Gennadiy Zubko, vice prime minister of Ukraine, is proud of the results that Ukraine has already achieved in energy efficiency during his four years of heading the ministry.
But he says that a lot more can be done as these are only initial steps.
One of the catalysts for energy efficiency projects is decentralization – an initiative that he has been advocating for since the beginning of his tenure to make sure that local budgets are responsible for where state money goes instead of relying on the central government. The results he says are impressive: local budget revenues around Ukraine went from Hr 68.6 billion in 2014 to Hr 192 billion in 2017.
Before decentralization, 70 percent of tax revenues went straight to the top level of government, redistributed through each ministry, and only then sent back to the local level.
This should give municipalities a lot more responsibility to operate with local budgets including how to make their towns more efficient.
“Previously, it was the state that paid for heating and electricity for schools and hospitals. Now, it is the responsibility of municipalities,” Zubko told the Kyiv Post during an interview at the Cabinet of Ministers on July 6. They understand this and have to reduce in order to save.”
The Organization for Economic Cooperation and Development, however, says that most local and regional governments still do not have control over most of their budgets as now subnational authorities control only about 30 percent of their revenues.
But the decentralization initiative is starting to make it possible to modernize buildings not only in urban cities but also in the countryside such as in schools.
This is important, Zubko says, as schools now will not depend so much on the central level for receiving money for utilities which in the past has disrupted classes.
Housing cooperatives
But the public sector is not the only one undergoing efficiency reforms.
Ukraine has 160,000 multistoried residential buildings, of which 90,000 should be modernized as they were built before 1995 based on an outdated Soviet-era system.
But Zubko’s solution to raise the necessary funds is housing cooperatives – legal entities that allow residents to unite in order to modernize the whole building.
There are 35,000 housing cooperative in Ukraine and the number is growing.
These housing cooperatives can agree, for example, to change the building’s central heating system with a temperature sensor that detects the temperature outside and then automatically switches the heating of the building. The quick fix which costs up to Hr 450,000 could save 25 percent of the building’s consumption, or save 3 months of energy use, Zubko said.
Moreover, this upgrade automatically increases the cost of such houses up to 30 percent as well as the durability, the vice prime minister said.
Leading cities
Kyiv, Lviv, Kharkiv, Dnipro, Odesa, Lutsk, Zhytomyr, Vinnytsia – these are the leading cities in energy efficiency projects.
“They show up to 65 percent in savings after household upgrades and renovation. This is a huge amount,” the minister said.
The city of Kamianets-Podilskyi is another great example of how modernization of energy infrastructure can make the whole city more energy efficient.
The city has been receiving financial support from the NEFCO to modernize both the heating and water supply systems.
The city practically is almost completely independent from central heating as the city relies on 22 new heating systems and distribution pumps allowing consumers to adjust the boilers according to their needs. In addition, the city is also applying more alternative energy sources and is almost entirely independent from gas.
This is the first example of when a city of 100,000 people switched to a completely different energy system with the (expertise) and financial support of international partners,” said Zubko.
But not all cities are going through successful reforms.
For example, some cities simply reject energy efficiency projects offered by the World Bank. For example, Kramatorsk’s city authorities refused a project that aimed at modernizing the water supply infrastructure.
“It was (suppose to be) a very cool project, which would provide very quick electricity savings, a completely different quality of water treatment and the possibility of improving the water supply,” Zubko said. “The reason – they just thought they don’t need it.”
Lack of energy auditors
Today, Ukraine lacks certified energy auditors that could provide not only expertise advice but also take responsibility for these recommendations.
There are already several associations of energy auditors in the country, but there is no certified energy auditor, according to Zubko.
“We need a huge number of (auditors),” the minister said. His ministry is collaborating with GIZ to train at least 100 energy auditors.
“But for a country that has 187 cities and 23 oblast centers, this is practically nothing,” Zubko said.
So far the ministry, in cooperation with the Education Ministry, signed a memorandum with 14 Ukrainian universities that will provide such as certification.
What can be achieved
Over the next five years, if the state moves towards becoming more energy efficient the country can create an additional 75,000 jobs, according to Zubko.
Moreover, becoming a more energy efficient country will also strengthen the currency as the hryvnia will be less vulnerable to external risks such as gas imports.
And with modernizing the residential sector, Ukraine can reduce up to 50 percent of its household energy consumption.
“One and a half billion cubic meters of gas consumption in the residential sector can be reduced in the next two years, in the next 5 years – 6 billion,” Zubko said.
