The Ukraine Sustainable Energy Lending Facility was designed to provide financial assistance, support policy dialogue, build institutional capacity, and encourage a vibrant private sector for renewable energy. The initiative will help Ukraine in its quest for energy independence, while reducing greenhouse gas emissions from the world’s 20th-largest emitter.

Fast facts:

• 20 projects financed with 120 million euros since December 2013;

• 30 percent of portfolio comprised of wind, solar, and biomass;

• 58.2 megawatts of new renewable energy capacity installed;

• More than 200,000 tonnes of carbon dioxide saved per year.

The problem

Ukraine relies heavily on imported energy – up to 80% during peak demand – and its own power plants are aging and highly polluting. Ukraine is also one of the most energy-intensive economies in the world, and among the largest greenhouse gas emitters globally. This confirms an urgent need to improve energy security and reduce the environmental impact of Ukraine’s energy sector. But implementing renewable energy in Ukraine has been slow, due to substantial market, regulatory, and information barriers.

The solution

The European Bank for Reconstruction and Development set up the Ukraine Sustainable Energy Lending Facility in 2009 to support renewable energy projects, including hydro, wind, biomass, and solar. Eligible projects were required to replace electricity generated from conventional energy sources; provide significant greenhouse gas emission reductions; be based on proven technology; and be financially viable. To ensure the effective implementation of the facility, the bank combined sustainable energy investments with technical assistance and policy dialogue.

The commercial funds were blended with climate finance from the Clean Climate Fund to overcome the extremely limited availability of commercial financing for renewable energy projects in Ukraine. The lending facility demonstrated the potential for project finance in the sector, established a community of local developers was and built their capacity, and developed enabling regulation and legislation working with the Ukrainian government.

Helping the planet

Financing solar, wind, small hydro, biomass, and biogas replaces fossil fuel energy, contributing significantly to the reduction of greenhouse gasses and reducing local pollution.

Helping people

Through financing local enterprises and funding green enterprises, doors have been opened for opportunity and jobs. Production of stable electricity domestically also increases access to energy for Ukrainians. Reducing dependency on foreign energy could help improve Ukraine’s security situation.

Scaling up

An extension approved in March 2014 enables full utilization of funds. A robust project pipeline remains, and additional projects are currently being identified. Considering the ongoing weakness in the commercial financing sector for renewable energy, this project is expected to continue to strengthen the long-term sustainability of the renewable energy sector by providing financing to the sector for another two to three years.

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