USAID Will Help Reform Energy and Municipal Infrastructure in Communities

February 9, 2024

On February 2, 2024, the USAID Energy Security Project (ESP), together with the Ministry for Communities, Territories and Infrastructure Development of Ukraine (Ministry of Infrastructure), discussed with 84 representatives of local authorities, heat supply companies, and distribution system operators the collection of initial data to determine the technical feasibility of implementing distributed energy generation projects at heat sources, including energy islands arrangement.

These projects aim to ensure reliable energy supply to Ukrainian communities and the uninterrupted operation of critical infrastructure facilities, such as heat and water supply, sanitation, healthcare facilities, invincibility centers for long-term stay, etc.

The Distributed Generation Initiative, which the Ministry of Infrastructure is implementing in partnership with USAID ESP, aims to restore, reform, and develop municipal energy infrastructure, as well as strengthen the resilience and modernize district heating in communities.

Andrii VEDMID, Head of the Heat Supply Division at the Utilities Department of the Ministry of Infrastructure, noted that Ukrainian heat supply companies are extremely interested in implementing distributed generation. “The Ministry understands how difficult it is for heat supply companies and municipalities to find funds in their budgets for the technical modernization of heat supply systems in the current circumstances. With this in mind, we asked for support from USAID. The joint arrangements are outlined in the Memorandum of Understanding between the Mininfrastructure and USAID ESP. We look forward to the results of the implementation already this year,” said Andrii Vedmid.

Oleksandr FILIPPOV, USAID ESP Municipal Infrastructure Director, noted that the key objective of the cooperation between USAID ESP and the Ministry of Infrastructure is to develop a portfolio of distributed generation projects at the municipal level. These projects provide for the use of cogeneration technologies of renewable and alternative energy sources and are designed not only to address current pressing issues but also to develop flexible and sustainable energy supply systems for communities. Distributed energy generation facilities should be integrated into a single energy system and provide a sustainable energy supply to critical infrastructure in an isolated mode. For the most technically and economically attractive projects, it is planned to develop preliminary feasibility studies, which will allow to attract both public funds and international investments.

“At the stage of Ukraine’s post-war recovery, there will be a real interest of international partners in reconstruction projects. And a ready package of documents with the substantiation of technical capabilities and economic feasibility will be the key to attracting investment funds for the modernization of energy systems,” said Ievgen GLUSHAK, USAID ESP Heat Market Officer.

The project development process involves two stages. The first is the assessment of technical feasibility, where the determining factors are the availability of centralized hot water supply (HWS) and the availability or possibility of restoring HWS in the interheating period. The second is an economic attractiveness assessment with modeling various scenarios of equipment use, including emergencies and determining opportunities for maximum benefit.

“During peacetime, without emergencies, the electricity generated from the heat source should be used for the company’s own needs, and the excess should be output to the grid, in particular, to meet the needs of heat supply facilities and sell to the single electricity market, including to cover imbalances. Therefore, the involvement and interest of local governments in the project implementation is extremely important,” Ievgen Glushak said.

During the training, USAID ESP’s experts presented a questionnaire to collect initial information and explained the key organizational and technical aspects of collecting, verifying, and processing information.

Maksym Bilyk, Director of Vinnytsiamiskteploenergo, shared his own experience and positive impressions of the pilot testing of the questionnaire: “The technical data section of the questionnaire can be conceptually divided into three components: initial data on generation sites, initial data on consumers, and initial data on the Distribution System Operator. When collecting the initial data on consumers, we were greatly assisted by local governments, as we needed to accumulate information on critical infrastructure consumers. Therefore, it is important to involve both local governments and critical infrastructure consumers in this work.” The questionnaire is made up of the most understandable blocks for inputting initial technical data, he said. At the same time, the company is ready to share with colleagues the experience gained in the filling process.

The collected data will form the basis for the development of investment projects to modernize and develop local energy systems.

The distributed generation initiative, which the Ministry of Infrastructure is implementing with USAID ESP’s technical support, aims to introduce a comprehensive approach to addressing the sustainability of heat and electricity supply. USAID’s technical assistance is crucial for restoring, strengthening, and maintaining Ukraine’s energy system during the war, and aims to implement a long-term strategy for the development of the energy sector.