operation of only highly efficient cogeneration (highly efficient CGUs will be exempt from the current excise duty on electricity).
To fulfill the requirements of the above-mentioned Law, the SAEE developed six draft regulations on the procedure to qualify CGUs and the methodology to determine the efficiency of CGUs. In addition, the agency issues guarantees of origin (GoO) for electricity produced by highly efficient cogeneration and creates and maintains a register of GoOs as well as a list of secondary energy resources that generate heat and electricity produced by CGUs.
A representative of SAEE updated participants and stated, “At this stage, all draft documents have been developed and are at various stages of approval and will soon be submitted to the Cabinet of Ministers of Ukraine (CMU) for approval. We believe that the implementation of all the planned measures will create the needed conditions for the conversion of existing inefficient combined heat and power plants (CHPs) into highly efficient ones; reduce energy consumption; increase the efficiency of primary fuel use; reduce greenhouse gas emissions; and issue GoOs for energy produced by highly efficient CGUs. All these measures seek to fulfill Ukraine’s obligations to the Energy Community.”
The SAEE has worked to streamline the process of obtaining a certificate of qualification for a high-efficiency CGU. DHCs need to submit an application, technical information on the CGU, and the estimated calculation of primary energy savings. Within 30 calendar days, the agency must verify the accuracy of the provided technical information and calculations of primary energy savings under the methodology for determining the efficiency of the cogeneration process.
During the webinar, ESP and SAEE presented the above joint work to develop the needed legislative foundations to support the growth of high-efficiency cogeneration. The team also discussed a
program to develop the institutional capacity of DHCs, i.e., the Institutional Development Program.
The USAID ESP Organizational Development & Training Specialist Vladyslav Kucherenosov reviewed this Program and mentioned important components of effective organization development, such as:
- Technical and professional capacity-building.
- Institutional management systems improvement, resulting in positive impacts on individual management systems and ensuring balance and coordination between them.
Institutional development involves improving both internal and external management systems, through the implementation of the following measures:
- Assess the institutional capacity (12 management systems) using the USAID Institutional Capacity Index for Systems and Standards tool.
- Prepare a report on the assessment results including recommendations to develop individual management systems at the institution.
- Conduct a post-assessment meeting to discuss the results of the assessment and identify priorities for further development.
- Annual institutional development plan.
- Provide technical assistance (information, consultations, training, etc.) to implement the institutional development plan.
- Conduct a second assessment (in about a year) to record the results achieved and identify new priorities for further development.
The program is open to local structural units of local governments, institutions, utilities, and/or their subdivisions operating in heat supply. To apply, an application should be sent to the project address that includes the name of the institution, its organizational and legal status, and actual address and contact information. The application should also indicate the management systems (from the USAID Institutional Capacity Index for Systems and Standards tool) that, in the applicant’s opinion, need to be improved. In addition, the applicant must answer the following questions: What kind of assistance will be needed to implement the institutional development plan? What results does the applicant plan to achieve in a year through the implementation of the institutional development plan?
The deadline for applications to participate in the Institutional Development Program for Local Heat Supply Institutions is October 13, 2023. Participation in the program is free of charge, but it requires time and the engagement of the representatives of DHCs to analyze management systems and develop and implement plans for their improvement.
Since Russia’s full-scale invasion of Ukraine on February 24, 2022, USAID has prioritized the supply of critical equipment and materials to keep Ukrainian homes warm. This year, USAID is focusing on a new type of support intended to strengthen Ukraine’s energy security and enhance the protection of local critical infrastructure from Russian attacks. This new support includes 69 cogeneration units for 23 district heating utilities and two universities this winter, which will help the DH system deliver heat to Ukrainian homes in the absence of electricity.