MUNICIPAL ENERGY REFORM PROJECT (MERP) FOURTEENTH QUARTERLY REPORT JANUARY 1 – MARCH 31, 2017
April 2017 This document was produced for review by the United States Agency for International Development (USAID). It was prepared by the USAID Municipal Energy Reform Project in Ukraine. USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 59
Key to cover photos:
MUNICIPAL ENERGY REFORM PROJECT (MERP)
FOURTEENTH QUARTERLY REPORT
JANUARY 1 – MARCH 31, 2017 CLEAN ENERGY IDIQ: AID-OAA-I-13-00015 Contract: AID-121-TO-13-00006
April 2017
DISCLAIMER The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 61
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TABLE OF CONTENTS
BACKGROUND ...... 1 A. SUMMARY OF PROGRESS AND ACCOMPLISHMENTS ...... 3 B. DETAILED DESCRIPTION OF PROGRESS/ ACCOMPLISHMENTS DURING THE REPORTING PERIOD ...... 11 B.1 Project Team and Procurement Actions ...... 11 B.1.1 Consulting Agreements ...... 11 B.1.2 Subcontracts ...... 11 B.1.3 Grants ...... 11 B.2 Costs ...... 11 B.3 Environmental Compliance ...... 11 B.3.1 Project Activities ...... 12 B.4 Progress and Accomplishments By Activity ...... 13 B.4.1 Activity 1: Improve CE Regulatory and Legislative Enabling Environment ...... 13 B.4.2 Activity 2: Promote Investment in CE Technologies and Applications ...... 22 B.4.3 Activity 3: Capacity Building and Dissemination ...... 32 B.4.4 Activity 4: Enhance Capacity for the GOU in LEDS ...... 32 C. DELIVERABLES ...... 37 D. SCHEDULES AND MILESTONES ...... 43 E. PROBLEMS ...... 47 F. PLANS ...... 49 F.1 Activity 1: Planned Activities in Quarter 15 ...... 49 F.1.1 Task 1.1: Developing Enabling Legislative and Policy Environment ...... 49 F.1.2 Task 1.2: Assistance to NEURC ...... 49 F.1.3 Task 1.3: Supporting Improvement of Social Safety Net for Vulnerable Population ...... 50 F.1.4 Task 1.4: Supporting EE Standards...... 50 F.1.5 Task 1.5: Public Information and Awareness ...... 50 F.2 Activity 2: Planned Activities in Quarter 15 ...... 51 F.2.1 Task 2.2: Assisting Municipalities with Planning, Preparing, and Financing for CE Projects ...... 51 F.2.2 Task 2.3: Introduction of Energy Management Systems ...... 52 F.2.3 Task 2.4: DCA Loan Guarantee ...... 52 F.2.4 Task 2.5: Support Mechanisms that Mobilize Private Sector Investment...... 52 F.2.5 Task 2.6: Preparation of Sustainable Energy Public Awareness Plan and Development of Related Materials ...... 52 F.2.6 Task 2.7: Implementing Sub-Activity 2 Tasks in Odesa Oblast and Ukrainian territories affected by the conflict with Russia ...... 53 F.3 Activity 3: Planned Activities in Quarter 15 ...... 53 F.3.1 Cross-Cutting (Anti-Corruption) ...... 53
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT III F.4 Activity 4: Planned Activities in Quarter 15 ...... 54 F.4.1 Task 4.1: Strengthening institutional capacity in planning LEDS-REDS ...... 54 F.4.2 Task 4.2: Implementing LEDS-REDS Through support in Developing and Introducing CE Technologies and Energy Services ...... 54 F.4.3 Task 4.3: Developing Uniform Database on LEDS-REDS and Exchanging Experiences and best Practices with Other Countries Participating in EC-LEDS ...... 55 G. PERFORMANCE INDICATORS ...... 58
IV USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT LIST OF TABLES
Table 1. Consulting Agreements in Place During the Reporting PeriodError! Bookmark not defined. Table 2. Fixed Price Subcontracts (Purchase Orders) Signed During the Reporting Period ...... Error! Bookmark not defined. Table 3. Summary of Project Expenditures ...... Error! Bookmark not defined. Table 4. Summary of the Current Status of SEAPs for Partner Cities ...... 22 Table 5. Funding by City under SEAP Measures Implementation ...... 23 Table 6. Summary of Information on the Projects Supported ...... 24 Table 7. Current Project Pipeline ...... 24 Table 8. Summary Information on Public Events for Odesa Oblast and Eastern Ukraine ...... 31 Table 9. Summary Information on Distribution of Informational Products, TV Program and PSAs for Odesa Oblast and Eastern Ukraine ...... 32 Table 10. Most important documents and materials produced under MERP during Q14 of the Project ...... 37 Table 11. Q14 Milestones for Activity 1: Improve CE Regulatory and Legislative Enabling Environment ...... 43 Table 12. Q14 Milestones for Activity 2: Promote Investment in CE Technologies and Applications ...... 44 Table 13. Q14 Milestones for Activity 4: Enhance Capacity for the GOU in LEDS ...... 45 Table 14. Q15 Milestones for Activity 1: Improve CE Regulatory and Legislative Enabling Environment ...... 55 Table 15. Q15 Milestones for Activity 2: Promote Investment in CE Technologies and Applications ...... 56 Table 16. Q15 Milestones for Activity 4: Enhance Capacity for the GOU in LEDS ...... 56
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT V ACRONYMS
AE Alternative Energy ARVI Aggregated Recovery Value Indicator AUC Association of Ukrainian Cities CE Clean Energy CEAC Clean Energy Advisory Center CE RC Clean Energy Resource Center CFR US Code of Federal Regulations CMU Cabinet of Ministers of Ukraine CoM Covenant of Mayors COR Contracting Officer’s Representative CPFF cost plus fixed fee DCA Development Credit Authority DCOP Deputy Chief of Party DH District Heating E5P Eastern Europe Energy Efficiency and Environmental Partnership EBRD European Bank for Reconstruction and Development EC-LEDS Enhanced Capacity for Low Emission Development Strategies EE Energy Efficiency EIB European Investment Bank ENSI Energy Savings International EPC Energy Performance Contract ESCO Energy Services Company EU European Union EUR Euro (currency) GCC Global Climate Change GHG Greenhouse Gas GOU Government of Ukraine HOA Homeowner Association
VI USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT IEE Initial Environmental Examination IFC International Finance Corporation IRG International Resources Group KPI Key Performance Indicator kWh Kilowatt Hour(s) LEDS Low Emission Development Strategies M&E Monitoring and Evaluation MDI Municipal Development Institute MERP Municipal Energy Reform Project MinEcology Ministry of Ecology and Natural Resources MinRegion Ministry of Regional Development, Construction, Housing and Communal Services MinSocPolicy Ministry of Social Policy MMP Mitigation Measures Plan MOU Memorandum of Understanding MP Member of Parliament MRV Measurement, Reporting, and Verification MTO MERP Task Order NEURC National Energy and Utility Regulatory Commission NEFCO Nordic Environment Finance Corporation NGO Nongovernmental Organization PPP Public-Private Partnership PSA Public Service Advertisement/Announcement Q Quarter RAB Regulatory Asset Base RC Resource Center RE Renewable Energy RSEP Regional Sustainable Energy Plan SAEE State Agency on Energy Efficiency and Energy Saving of Ukraine SEAP Sustainable Energy Action Plan SECAP Sustainable Energy and Climate Action Plan SIDA Swedish International Development Cooperation Agency
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT VII SME Small and Medium Enterprise SOW Scope of Work TIMES The Integrated MARKAL-EFOM System UAH Ukrainian Hryvna (currency) UNFCCC United Nations Framework Convention for Climate Change USAID United States Agency for International Development USD United States Dollar VR Verkhovna Rada, Supreme Council of Ukraine WB World Bank
VIII USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT BACKGROUND
The United States Agency for International Development (USAID) Mission for Ukraine, Moldova, and Belarus and the Office of Economic Growth supports the implementation of the Municipal Energy Reform Project (MERP, or the Project) in Ukraine as described in the Scope of Work (SOW) and further detailed in the IRG, an Engility Company, Technical Proposal and subsequent modifications. The primary purpose of the USAID MERP is to enhance Ukraine’s energy security. Increased end-use energy efficiency (EE) combined with increased production of clean energy (CE) in large towns and cities will reduce the consumption of conventional energy in Ukraine while cutting greenhouse gas (GHG) emissions, energy expenditures, and imports. The Project has four main activities: 1. Improve the CE Regulatory and Legislative Enabling Environment 2. Promote Investment in CE Technologies and Applications 3. Capacity Building and Dissemination 4. Enhance the Capacity of the Government of Ukraine (GOU) in Low Emission Development Strategies (LEDS) The GOU is engaged in reforming the municipal energy sector and addressing challenges identified in the GOU Program of Economic Reforms for 2020, with an emphasis on CE/EE through price signals and improving the competitiveness and reliability of municipal services. Ukraine’s energy policies are shifting to domestic resources and strengthening the energy market framework to European Union (EU) standards. The adoption and full implementation of Energy Community Treaty and Global Climate Change (GCC) Convention provisions could provide Ukraine with a competitive, transparent, and predictable market framework to attract investment and to underpin CE/EE improvements in the energy sector. The Project focuses on introducing EE/CE in cities by assisting municipalities with: Planning, preparing, and financing CE projects Introducing energy management systems Supporting the implementation of the development of Development Credit Authority (DCA) loan guarantees Supporting mechanisms that mobilize private sector investment; in particular, performance contracts by energy services companies (ESCOs) Preparing sustainable energy public awareness plans This Quarterly Report is submitted in accordance with the contract requirements and covers the project period from January 1, 2017, through March 31, 2017. It serves as a tool for evaluating the Project’s progress and achievements and provides a summary of Project activities, accomplishments, issues, and problems encountered in implementing the activities set by the Project Work Plan. It also weighs the accomplishments in the context of the indicators set by the Monitoring and Evaluation Plan.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 1
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2 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT A. SUMMARY OF PROGRESS AND ACCOMPLISHMENTS
The overall objective of the Project is to enhance Ukraine’s energy security. Increased end-use EE combined with the increased production of CE in large towns and cities should reduce the consumption of conventional energy (i.e., imported natural gas from Russia), while cutting GHG emissions, energy expenditures, and overall energy imports. Under Activity 1, the Project continued supporting GOU and the Ukrainian parliament to approve key legislative and regulatory acts related to municipal energy reform. Bill on Commercial Metering of Communal Services The Draft Law on Commercial Metering of Communal Services (reg. # 4901) was prepared for the second reading at the Verkhovna Rada. MERP provided substantial assistance during this phase. Bill on Housing and Communal Services The bill was not considered by the Verkhovna Rada during the reporting period. Legal and Regulatory Framework for Establishing District Heating (DH) Sector Competitive Markets The Parliament of Ukraine adopted amendments to the Law on Heat Supply, providing incentives to generate thermal energy via alternative energy sources. The newly adopted law sets the terms of the economic environment for newly established "green" generators in municipalities, including price level incentives and other simplified administrative terms of operations for those generators. Task 1.2 Assistance to National Energy and Communal Services Regulatory Commission (NEURC) Capacity Building MERP conducted the “Procedures (rules) for separate accounting by type of licensed activity in centralized water supply and sewage sector” seminar for NEURC and licensees. The seminar focused on key provisions of the draft rules (procedure) for separate accounting by type of licensed activity in the area of centralized water supply and sewage. The draft rules were developed by the Project jointly with NEURC. Support Changes to the Assets Valuation Methodology for Natural Monopolies in the DH and Water and Wastewater Sectors The report on Changes to Asset Revaluation for Incentive Based Tariff Regulation (changes to State Property Fund Order # 293) was submitted to NEURC for review/comments.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 3 The Project also developed and submitted to NEURC a draft order "On amending the methodology to establish value of assets of entities natural monopolies, of entities operating at adjacent markets, and combined heat and power production (CHP) entities." Establishing a Transparent System of Tariff Setting and Regulatory Decision Making MERP prepared the final version of the report “Recommendations for improving the transparency of regulatory decisions on tariff formation and setting.” The report takes into account the entire chain of regulatory procedural actions at pre- and post-tariff decision making, gives an overview of international practice, assesses advantages and identifies shortcomings of NEURC procedures in the area, and provides a list of the relevant recommendations to all the identified shortcomings. Assist NEURC in the Gradual Introduction of Incentive Tariff Regulation for Heating and Water Utilities During the reporting period, the Project continued providing assistance to NEURC (the “Regulator”) to gradually introduce incentive-based regulation. In particular, this included the following: 1) The Project prepared and submitted to NEURC the report “Recommendations on establishment of key performance indicators [KPIs] in the heating sector and on the initial data for assessing the value of indicators.” This is a suggestion for a list of KPIs that shall be used for E coefficient development at a later stage. 2) The Project developed and submitted to NEURC a revised list of service quality indicators for the water supply and sewage sector. This suggestion is to be used during Q indicator development. 3) The Project developed and submitted to NEURC the report "Recommendations on considering specific issues in the tariff model." Develop Methodological Recommendations on Accounting for Licensed Types of Activities During the reporting period the Project provided the following assistance to NEURC: Prepared draft procedure/rules for accounting by types of licensed activity in the district heating sector. The main business unit blocks are foreseen as generation, transportation, supply, other regulated services, other non-regulated services. Prepared draft procedure/rules on accounting separation by entities engaged in district water supply and wastewater treatment. The drafts envision accounting according to types of licensed activities and should enable NEURC to track costs versus revenues for the relevant services. Pilot Survey on the Quality of Utility Services and Consumer Readiness to Pay for Utility Services NEURC was provided with an updated version of the report “Survey on the quality of certain types of utility services and consumer willingness to pay for better quality services” —reflecting the comments received from NEURC. The survey covers all the main categories of utility services and issues and makes regulatory procedural recommendations, providing NEURC with the possibility to make regulatory decisions on the development of incentives in all areas of economic regulation.
4 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT Task 1.3 – Supporting Improvement of Social Safety Net for Vulnerable Population Develop Recommendations on Reform of Social Housing Norms and Norms for Consumption of Housing and Communal Services During the reporting period, GOU adopted Resolution #51 “On amendments to GOU Resolution #409 dated 06.08.2014,” which changed some social norms for the consumption of housing and communal services (based on actual consumption of energy by households). In particular: (i) the norm for the consumption of heat energy for DH to consumers having in-building and/or apartment heat meters was reduced by 21.4%; (ii) the norm for the consumption of electric energy for individual heating was reduced by 21.5%; (iii) norm for consumption of natural gas for individual heating was reduced by 9.1%. The new norms will be valid from May 1, 2017. Changes to the norms will reduce State Budget spending on social subsidies and stimulate energy conservation. MERP prepared a draft GOU resolution and analytical report to allow for and substantiate the changes on improving social housing norms and social norms for the consumption of housing and communal services. The Report and draft GOU resolution was submitted to Ministry of Regional Development, Construction, Housing and Communal Services (MinRegion), Ministry of Social Policy (MinSocPolicy), and State Agency on Energy Efficiency and Energy Saving of Ukraine (SAEE). Task 1.4 – Supporting Energy Efficiency Standards The project continued support to MinRegion in developing three national standards on energy marking aimed at supporting the implementation of EU Directive 2010/30/EU. Task 1.5 – Public Information and Awareness Campaign Video Public Service Advertisements/Announcements (PSAs) During the reporting period, MERP launched in social networks and Ukrainian TV channels its new video PSAs about EE in an apartment, in a residential building where a Home Owner Association (HOA) is established, and in a private house. Video PSAs demonstrate measures that could be taken by each resident and co-owners together in order to decrease energy consumption and their energy bills respectively. Since January 24, when the PSAs were launched in social networks, they have been viewed by over 150,000 users of Facebook and YouTube on MERP’s and its partners’ pages. In addition, MERP social advertisement videos can be viewed at governmental portals, such as www.teplo.gov.ua (Cabinet of Ministers), and on web site pages of numerous municipalities, district entities, news portals, etc. As for the TV audience, the videos are broadcasted by 86 TV channels, with the audience reach exceeding 20 million people. The PSAs are also placed on video screens of high-speed trains covering all directions of Ukraine’s territory. The potential audience for the PSAs in these trains reaches approximately 200,000 persons monthly. TV Program “Your Home” MERP continued the production of the second season of the “Your Home” TV program, which is broadcast by the national UA-One channel every Sunday. Eleven episodes were on the air during the January–March period. Accordance to the channel’s ratings, “Your Home” is in the top 10 most popular of UA-One’s shows. In addition to the national channel, it is currently enjoyed by viewers of 35 Ukrainian regional TV channels with an audience of 4.7 million and 3 million Facebook users with 814, 536 views. Broadcasting is done free of charge.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 5 Public Outreach Materials In cooperation with SAEE, MERP finalized a series of billboards and city lights that start blanketing USAID project partner cities in March. Outdoor posters are a part of our “Energy Saving Arithmetic" campaign, which is being implemented by MERP together with SAEE and MinRegion. A series of new billboards and city lights will be placed in the USAID Project’s partner cities to inform residents about various energy efficiency measures, and the savings they enable achieving if implemented in apartments, private houses, or condominiums. The billboards also inform readers how to receive compensation of up to 70% of the cost of the materials purchased under the “warm loans” state and municipal programs. The brochure "Tariffs Explained" was produced during this quarter. It explains in detail how the tariffs for electricity, heating, and district water supply and sewage services are formed. The brochure also tells about the prospects of the tariff formation system in Ukraine and provides tips on how to save money and reduce energy consumption. Hotline on EE/Alternative Energy (AE) The hotline on EE/AE, which was launched by MERP in cooperation with Kyiv City Administration and SAEE to address the most urgent issues faced by Ukrainian communal service consumers served 1,268 clients during the January–March period. Support to Vulnerable Populations To raise awareness among low income residents and vulnerable groups on issues related to EE/AE, tariff regulation reform, and the social safety net, the Project conducted 46 meetings and thematic seminars in the Municipal Employment Centers of MERP partner-cities. During these meetings, 1,106 citizens (414 men and 692 women) received information materials, consultations, or both on issues related to energy smart behavior, EE measures in multi- apartment buildings, reasons for tariff increases, the communal subsidy mechanism, and how to create a condominium, among others. Under Activity 2, the Project supported partner cities with the preparation and implementation of their Sustainable Energy Action Plans (SEAPs) in compliance with the European Covenant of Mayors (CoM). As of the end of the reporting period, 12 SEAPs had been approved and implementation started (Chernihiv, Dnipro, Ivano-Frankivsk, Kherson, Kramatorsk, Lutsk, Zaporizhzhia, Khmelnytskyi, Rivne, Ternopil, Sumy and Vinnytsia), and another three are in the process of approval (Pavlohrad, Kryvyi Rih, and Kyiv). EE/CE Projects Development and Support During the reporting period, the Project supported cities in mobilizing funding for EE/CE investments. The specific examples include: The city of Ivano-Frankivsk can draw Nordic Environment Finance Corporation (NEFCO) loan (EUR 4.0 million) and Eastern Europe Energy Efficiency and Environmental Partnership (E5P) grant (EUR 2.3 million) funding for implementation of EE measures in public buildings. USAID MERP prepared the energy audits and feasibility study for the project. The city of Ivano-Frankivsk was able to finalize the competition and select an investor for the creation of a degasification system at a solid waste landfill and energy generation from landfill gas. The project envisions the installation of a gas fired electricity generation unit (up to 1MW) which would allow it to sell electricity using the “green tariff.” The
6 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT estimated private investments are in the area of USD 1.8 million. This project will secure the landfill from combustion and will improve the environmental situation in the region. The city of Chernihiv started the procurement of new trolleybuses and applied for an approximately USD 6.1 million loan from the European Investment Bank (EIB). USAID MERP developed the feasibility study for improvement of public transportation system. Ministry of Finance of Ukraine cleared an EIB loan to allow the capital thermal modernization of public buildings in Ternopil. The project value is approximately USD 30.0 million. USAID MERP prepared the energy audits and feasibility study for the project. Ministry of Finance of Ukraine cleared an EIB loan to allow the modernization of the centralized heating system in Zaporizhzhia. The project value is approximately USD 11.3 million. USAID MERP prepared feasibility study for the project. The city of Chernihiv submitted a feasibility study for the project on the capital thermal modernization of public buildings and supporting documentation to the Ministry of Finance for clearance. The project value is approximately USD 8.4 million. The city of Khmelnytskyi submitted a feasibility study for the project on the capital thermal modernization of public buildings envisions and supporting documentation to the Ministry of Finance for clearance. The project value is approximately USD 5.8 million. USAID MERP prepared the energy audits and feasibility study for the project. The city of Sumy submitted a feasibility study for the project on capital thermal modernization of public buildings and supporting documentation to the Ministry of Finance for clearance. The project value is approximately USD 6.6 million. USAID MERP prepared the energy audits and feasibility study for the project. Funding Mobilized for Residential Energy Efficiency Loan provisions under the state program to support EE measures in residential sectors (supported by MERP) also had positive dynamics. As of March 31, 2017: 187,628 loans (approximate value of over USD 120 million), including 696 loans to HOAs, had been issued under the State Program to support residential EE. As of June 2015, such loans had been taken by only 3,984 households and one HOA in the amount of UAH 71 million (less than USD 3 million). Task 2.3 – Introduction of Energy Management Systems The Cabinet of Ministers of Ukraine (CMU) Committee on European, Euro-Atlantic Integration, International Cooperation and Regional Development, approved a draft resolution “On approval of a plan of implementation for energy management in budget institutions.” The USAID project started providing assistance to support the implementation of this resolution by developing the methodology for monitoring, guidelines for energy management, limits for energy consumption, and the use of funds received from savings. Task 2.4 – Development Credit Authority (DCA) Loan Guarantee Since the beginning of 2014, Bank Lviv has received 40 applications and issued 17 loans for a total of UAH 7.51 million, EUR 1.95 million and USD 0.55 million (approx. total value USD 3.01 million). During the reporting period, the bank issued seven loans to local small and medium enterprises (SMEs). The current utilization ratio for DCA is estimated at 36.78%.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 7 Task 2.5 – Support Mechanisms That Mobilize Private Sector Investment Residential Energy Efficiency During the reporting period, MERP supported a number of activities aimed to promote EE in the residential sector. In particular, these covered: (i) support of Clean Energy Resource Center (CE RC) operations; (ii) energy audits of residential buildings for the city of Ivano-Frankivsk; (iii) support of state-funded EE partial loan compensation programs for HOAs and households. During the reporting period, MERP submitted to SAEE the final version of the report on “Methodology for monitoring and assessing the effectiveness of the state ‘warm’ loans program.” The revised report reflects the comments provided by SAEE. MERP, in cooperation with SAEE, organized two media tours called “Homeowners associations (HOAs) Thermal Modernization Success Stories.” After these tours, MERP saw over 30 publications in internet and printed media and over 10 TV newscasts were released in regional and national media. As a result of the increased public awareness and confidence regarding the program, over 18,000 households have applied for “warm loans” over part of the month of March (data as of March 28, 2017) and have received UAH 355 million from the state banks for heat insulation of their homes. This is a record amount of money during the program’s lifetime (since October 2014). Support for ESCO Mechanism Implementation The Project finalized a draft prefeasibility study for a potential ESCO project for the city of Odesa and energy scanning reports for public buildings in the city of Kremenchuk. Task 2.6 – Preparation of Sustainable Energy Public Awareness Plan and Development of Related Materials MERP participated in the USAID University Day celebration conducted at Sumy National Agrarian University. It gathered over 100 students, who learned about the tasks and achievements of six USAID projects, including MERP, and discussed the main challenges related to reforming sectors such as: agriculture, trade, energy efficiency, finance, and education, as well as anti-trafficking issues. Task 2.7 – Implementing Sub-Activity 2 Tasks in Odesa Oblast and Ukrainian Territories Affected by the Conflict with Russia Eastern Ukraine About 40 representatives from MERP partner cities (Bakhmut, Dobropillya, Kharkiv, Kramatorsk, Mariupol, Myrnohrad, Pokrovsk, Rubizhne, Severodonetsk, and Sloviansk) and Donetsk Oblast Administration took part in the “Introductory training seminar on MERP activities and energy planning.” The seminar focused on energy management, sustainable energy planning, energy audits, and EE/CE projects identification. The Project delivered the introductory training workshop, agreed on the work plan, and started development of Sustainable Energy and Climate Action Plan (SECAP) development for the cities of Myrnohrad, Pokrovsk, and Rubizhne. MERP provided assistance to the cities of Bakhmut, Dobropillia, Mariupol, Myrnohrad, Pokrovsk, Rubizhne, Severodonetsk, and Sloviansk in the eastern part of Ukraine. This included energy audits of public and residential buildings, centralized heating systems, preparation of feasibility studies for CE/EE projects, and conducting a public information campaign. USAID MERP and Kharkiv City Council signed a memorandum of understanding (MOU) outlining the areas of assistance, such as energy management system building, conducting of energy audits for standard buildings and for communal systems, preparation of documentation
8 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT to attract investment into EE and AE resources, information campaigns, and public awareness. The project conducted introductory meetings to access the assistance needs and initiated energy audits of public and residential buildings in the city. The USAID Project conducted a comprehensive training seminar on energy management in Kharkiv; 30 participants from partner cities and oblast administrations (Luhansk and Donetsk oblasts) attended the event. The training covered organizational, legal, and technical aspects related to establishment and operations of energy management function in municipalities. Odesa Oblast The Project conducted training on energy management for representatives of municipal and regional administrations of Odesa Oblast. Over 30 persons attended the event. The training consisted of several modules aimed to increase municipal capacity to manage energy resources, conduct energy audits, identify EE projects, and monitor and verify energy savings. Based on the result of this first training, the Project will adjust the training approach to ensure the material is delivered in the most efficient manner. Izmail SECAP was presented at the meeting of expanded advisory committee. The unanimous decision was to approve the SECAP and to submit it for consideration by the City Council’s Executive Committee. The Izmail City Council approved the Izmail SECAP, developed by the USAID Project. Bilhorod-Dnistrovskyi City Council’s Executive Committee approved the Bilhorod-Dnistrovskyi SECAP, developed by the USAID Project. MERP provided assistance to the cities of Odesa and Odesa Oblast by conducting energy audits of public and residential buildings, centralized heating systems, the preparation of feasibility studies for CE/EE projects, and conducting a public information campaign. The Project continued work related to the development of a regional sustainable energy plan (RSEP). This included an overview of regional sustainable planning methodologies, and conducting assessments of renewable energy (RE) and AE potential (solar, biomass, and waste utilization). Capacity building MERP finalized the selection of trainees for “Energy auditors training and certification using Energy Savings International (ENSI) methodology and software.” This training will enhance the capacity of municipalities, municipal utilities, educational institutions, and local companies in conducting energy audits of buildings. This will allow for effective EE project identification, preparation, and implementation support. The advantage during the selection process was given to applicants located or conducting activities in eastern Ukraine and Odesa Oblast. Under Activity 4, the Project continued supporting GOU with LEDS. MERP continued providing support to the Ministry of Ecology and Natural Resources (MinEcology) on the State Climate Policy Concept implementation and developed a draft Climate Policy Concept Action Plan. MERP also initiated the transparent and inclusive discussion of the action plan and, in cooperation with MinEcology, conducted the roundtable for state officials, civil society, and expert representatives, where the first round of the discussion on the draft action plan took place. MERP continued LEDS policy document cooperation with GOU and finalized the LEDS Sectoral Policies Catalog, in which over 70 economy-wide policies outline the low emission policies and measures in Ukraine until 2050. Under the LEDS process, MERP also conducted the initial TIMES-Ukraine modeling of GHG emission reduction potential and the social-economic impact of LEDS final policies and measures implementation. MERP also conducted the analysis and
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 9 consultations with the Minister of Ecology on the content and possible legal format of the final LEDS document based on best available international practices. In late January 2017 MERP conducted a 5-working day extensive LEDS Study Tour to the US for 13 state officials representing parliament, presidential administration, ministries, state agencies, and academia. The Study Tour participants conducted low emission related meetings on both the state and federal levels, visited municipal and public companies, and established contacts with the US Congress, green banks, professional nongovernmental organizations (NGOs), and academia. To follow up the LEDS Study Tour, MERP organized a press briefing, at which three members of the Verkhovna Rada (VR) shared their knowledge on the practical implementation of policies and measures and lessons learned during this one-week Study Tour to the northeast US states and to Washington, DC. Another important outcome of the LEDS Study Tour was the establishment in the parliament of the Inter-factional Union "Green Energy of Changes" with 23 members registered so far by the end of March 2017. The Inter-factional Union will promote the Clean Energy and Low Emission Development agenda in the Ukrainian legislative branch. It will cooperate with the Ukrainian executive branch, academia, and civil society as well as with Ukrainian Caucus of the US Congress.
10 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT B. DETAILED DESCRIPTION OF PROGRESS/ ACCOMPLISHMENTS DURING THE REPORTING PERIOD
B.1 PROJECT TEAM AND PROCUREMENT ACTIONS B.1.1 CONSULTING AGREEMENTS B.1.2 SUBCONTRACTS B.1.3 GRANTS B.2 COSTS B.3 ENVIRONMENTAL COMPLIANCE MERP is taking steps to conform with USAID environmental regulations, 22 Code of Federal Regulations (CFR) 216. The Project incorporated environmental mitigation measures as a standard component of its program management. The Project assessed and developed a plan to meet USAID and Ukrainian environmental requirements through mitigating and monitoring environmental risks. MERP does not foresee any significant adverse environmental impacts from Project Activities. This is confirmed by the Initial Environmental Examination (IEE) recommendation of “categorical exclusion” for most Project tasks and activities. “Negative determination with conditions” was defined for Project Tasks 1.2, 1.6, 2.2, 2.4, and 2.5. MERP assessed the possible environmental risks for these tasks and started implementing measures recommended by the IEE (4.3.1-4.3.4). The Project submitted to USAID the MERP Environmental Compliance Report, based on Task Order (TO) Contract ANNEX 1 – Initial Environmental Examination. The Report includes the following items: Environmental Legislation Requirements, Environmental Determination, Mitigation Measures Plan, and Monitoring Plan. It is anticipated that many Project activities will not have any effect on environment and human health in Ukraine. While some Project activities may have some effect, in most cases, this environmental/health effect is deemed to be positive—as increased EE and use of clean energy (CE) will lead to reduced energy consumption and greenhouse gas (GHG) emissions.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 11 The preliminary environmental assessment of Project activities defined potential environmental impacts and recommended environmental determination as follows: a) Categorical Exclusion: The activity is not likely to have an effect on the natural or physical environment. No further environmental review is required. b) Negative Determination with Conditions: The activity does not have potentially significant adverse environmental, health, or safety effects, but may contribute to minor impacts that can be eliminated or adequately minimized by appropriate mitigation measures. B.3.1 PROJECT ACTIVITIES Activity 1. Improve the CE Regulatory and Legislative Enabling Environment All the activities during the reporting period were assessed against the IEE and Project Monitoring Plan. It was determined that all activities meet the definition of a categorical exclusion and per 22 CFR 216.2(c)(2)(i), (iii), (v), and (xiv); neither an IEE nor an environmental assessment is required. However, it is recommended to ensure that the principle of aiming to prevent the depletion of natural resources and deterioration of environmental components (air, water, land, plant, and animal life) is mainstreamed into the draft laws and regulations that may be developed as a result of Project activities. Activity 2. Promote Investment in CE Technologies and Applications During the reporting period, the Project developed 14 documents / sets of documents that fall under negative determination with conditions. In particular, these include the following: Energy Audit reports and pre-feasibility study on thermomodernization of 40 public buildings in Odesa Report on the Energy Audit of Izmail, including recommendations on EE measures, renewable energy sources, and investment projects in support of the development and implementation of the Sustainable Energy and Climate Action Plan (SECAP) of Izmail Report on the Energy Audit of Bilhorod-Dnistrovskyi, including recommendations on EE measures, renewable energy sources, and investment projects in support of the development and implementation of the SECAP of Bilhorod-Dnistrovskyi SECAP of Izmail until 2030 SECAP of Bilhorod-Dnistrovskyi until 2030 Energy Audit reports for residential and public buildings in Bolhrad, Odesa Oblast Energy Audit reports for residential and public buildings in Chornomorsk, Odesa Oblast Energy Audit reports for residential buildings in Ivano-Frankivsk Feasibility study of the project “Capital thermal modernization of educational facilities of the City of Ternopil” Energy scanning reports for 50 public buildings in Kremenchuk Report on improvement of the EE of district heating (DH) system of Yuzhne, Odesa Oblast Energy audit of the district heating system of Rubizhne, Luhansk Oblast Preliminary feasibility study of the project "Modernization of Rubizhne street lighting based on the use of LED lamps"
12 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT Preliminary feasibility study of the project "Modernization of Yuzhne street lighting based on the use of LED lamps" Preliminary feasibility study of water pumping station modernization in Yuzhne, Odesa Oblast No adverse environmental impact is likely, although, according to 4.3.5 of IEE it is recommended to advise the assisted municipalities to integrate environmental and/or health considerations into the project/plans since they may have a local negative effect on the environment. According to the Project Mitigation Measures Plan (MMP) and the Sustainable Energy Action Plan (SEAP; SECAP), projects involving the construction of new energy supply/heating facilities or upgrade of existing facilities should undergo the national environmental assessment process including the preparation of an environmental impact assessment in line with DBN A.2.2-1-2003. Feasibility studies shall include an Air and Environment Protection section. Following Project recommendations, an environmental impact assessment section has been introduced into all feasibility studies so that during project implementation all the available and applicable environmental protection measures for reducing negative environmental impacts would be taken into consideration. The rest of the activities were assessed against the IEE and Project Monitoring Plan. It was determined that all activities meet the definition of a categorical exclusion and per 22 CFR 216.2(c)(2)(i), (iii), (v), and (xiv), neither an IEE nor an environmental assessment is required. Activity 3: Capacity Building and Dissemination There were no activities conducted during the reporting period. Activity 4: Enhance Capacity for the GOU in LEDS All activities conducted during the reporting period were assessed against the IEE and Project Monitoring Plan. It was determined that as all activities (except for one) meet the definition of a categorical exclusion and per 22 CFR 216.2(c)(2)(i), (iii), (v), and (xiv), neither an IEE nor an environmental assessment is required. However, it is recommended to ensure that the principle aimed at preventing the depletion of natural resources and the deterioration of environmental components (air, water, land, plant and animal life) is mainstreamed into the draft laws and regulations that may be developed as a result of Project activities. The conclusions are that USAID MERP is in compliance with Ukrainian and contract requirements on all implemented activities, and the MMP and Monitoring Plan are up to date and compliant with all requirements. The Project regularly monitors its activities for compliance with environmental regulations. B.4 PROGRESS AND ACCOMPLISHMENTS BY ACTIVITY B.4.1 ACTIVITY 1: IMPROVE CE REGULATORY AND LEGISLATIVE ENABLING ENVIRONMENT B.4.1.1 Task 1.1: Developing an Enabling Legislative and Policy Environment During the reporting period, MERP continued supporting GOU in developing CE policies, legislation, and regulations. The assistance is based on EU Energy Community requirements and best international practice. In particular, MERP supported the development and/or approval process for the following: Law on the Commercial Metering of Communal Services
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 13 Law on Housing and Communal Services Amendments to the Law on Energy Services Company (ESCO) Law on Heat Supply Legal and regulatory framework for establishing a competitive DH sector market Law on Commercial Metering of Communal Services On 18.10.2016, the Verkhovna Rada voted for preliminary adoption of the bill “On Commercial Metering of Communal Services” (#4901). This law aims to implement the provisions of EE directive 2012/27/EC at the national level regarding the metering of the heat, hot water, and cold water supplied to consumers by centralized systems. During the reporting period, the Committee on Construction, Urban Development and Housing of Verkhovna Rada approved the Comparative Table on the Bill on Commercial Metering and recommended the bill for the second reading and adoption as a whole. The Project provided assistance to the VR Committee on Regional Development, Construction and Housing and Communal Services in preparing the bill for the second reading. Law on Housing and Communal Services The bill was on the agenda for several plenary meetings, but not considered by the VR. Amendments to the Law on ESCO In March 2017, the Verkhovna Rada adopted Amendments to the Law of Ukraine "On Introduction of new investment opportunities, guaranteeing the rights and interests of businesses for major energy modernization” (regarding procurement mechanism of energy service contracts). The amendments will allow unlocking the ESCO mechanism implementation in the public buildings sector. Law on Heat Supply The Verkhovna Rada adopted amendments to the Law on Heat Supply, providing incentives to generate thermal energy via alternative energy (AE) sources. The newly adopted amendments set the terms of the economic environment for the newly established "green" generators in municipalities, including the price level incentive and other simplified administrative terms of operations for those generators. The development of the draft law and advocacy was supported by the Project. The adoption of the law will allow municipalities, at the initial phase, to unlock the thermal energy sector for more participants and increase the share of renewable energy in the DH sector. Legal and Regulatory Framework for Establishing DH Sector Competitive Market The Project conducted a modelling of price scenarios for the introduction of competition in DH generation for Dnipro and presented the results at the SAEE working group. The initial modelling proved the necessity to integrate and optimize the network to a certain extent and assess the potential costs and gains of the integration-optimization before moving to an active competition phase. MERP will continue working on modelling for selected localities in Q15 of the project. Advocacy Campaign to Support Legal and Regulatory Changes To support the approval process for the above legal acts, the Project conducted an extensive advocacy campaign. Specific activities included the following: Participating in working groups of the VR
14 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT Holding a series of talks with representatives of the Cabinet of Ministers of Ukraine (CMU) and Members of Parliament (MPs) Advocating the need for adoption through media events B.4.1.2 Task 1.2: Assistance to the NEURC Capacity Building In February 2017, MERP conducted a seminar on “Procedure (rules) for separated accounting by type of licensed activity in centralized water supply and sewage.” At the seminar, the Project presented the main provisions of the draft of the Procedure (Rules), developed jointly with NEURC. The comments received from seminar participants were taken into account during the preparation of the final version of the Procedure (Rules). Development of Service Quality Monitoring Methodology The Project finalized the list of quality indicators for the district water supply and sewage sector and submitted it to NEURC in January. The final list, submitted in March, takes into account comments received from NEURC. The Project developed a draft list of quality indicators for the heating sector. It is expected that, following discussions with NEURC, the list will be finalized in Q15 of the Project. During the reporting period, the Project continued the development of the automated system for the monitoring of quality indicators in the district water supply and sewage sector. Support Changes to the Assets Valuation Methodology for Natural Monopolies in the DH and Water and Wastewater Sectors In January, 2017, the Project provided NEURC with the report on “Development of changes to the Assets Valuation Methodology for the purpose of incentive based regulation” and draft amendments to the Order # 293 by State Property Fund on Assets Valuation Methodology. These preparatory steps are needed to comply with provisions of the Law on Natural Monopolies, which requests asset value establishment before entering incentive based regulation. In February 2017, the Project received NEURC’s comments on the report on “Development of changes to the Assets Valuation Methodology for the purpose of incentive based regulation.” In the formal letter, NEURC appreciated the USAID Project’s assistance in developing changes to the methodology for the purpose of the incentive-based regulation. NEURC confirmed its readiness to continue this work and to prepare the final version of the Assets Valuation Methodology based on the results of conducting asset valuations of companies. In February 2017, NEURC submitted to the State Property Fund of Ukraine the draft order with proposed changes to the Assets Valuation Methodology. In the cover letter, NEURC emphasized that the proposed changes are not final and that development of ARVIs (Aggregated Recovery Value Indicators) is required. During the reporting period, the Project held several meetings to discuss pilot valuations of assets of companies. In particular, these included the following: Meeting with NEURC to discuss the implementation of the Plan for the gradual introduction of incentive-based regulation in the heating sector. During the meeting, the head of NEURC confirmed that valuations of assets is a mandatory condition to transfer to incentive-based regulation. As a result of the meeting, NEURC promised to identify water supply and sewage companies willing to pay for valuations of assets and organize
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 15 a meeting of such companies and potential valuators. The Project prepared a SOW for valuation and submitted it to NEURC. Meeting with NEURC, water supply and sewage companies (Bila Tserkva and Kyiv), and a potential valuator (Deloitte). At the meeting, the management of the two companies confirmed their readiness to finance pilot assets valuations. Meeting with Deloitte to discuss pilot valuations of assets of water supply and sewage companies. The participants of the meeting discussed the draft SOW for selecting a valuator and the role of the Project in assets valuations and in finalization of the methodology. Deloitte expressed concerns about the fact that presently there are summarized data on the construction of the water supply and sewage systems that could be used for the estimation of ARVIs. Meeting with Deloitte, Scientific Research Design Technological Institute of Municipal Economy, and NEURC to discuss the development of an ARVI for the district water supply and sewage sector. As a result of the meeting, the Institute confirmed its readiness to develop ARVIs for water supply and sewage companies. Regarding pilot valuations of assets of heating companies, there was no progress during the reporting period. As of the end of the reporting period, the World Bank response was pending.1 Given time constraints regarding the start of the introduction of the incentive-based regulation, the Project started discussions with heating companies willing to turn to incentive-based regulation and able to finance pilot valuations of their assets from their own funds. At the request of NEURC, the Project prepared a draft report on alternative methods (historical values) for determining the regulatory asset base (RAB). The alternative method can be used for pilot tariff estimates. Establishing a Transparent System of Tariff Setting and Regulatory Decision-Making The Project revised the report “Methodological recommendations on improving the transparency of regulatory decisions on tariff setting” to incorporate the most recent regulatory changes. In January 2017, the revised report was submitted to NEURC. The report was positively received and praised by the Regulator. The Regulator informed the Project that the recommendations were being implemented. Improvement of Regulatory Reporting Forms The Project supported NEURC in conducting public discussions and addressing comments received in relation to the resolution “On approval of Reporting Rules for reports submitted by licensees operating in heating, district water supply and sewage sectors to the National Energy and Communal Services Regulatory Commission.” The results of the public discussions were disseminated through NEURC’s website and are available at http://www.nerc.gov.ua/?news=5905. Assist NEURC in the Gradual Introduction of Incentive Tariff Regulation for Heating and Water Utilities During the reporting period, the Project provided assistance to NEURC in developing drafts of tariff formation procedures for incentive-based tariffs for heat energy transportation and for district water supply and sewage services (to replace NEURC Resolution #356 and #357).
1 Negative answer from WB was received in April 2017.
16 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT The Project developed draft tariff formation procedures and discussed them at the working groups with NEURC’s heating and water supply and sewage departments and representatives of licensees. The heating companies of Chernihiv and Kyiv took an active part in the working group on incentive-based regulation in the heating sector. Water supply and sewage sector companies from Kyiv, Bila Tserkva, and Ternopil were also active members of the relevant working group. As of the end of the reporting period, 10 working group meetings (heating sector) and 6 working group meetings (water supply and sewage sector) were held. In March 2017, the presentation on the introduction of incentive-based regulation in the heating sector was disseminated through the website of NEURC (https://www.slideshare.net/NKREKP/ss-72855305.). The presentation was prepared by the Project jointly with NEURC’s Heating Sector Department. The presentation focuses on relevant legislation on incentive-based regulation, the main definitions and principles of incentive-based regulation, progress by the USAID Project regarding introduction of the incentive-based regulation in the heating sector, and further steps. In Q15, the Project will embark on the creation of the methodological recommendations for developing long-term investment programs by heating and water supply and sewage companies, the procedure for forming the regulatory base of assets, and tariff formation procedure for incentive-based tariffs for the production of heat energy. Development of a Mechanism to Use Benchmarking Indicators Based on an Analysis of Best International Practice The Project submitted to NEURC the report “Recommendations on KPIs [key performance indicators] in the heating sector and on initial data for the calculating of KPIs.” The Project continued to develop recommendations on the clustering of heating companies and comparative analysis (benchmarking) methods. The Project analyzed the regulatory reporting forms for 2014–2016 of the licensees operating in the heating sector (provided by NEURC). The results of the analysis will be used to form a data array for clustering. During the reporting period, the Project started working on determining the long-term regulatory indicators necessary for calculating incentive-based tariffs. These include: E-indicator (reducing ineffective operational costs), target indicator on losses in networks, and target indicator on the consumption of electric energy. The recommendations on the calculation of the indicators will be presented as separate annexes to the tariff formation procedure on the formation of incentive- based tariffs (for heat energy transportation, centralized water supply, and centralized sewage). The approaches to calculating these indicators were presented and discussed with NEURC and licensees at the meetings of the working groups on incentive-based regulation. Develop Methodological Recommendations on Accounting for Licensed Types of Activities The Project revised and submitted to NEURC drafts of “Procedure/Rules for accounting for licensed type of activity in heating sector” (January 2017) and “Procedure (Rules) for water supply and sewage sector” (March 2017). As of the end of the reporting period, NEURC’s comments were pending. Mechanisms for Considering Special Aspects in the New Tariff Model In January 2017, the Project submitted to NEURC the revised report “Recommendations on considering special aspects of performance of utility companies in tariff model.” The report covers losses in networks, currency risks, fees, and penalties pertinent to the operations of heating and water supply and sewage companies. As of the end of the reporting period, NEURC’s comments were pending.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 17 Pilot Survey on Quality of Utility Services and Consumer Readiness to Pay for Utility Services In January 2017, The Project submitted the draft survey report “On the quality of certain types of utility services and consumer readiness to pay for better quality services” to NEURC. The Regulator appreciated the high professional level of the report and asked the Project to analyze: (i) the respondents’ responses regarding volumes of consumption of utility services; (ii) estimate expenses resulting from breaks in electricity supply; and (iii) to present the survey findings at the seminar for NEURC. The Project updated the report and submitted to NEURC in February 2017. In March 2017, the Project presented its survey findings at the roundtable for NEURC. The participants of the roundtable stressed the importance of the survey and the need to conduct such surveys regularly for the purposes of monitoring utility services. B.4.1.3 Task 1.3: Supporting Improvement of the Social Safety Net for the Vulnerable Develop Recommendations on the Improvement of the Housing Subsidy Program Based on the Results of Monitoring the Effectiveness of the New Subsidy Program In March 2017, the Project received feedback from the MinSocPolicy on the “Analysis and assessment of outcomes of reform of social protection for service consumers during 2014– 2016” report (report provided to the MinSocPolicy on November 16, 2016). The Ministry gave its appreciation for USAID Project assistance in analyzing and assessing the outcomes of the reform and emphasized the need to improve social norms. Based on the Project inputs, GOU adopted Resolution #51 “On amendments to GOU Resolution #409 dated 06.08.2014” by which some social norms for the consumption of housing and communal services were revised based on the actual consumption of energy carriers by households: (i) the norm for consumption of heat energy for DH to consumers having in-building and/or apartment heat meters was reduced by 21.4%; (ii) the norm for consumption of electric energy for individual heating was reduced by 21.5%; (iii) the norm for consumption of natural gas for individual heating was reduced by 9.1%. New social norms will be in force from May 1, 2017, and will be applicable for the new heating season. MERP provided support to MinRegion Working Group to develop draft regulations on payments for housing management services in multi-apartment buildings and on the social protection of consumers of such services. The Project’s proposals were provided to MinRegion in March 2017. Develop Recommendations on the Reform of Social Housing Norms and Norms for Consumption of Housing and Communal Services The Project prepared the report “Analysis of social norms for housing and communal services: Recommendations on the improvement of the norms.” The report provides an in-depth analysis of existing values of social norms and develops a plan to gradually introduce non-discriminatory technology and incentivizing-EE social norms during 2017–2021 period. The Project also prepared the draft GOU resolution on improvement of social norms and the explanatory note. In February 2017, the report and corresponding documentation were submitted to the MinSocPolicy, MinRegion, and SAEE for review/comments. The feedback on the report was generally positive and acknowledged the need to revise and improve social norms. To facilitate discussion regarding further steps in the continuing reform effort, the Project will organize a roundtable with MinRegion, MinSocPolicy, SAEE, and other stakeholders’ participation (planned for April 2017).
18 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT Develop Concept Paper for Transition to Monetized Targeted Assistance to Consumers of Housing and Utility Services The Project assisted SAEE in preparing the GOU resolution on financing EE improvements from unused subsidy amounts. In February 2017, SAEE sent a draft resolution to the MinSocPolicy, Ministry of Finance, MinRegion, and Ministry of Economy for review/comments. Based on the comments received from these stakeholders, SAEE is working to improve the resolution. The Project prepared the structure of the policy paper for the transition to monetized subsidies and the key issues to be included in the policy paper. The structure and outline of the policy paper were discussed with the MinSocPolicy and SAEE. The Project developed the following chapters: Overview of the development of the subsidy program in Ukraine and past subsidy monetization experience Analysis of the reasons that gave rise to problems related to non-cash subsidies, and the substantiation of the need to solve such problems Description of the proposed monetization schemes and scenarios Model for analysis of provision of heating services to households and provision of other housing and communal services depending on the type of heating Other Activities MERP, through a campaign conducted in social media, online (www.zhytlo.in.ua), and through participation in public events, provided information regarding changes in the provision of public housing subsidies and advocated the monetization of subsidies as a method to bring recipients of subsidies toward a more energy efficient lifestyle. B.4.1.4 Task 1.4: Supporting EE Standards MERP continued assisting GOU in the development of the following standards: National Standard “Rules for the Energy Labelling of Translucent Building Envelope Structures” National Standard “Rules for the Energy Labelling of Façade Systems” National Standard “Instruction on the Energy Labelling of Construction Heat Insulation Materials and Products” B.4.1.5 Task 1.5: Public Information and Awareness Campaign During the reporting period, MERP held a number of meetings with communication teams from SAEE to better target joint outreach efforts and public information activities. The meetings focused on the following: Press tours to observe best practices of EE measures implementation in multi-apartment buildings using the “warm loans” program Facts related to potential energy savings for a series of new video public service announcements/advertisements (PSAs), featuring EE tips in a private house (https://www.youtube.com/watch?v=jSNEK3Oo1iI), an apartment (https://www.youtube.com/watch?v=hKlX3feXOlQ), and a condominium (https://www.youtube.com/watch?v=zajoxvRp0Vc)
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 19 Video PSAs During the reporting period, MERP launched in social networks and Ukrainian TV channels its new video PSAs about EE in an apartment, in a residential building where a Home Owner Association (HOA) is established, and in a private house. Video PSAs demonstrate measures that could be taken by each resident and co-owners together in order to decrease energy consumption and their energy bills respectively. The HOA video also provides information about the state and municipal programs that reimburse from 40 to 70% of costs for EE materials and equipment. Since January 24, 2017, when the PSAs were launched in social networks, they have been viewed by over 150,000 users of Facebook and YouTube on MERP’s and its partners’ pages. In addition, MERP social advertisement videos can be viewed at governmental portals such as www.teplo.gov.ua (CMU), and the web sites of numerous municipalities, district entities, news portals, etc. As for the TV audience, the videos are being broadcast by 86 TV channels, with the audience exceeding 20 million people. The PSAs are also placed on video screens of high-speed trains covering all directions of Ukraine’s territory. The potential audience for the PSAs in these trains reaches approximately 200,000 persons monthly. Placements and broadcasting of PSAs are done by all distribution channels on a free of charge basis. TV Program “Your Home” MERP continued production of the second season of the “Your Home” TV program, which is broadcast by the national “UA-One” Channel every Sunday. Eleven episodes were on the air during the January–March period. They featured problems and best practices experienced by Ukrainians who decided to create HOAs, modernize their residential buildings, install metering equipment, implement AE/EE measures, take loans for EE projects, etc. The program also clarified a number of technical and legal aspects related to co-ownership in multi-apartment building, and EE measures implementation in the residential sector, among other issues. According to channel ratings, “Your Home” is in the top 10 most popular UA-One shows. In addition to the national channel, it is currently enjoyed by viewers of Ukrainian regional TV channels with an audience of 4.7 million and 3.5 million Facebook users with 895,455 views. The broadcasting of the program is done free of charge. Outdoor Advertisements In cooperation with SAEE, the MERP team finalized a series of billboards and city lights that started blanketing USAID Project partner cities in March. Outdoor posters are a part of our “Energy Saving Arithmetic" campaign, which is being implemented by MERP together with SAEE and MinRegion. A series of new billboards and city lights will be placed in the USAID Project’s partner cities to inform residents about various EE measures and the savings they help achieve if implemented in apartments, private houses, or condominiums. The billboards also inform residents about how to receive compensation of up to 70% of the cost of materials purchased under the “warm loans” state and municipal programs. Outdoor posters direct all interested citizens to get more information about the campaign and EE measures in the residential sector at the USAID Project web site (www.merp.org.ua) or by calling the USAID project hotline (0-800-21-06-11). Placement of outdoor posters is done by a commercial company as well as by MERP partner municipalities free of charge. Hotline on EE/AE The hotline on EE/AE, which was launched by MERP in cooperation with Kyiv City Administration and SAEE to address the most urgent issues faced by Ukrainian communal service consumers, served 1,268 clients during the January–March period, which is the highest number since its launch in June 2016 (2,722 persons in total). Most of questions were related to conditions of the “warm loans” state program and subsidies for communal services; all the rest
20 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT included issues on the establishment and effective management of HOAs, energy saving measures in multi-apartment buildings, and legal aspects of relationships between consumers and their energy suppliers. Public Outreach Materials and Events to Support EE/AE The Project produced the brochure "Tariffs Explained." It is the third brochure of the USAID Project dedicated to the subject of increasing tariffs for communal services in Ukraine. These brochures describe in detail what a tariff is and what its components are, and explain the principle of tariff formation. The first two brochures focused on the reasons for tariff growth, why this growth was inevitable, and also presented the experience of European countries with efficient systems of communal services provision. The new brochure focuses more on the tariffs themselves. It explains in detail how the tariffs for electricity, heating, and district water supply and sewage services are formed. "Tariffs Explained" also tells about the prospects of the tariff formation system in Ukraine and provides tips on how to save money and reduce energy consumption. The printed version of the new publication will be distributed at public events in MERP partner cities, while its electronic version is available on the MERP web site: www.merp.org.ua Study Tour for Journalists to Promote EE in Multi-Apartment Buildings MERP in cooperation SAEE organized two study tours called “Homeowners Associations (HOAs) Thermal Modernization Success Stories.” About 60 journalists from national and regional media outlets traveled to Lviv and Lutsk to observe success stories about Ukrainians who led the way when it comes to establishing HOAs, implementing EE measures, and using the state program of “warm loans,” which reimburses from 30 to 70% of costs for EE materials and equipment. All this allows them not only to create proper living conditions in their dwellings, but also to significantly reduce expenses for communal services. For example, the residents of the “Renaissance” HOA in Lutsk replaced all the utilities networks in their building and installed an individual heat substation, LED lighting, and energy efficient windows and doors in the entrance premises. All these measures enabled the building residents to spend just UAH 12.53 per m² for heating in January this year, compared to other buildings in Lutsk, which paid UAH 42.66 per m². In another example, the “Berehynia” HOA from Lviv took out a UAH 1.3 million loan for the comprehensive thermal modernization of the building project under the "warm loans" program, of which UAH 810,000 was compensated by the state and the city. The project was completed in January and enabled the residents to pay only UAH 23 per m² for heating, which is less than 30% of an average bill in the city. After the study tour, over 30 publications in internet and printed media and over 10 TV news casts were released in regional and national media. As a result of the increased public awareness and confidence regarding the program, according to SAEE statistics, 23,115 households have applied for “warm loans” in March and have received over UAH 490 million from the state banks for heat insulation of their homes. This is a record amount of money during the program lifetime (since October 2014). Even in the best periods of the program functioning, the population and condominiums borrowed a maximum of UAH 300–350 million in a full month. Support to Vulnerable Population In order to raise awareness among low income residents and vulnerable groups on issues related to EE/AE, tariff regulation reform, and the social safety net, the Project conducted 46 meetings and thematic seminars in the Municipal Employment Centers of MERP partner cities. During these meetings, 1,106 citizens (414 men and 692 women) received information materials, consultations, or both on issues related to energy smart behavior, EE measures in multi-apartment buildings, reasons for tariff increases, the communal subsidy mechanism, and
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 21 how to create a condominium, among other things. MERP provided about 830 copies of information materials to support these events. B.4.2 ACTIVITY 2: PROMOTE INVESTMENT IN CE TECHNOLOGIES AND APPLICATIONS B.4.2.1 Task 2.2: Assisting Municipalities with Planning, Preparing, and Financing for CE Projects MERP continued assisting partner cities with the finalization and approval of Sustainable Energy Action Plans (SEAPs) and catalogs of investment projects. To date, 15 SEAPs were prepared/improved, and 12 of them have been approved by the city councils. Information on the Progress of SEAP Development and Approval The current status of SEAPs for partner cities2 is summarized in Table 4 below.
Table 4. Summary of the Current Status of SEAPs for Partner Cities SEAP Development/ New or Revised SEAP City SEAP Status / Comments Improvement Approval Date (D or I) Chernihiv D Approved. Implementation started. June 4, 2015 Dnipro D Approved. Implementation started. March 11, 2015 Ivano- I Approved. Implementation started. July 28, 2015 Frankivsk Kramatorsk D Approved. Implementation started. April 22, 2015 Lutsk I Approved. Implementation started. October 6, 2015 Ternopil I Approved. Implementation started. August 18, 2016 Khmelnytskyi D Approved. Implementation started. May 18, 2016 Rivne D Approved. Implementation started. April 21, 2016 Sumy D Approved. Implementation started. September 28, 2016 Approved. Implementation started. Kherson D Undergoing review to meet CO2 February 20, 2015 reduction targets. Zaporizhzhia D Approved. Implementation started. March 25, 2015 Approval is expected in Kyiv D Final version prepared. Q15 of the Project Vinnytsia I Approved. Implementation started. February 24, 2017 Final version prepared. To be updated for Approval is expected in Pavlohrad D approval. Project Q15 Approval is expected in Kryvyi Rih I Final version prepared. Project Q15
2 Excludes partner cities in Eastern Ukraine and in Odesa Oblast (see Task 2.7 for details).
22 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT Kyiv In March 2017, the Project was informed that the SEAP had been accepted by the city and approval is expected during Project Q15. Vinnytsia In January 2017, Vinnytsia SEAP was approved by the Executive Committee of Vinnytsia City Council. In February 2017, the Vinnytsia SEAP, investment catalog, and investment program were approved at the session of Vinnytsia City Council. The official resolution is published on the website of Vinnytsia City Council3. Kherson During the reporting period, the Project was working to review the Kherson SEAP so that it meets CO2 emissions reduction targets established by CoM. Kryvyi Rih The SEAP was reviewed to incorporate a new EIB/European Bank for Reconstruction and Development (EBRD) transport sector project and to review DH sector priorities. The updated version was reviewed and accepted by the city. The approval is expected in Project Q15. SEAPs Implementation Monitoring The Project updated information on SEAP implementation in partner cities. As of the end of the reporting period, the cities mobilized (actually invested) approximately USD 57.41 million for SEAP implementation during CY2015–2016. The partner cities4 monitoring info on the funding mobilized during CY2015–CY2016 is presented in Table 5 below.
Table 5. Funding by City under SEAP Measures Implementation
Investment Investment Total SEAP Adoption # Partner City Made in 2015 Made in 20165 Investments, (New or Improved) “000” UAH “000” UAH “000” UAH
1 Ivano-Frankivsk July 28, 2015 5,935 1,958 7,893
2 Ternopil August 18, 2016 3 Rivne April 21, 2016 124,864 124,864 4 Dnipro March 11, 2015 89,375 16,727 106,102 5 Sumy September 28, 2016 13,568 52,355 65,923 6 Kryvyi Rih SEAP updated 77,784 77,784 7 Kramatorsk April 22, 2015 28,151 13,226 41,377 8 Kherson February 20, 2015 16,677 39,874 56,551
3 http://www.vmr.gov.ua/Docs/CityCouncilDecisions/2017/%E2%84%96620%2024-02- 2017%20%D0%9F%D1%80%D0%BE%20%D0%B2%D0%BD%D0%B5%D1%81%D0%B5%D0%BD%D0%BD%D1 %8F.pdf 4 Excludes associated partners and cities where SEAPs have not been approved by the city councils. 5 The data are for the12-month period of CY2016.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 23 Table 5. Funding by City under SEAP Measures Implementation
Investment Investment Total SEAP Adoption # Partner City Made in 2015 Made in 20165 Investments, (New or Improved) “000” UAH “000” UAH “000” UAH
9 Zaporizhzhia March 25, 2015 48,450 48,450 10 Lutsk October 6, 2015 29,842 32,518 62,360 11 Chernihiv June 4, 2015 166,437 60,199 226,636 12 Vinnytsia February 24, 2017 418,009 418,009 13 Khmelnitsky May 18, 2016 62,297 72,200 134,497
TOTAL, “000” UAH 412,280 958,164 1,370,446
Approx. Value in “000” USD 21,655 35,758 57,413
СЕ Investment Projects Support Based on requests from the partner cities and existing funding sources, the Project continued to support the preparation and implementation of CE projects. A summary of information on the support of projects is presented in Table 6 below.
Table 6. Summary of Information on the Projects Supported Status Number of Projects New requests received 10 Projects with MERP support 74 Of them: Post-signing support provided 5 New project proposals developed 37 Project proposals under development 18 Stopped / Suspended 14 Total 84
As of the end of the reporting period, the Project had provided post-signing support to five projects valued at USD 72.53 million and secured funding for seven new projects valued at USD 15.63 million. The details on the current projects pipeline by utility area and type are presented in Table 7 below.
Table 7. Current Project Pipeline
# of Approximate Value, Million USD Area Projects New Projects Post-Signing Support Total District Heating 27.0 40.2 54.9 95.1 Energy Management 2.0 Public buildings (>650) 26.0 108.8 17.6 126.4
24 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT Table 7. Current Project Pipeline
# of Approximate Value, Million USD Area Projects New Projects Post-Signing Support Total Residential buildings 1.0 7.5 7.5 Solid Waste 11.0 8.4 8.4 Street Lighting 6.0 2.4 2.4 Transport 5.0 18.8 18.8 Water / Waste Water 6.0 26.7 26.7 Total 84.0 212.7 72.5 285.2
In total, the pipeline includes 84 projects (requests from the cities), including 55 active projects (valued at approximately6 USD 213 million) and 5 projects where the Project is instrumental in providing post-signing support to EBRD, World Bank, and NEFCO funded activities (valued at approximately USD 73 million). A summary of the information on MERP support provided to partner cities for the preparation and implementation of CE projects is provided below: The Project initiated the update of energy audits of public buildings and feasibility study for Zaporizhzhia (potential KfW funding). The Project prepared energy audit reports for 20 residential buildings in Ivano-Frankivsk. It is expected that proposed EE measures will be funded by the city, an EIB loan, and residents. Based on the request from the city, the Project updated the feasibility study of the project “Comprehensive thermal modernization of the educational facilities of the city of Ternopil.” MERP prepared energy scanning reports for 50 public buildings in Kremenchuk. MERP performed energy audits in the buildings of 15 secondary schools that won the contest on the reduction of electricity consumption. For each school the Project developed three packages of the most effective EE measures, providing info on the investment required for their implementation and the estimated payback period. It is estimated that if all schools implement the proposed optimal package of measures, they will be able to save annually up to 7.8 million kWh, or UAH 8.4 million (USD 3 million). MERP presented energy audits and a feasibility study for the thermal modernization of public buildings in Ivano-Frankivsk. In March 2017, the Project received a letter from the City of Ivano-Frankivsk expressing its gratitude for the MERP contribution to building the institutional and financial capacity of the city in sustainable energy development and for conducting energy audits and developing a feasibility study that allows the city to attract both loan and grant funds for implementing EE measures in public buildings. According to the estimates, the total cost of the proposed EE measures is EUR 6,803,400, of which: the amount of the loan from NEFCO is EUR 3,997.4; the amount of the grant from the E5P Fund is EUR 2,316,000 (taking into account the possibility of value-added tax exemption); and co-financing from the municipal budget is EUR 490,000.
6.Some project values have not been identified (to be determined) and thus are not included in the overall value.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 25 The Project initiated the development of the concept of the project for increasing the effectiveness of public transportation in Kramatorsk. In February 2017, the Project received information (a letter) from Chernihiv acknowledging the support of the USAID Project in preparing a project on the thermal modernization of buildings (with a potential EIB loan) and an electric transport sector feasibility study, which enabled the initiation of procurement of new trolleybuses and an application for a EUR 6.1 million loan from EIB. During the reporting period, similar letters were received from Ternopil, Khmelnytskyi, Zaporizhzhia, and Sumy. As of the end of the reporting period, the following projects had been prepared for potential EIB loan funding under “Municipal Infrastructure Support Program” (approximate total value is USD 79 million): City of Ternopil: Implementation of EE measures in 93 public buildings of Ternopil, including kindergartens and schools; project value is about USD 31.1 million City of Zaporizhzhia: (i) Improvement of the EE of 60 public buildings in Zaporizhzhia, project value is about USD 16 million; and (ii) Support in implementing EE measures in the heating system of Zaporizhzhia, project value is about USD 11.4 million City of Sumy: Improvement of the EE of kindergartens in Sumy aimed at reducing energy consumption and creating comfortable conditions; project value is about USD 6.6 million City of Chernihiv: Support of EE measures in public buildings of the city; project value is about USD 8.4 million City of Khmelnytskyi: Support for implementing EE measures in public buildings of Khmelnytskyi; project value is about USD 5.8 million It is expected that all of the above projects will be considered by MinRegion (EIB Project coordinator) in Q15 of the Project. Development of the Catalogs of Investment Projects The Project placed 10 investment catalogues of partner cities on the Development Experience Clearinghouse web site. The catalogues were published in the Ukrainian language. All English versions will be prepared during Project Q15. At the request of the city, the Project started developing an investment catalogue for Kramatorsk. Funding Mobilized for Residential EE Loan provision under the state program to support EE measures in residential sectors (supported by MERP) also had positive dynamics. As of March 31, 2017: 187,628 loans (approximate value of over USD 120 million), including 696 loans to HOAs, had been issued under the State Program to support residential EE. As of June 2015, such loans had been taken by only 3,984 households and one HOA in the amount of UAH 71 million (less than USD 3 million). Support to Implementation of CE Demonstration Projects in Multi-Family Residential Buildings During the reporting period, the Project finalized SOWs for design documentation and started procuring the relevant services. It is expected that design documentation will be finalized in Project Q16.
26 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT CE Investment Informational Support The preparation of Issue 4 of the Newsletter on Investment Opportunities is in progress. Issue 4 will focus on the main achievements of MERP during recent months and will be completed in April 2017. B.4.2.2 Task 2.3: Introduction of Energy Management Systems In February 2017, CMU Committee on European, Euro-Atlantic Integration, International Cooperation and Regional Development approved a draft Resolution of CMU “On approval of a plan of implementation for energy management in budget institutions.” It is expected that CMU will approve the resolution at a later stage. The USAID Project started providing assistance in the development of a methodology and guidelines related to energy monitoring, energy management, limits for energy consumption, and the use of funds received from savings. B.4.2.3 Task 2.4 – Development Credit Authority (DCA) Loan Guarantee As of the end of the reporting period, Bank Lviv had received 40 applications and issued 18 loans for a total of UAH 7.511 million, EUR 1.95 million, and USD 0.55 million (approximate total value USD 3.008 million). During the reporting period, the Bank issued two loans to local SMEs. The current utilization ratio for DCA is estimated at 36.78%. As of March 31, 2017, the Bank had five new applications from SMEs to review. The Bank’s Credit Committee will make a final decision regarding placing them under the DCA guarantee in the 2nd quarter of 2017. B.4.2.4 Task 2.5: Support Mechanisms That Mobilize Private Sector Investment Support to ESCO Mechanisms Implementation MERP, in coordination with EBRD, is in the process of developing two pre-feasibility studies for the thermal modernization of public buildings in the cities of Kremenchuk and Odesa. Both studies are aimed at facilitating EBRD loans for the implementation of projects based on ESCO principles. Public-Private Partnerships In March 2017, the Project received a letter from Ivano-Frankivsk City Council expressing its gratitude for the assistance provided to the city. The documents developed by the USAID Project (feasibility study and legal documentation) allowed the municipality to conduct a competitive selection of a private investor to start implementing the project “Creation of a degasification system at the solid waste landfill in Rybne village and energy generation from landfill gas.” The project envisions the installation of a gas fired electricity generation unit (up to 1MW) which would permit the sale of electricity using the “green tariff.” The estimated private investments are in the area of UAH 50 million (approximately USD 1.8 million). This project will secure the landfill and will improve environmental conditions in the region. Annual CO2 emissions reductions are estimated at 75-80 thousand tons. We expect that similar projects developed with MERP support will be initiated in Kamyanets- Podilsky and Khmelnitsky in Project Q15–Q16. Residential Energy Efficiency During the reporting period, MERP supported a number of activities aimed at promoting EE in the residential sector. In particular, these covered: (i) support of CE RC operations; (ii) energy audits of residential buildings; (iii) support of the state-funded EE partial loan compensation programs for HOAs and households.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 27 Support to HOA/CE Resource Centers Operations MERP continued providing regular assistance to HOAs/CE RCs with outreach, legal, technical, economic, ecological, and other key issues related to EE/AE projects and the attraction of investments for their implementation in residential buildings. The Project also supported the exchange and dissemination of information through RCs’ individual pages on Facebook and through MERP and partner pages. In total, since the beginning of 2015, MERP has supplied RCs with over 63,000 copies of information materials and conducted a number of trainings for RCs staff representatives of the city councils, local HOAs, associations of HOAs, and NGOs supporting the establishment and functioning of HOAs. The informational materials covered the following topics: (i) information materials on setting up and activities of HOAs; (ii) information materials on energy saving and clean energy; (iii) information materials on housing subsidies. Thus far, MERP RC outreach efforts resulted in the following: over 3,630 public outreach events on the local level (including trainings and meetings on establishing HOAs), 13,234 initiative groups or/and individuals received consultations on legal, administrative, and technical issues. Some 3,478 new condominiums were created from the beginning of 2015 through March 31, 2017, which is about 32.8% of all new HOAs established in Ukraine during the same period. During the reporting period, the Project was monitoring work of HOA/CE RC operations. Of 13 HOA RCs, all but Kramatorsk have created their Facebook pages. There are 14 such pages now (Association of Sumy HOAs “Sumschina” and Zaporizhzhia CSO “OZhBK “Victoria” have two Facebook pages each) and one national Facebook page (created for coordinating between regional pages of HOA RCs). Zaporizhzhia HOA RC retains the lead, with its audience of active viewers exceeding 2,000 and tending to grow. The Facebook account of Sumy HOA RC has almost 900 viewers. As of March 31, 2017, the total number of viewers of the network of HOA RCs on Facebook reached almost 6,000. Energy Audits of Residential Buildings During the reporting period, MERP completed energy audits of 20 residential buildings in Ivano- Frankivsk. Similar audits were being conducted for residential buildings located in Eastern Ukraine and in Odesa Oblast. The energy audits are a step toward gaining financing for conducting the thermal modernization of the residential sector. Support to State-Funded EE Partial Loan Compensation Programs for HOAs and Households During the reporting period, the Project finalized the “Methodology for monitoring and assessment of effectiveness of the state ‘warm’ loans program” report. The report takes into account comments received from SAEE. Through an advocacy campaign, MERP supported the continuation of the “warm loans” program in CY2017. This resulted in CMU approving the continuation of the program in February 2017. The CMU resolution provides funds in the amount of UAH 374 million "to stimulate people to implement energy efficiency measures" and UAH 85 million "to encourage the implementation of energy efficiency measures in apartment buildings." B.4.2.5 Task 2.6: Preparation of a Sustainable Energy Public Awareness Plan and Development of Related Materials USAID University Day in Sumy MERP participated in the USAID University Day conducted in Sumy National Agrarian University. It gathered over 100 students, who learned about the tasks and achievements of six
28 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT USAID projects, including MERP, and discussed the main challenges related to reforming such sectors as agriculture, trade, energy efficiency, finance, and education, as well as anti-trafficking issues. The Project prepared its own curriculum for the students. It included an interactive session, where all interested students participated in an energy audit of the main university campus, discussed the innovative technologies and energy efficiency measures that could be implemented in the building, as well as participated in a thematic quiz focusing on energy saving issues and alternative energy sources. During the session, the most active participants received branded presents from MERP. B.4.2.6 Task 2.7 Implementing Sub-Activity 2 Tasks in Odesa Oblast and Ukrainian Territories Affected by the Conflict with Russia Eastern Ukraine On March 23, the Project signed an MOU on cooperation with the city of Kharkiv.7 Following the MOU signing, the USAID Project conducted introductory meetings with the relevant municipal departments and utility companies, including the Educational Department and Health Care Department; communal enterprise “Municipal Information Center”; Housing Department; and the communal department (management of utility), utility company “Gorsvet” (street lighting); Kharkiv heat supply utility “Kharkivsky Teplovy Merezhi” (Kharkiv Heat Networks) to present the details of the potential assistance to Kharkiv. As a result of the meeting, the following assistance areas had been identified: Development of the catalog (database) of public buildings (with potential expansion to cover residential sector) Energy audits of public and residential buildings Development of feasibility studies for street lighting and public buildings sectors Public information campaign Energy Planning In March 2017, 40 representatives from MERP partner cities (Bakhmut, Dobropillya, Kharkiv, Kramatorsk, Mariupol, Myrnohrad, Pokrovsk, Rubizhne, Severodonetsk, and Sloviansk) and Donetsk Oblast administration took part in the “Introductory training seminar on MERP activities and energy planning.” The seminar focused on energy management, sustainable energy planning, energy audits, and EE/CE project identification. As a result of the seminar, the Work Plans on the development of SECAPs for Myrnohrad, Pokrovsk, and Dobropillya were agreed upon with municipalities. Energy Management and Capacity Building In March 2017, the Project conducted a training seminar on energy management in Kharkiv. About 30 participants from the partner cities and oblast administrations (Luhansk and Donetsk oblasts) attended the event. The training covered organizational, legal, and technical aspects of the establishment and operations of the energy management function in municipalities. Further on, the cities will receive support in establishing energy management authorities. This will include developing concepts and operational policies and procedures for selected localities.
7 http://www.city.kharkov.ua/uk/news/kharkiv-pidpisav-memorandum-z-usaid-u-sferi-energetichnoi-reformi-34876.html
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 29 MERP finalized the selection of trainees for the “Energy auditors training and certification using ENSI methodology and software.” This training will enhance the capacity of municipalities, municipal utilities, educational institutions, and local companies in conducting energy audits of buildings. This will allow for effective EE project identification, preparation, and implementation support. About 180 persons expressed their interest in this training and submitted applications. As a result, 32 were selected for training and field exercises (energy audits), which will take place during April–June 2017. During the selection process the advantage was given to applicants located or conducting activities in eastern Ukraine and Odesa Oblast. Specific Project Support Following is a summary of Project activities: Over 120 public and residential buildings will be assessed (energy audits initiated) in new partner cities (eastern Ukraine and Kharkiv) to identify EE improvements and provide information for future projects preparation. The Project initiated the preparation of a pre-feasibility study for Mariupol to support the implementation of EE measures in public buildings (potential EIB funding). The Project initiated the preparation of a pre-feasibility study for Mariupol to support the implementation of EE measures in the DH sector (potential EIB funding). The Project started energy audits of municipal systems for the cities of Dobropillya, Slavyansk Rubizhne, and Bakhmut. The Project finalized a pre-feasibility study to improve street lighting in Rubizhne. In addition to the above, MERP provided support to Luhansk Oblast in preparation of a regional EE program. Odesa Oblast Energy Planning During the reporting period the Project supported partner cities with developing SECAPs. The Energy Audit Reports, SECAPs for 2017–2030, and auxiliary investment programs were finalized for the cities of Izmail and Bilhorod-Dnistrovskyi. On March 31 2017, the Izmail SECAP was approved at a session of Izmail City Council. The approval for Bilhorod-Dnistrovskyi SECAP is expected in Q15 of the Project. Energy Management and Capacity Building The Project conducted a workshop on energy management for the representatives of municipal and regional administrations of Odesa Oblast. Over 30 persons attended the event. The training consisted of several modules aimed to increase municipal capacity to manage energy resources, conduct energy audits, identify EE projects, and monitor and verify energy savings. Specific Projects support Following is a summary of Project activities: The Project finalized energy audits of residential and public buildings in Bolhrad, Odesa Oblast. The Project finalized energy audits of residential and public buildings in Chornomorsk, Odesa Oblast.
30 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT The Project started an energy audit of the DH system for the city of Odesa and initiated work on assessing landfill gas utilization potential. The Project prepared a report on improving the EE of the DH system of Yuzhne, Odesa Oblast. The Project prepared a preliminary feasibility study of the project "Modernization of Yuzhne street lighting through the use of LED lamps." The Project prepared a preliminary feasibility study of pumping station modernization (water supply) in Yuzhne, Odesa Oblast. The Project initiated an assessment of biomass utilization for heat energy production for Teplodar (based on an Odesa Oblast request). Regional Energy Planning To support regional energy planning activities for Odesa Oblast, the Project was in the process of conducting the following assessments: Potential for solar energy utilization in Odesa Oblast Regional detailed assessment of available biomass resource; Regional assessment of solid waste management approaches and potential of utilization of landfill gas for existing landfills MERP conducted an analysis of regional energy planning methodologies for EU countries. The presentation for local counterparts will be conducted in April 2017. Public Information Campaign The Project started informational campaign activities in the new partner localities. Summary information on public events for Odesa Oblast and eastern Ukraine is provided in Table 8 below:8
Table 8. Summary Information on Public Events for Odesa Oblast and Eastern Ukraine
Seminars and Trainings Sustainable Trainings for Locality for HOAs, Energy Energy Days Journalists Managers, etc. Balta Yes Bilhorod-Dnistrovskyi Yes Yes Yes Bolhrad Yes Yes Yes Izmail Yes Yes Kramatorsk Yes Mariupol Yes Yes Odesa Yes Yes Rubizhne Yes Sloviansk Yes Yes Yes
8 Includes information received from partner cities on their willingness to participate in MERP events, scheduled for the next few months.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 31 Summary information on the distribution of informational products, TV programs, and PSAs for Odesa Oblast and eastern Ukraine is provided in Table 9 below.
Table 9. Summary Information on Distribution of Informational Products, TV Program and PSAs for Odesa Oblast and Eastern Ukraine
Locality Info Materials TV Program PSAs
Balta 1,500 Yes
Bakhmut 3,000 Yes
Bilhorod-Dnistrovskyi 1,500 Yes
Bolhrad 1,750 Yes
Izmail 3,000 Yes, broadcast Yes Kramatorsk 1,500 Yes Mariupol 2,900 Yes, broadcast Yes Rubizhne 1,200 Sloviansk 1,750 Yes, broadcast Yes Balta 1,500 Yes
B.4.3 ACTIVITY 3: CAPACITY BUILDING AND DISSEMINATION All activities under this task have been finalized. B.4.4 ACTIVITY 4: ENHANCE CAPACITY FOR THE GOU IN LEDS B.4.4.1 Activity 4: Enhance Capacity for the GOU in LEDS Task 4.1: Strengthening Institutional Capacity in Planning LEDS-Resource Efficiency Development Strategies (REDS) Paris Agreement Implementation—State Climate Policy Concept MERP continued providing support to MinEcology on State Climate Policy Concept implementation and developed a draft Climate Policy Concept Action Plan. MERP also initiated a transparent and inclusive discussion of the Action Plan and conducted, in cooperation with MinEcology, a roundtable discussion about the first round of the draft Action Plan for state officials, civil society, and expert representatives. Over 45 representatives from ministries, state agencies, international organizations, technical assistance projects, and NGOs provided their comments and feedback on the draft Action Plan. The development of this Action Plan is a mandatory requirement of the GOU decree approving the State Climate Policy Concept. As a next step, MERP will provide assistance on the official concurrence process with all interested ministries and state agencies and with approval by the CoM. The Action Plan will outline the specific activities, policies, and measures to be implemented by GOU, including all agencies and ministries, in order to achieve low emission development and to implement Paris Agreement provisions. Implementation of Paris Agreement Provisions—LEDS Action Plan Process MERP continued LEDS policy document cooperation with GOU and finalized the LEDS Sectoral Policies Catalog, in which over 70 economy-wide policies outline the low emission policies and measures in Ukraine until 2050. Under the LEDS process, MERP also conducted the initial
32 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT TIMES-Ukraine modeling of GHG emission reduction potential and the socioeconomic impact of LEDS final policies and measures implementation. MERP also conducted an analysis and consultations with the Minister of Ecology on the content and possible legal format of the final LEDS document based on best available international practices. The final LEDS document will be an economy-wide comprehensive policy document that will outline national low carbon paths through 2050. In January 2017, MERP conducted a 5-working day extensive LEDS Study Tour to the US for 13 state officials representing parliament, the presidential administration, ministries, state agencies, and academia. The Study Tour participants conducted low emission related meetings on both the state and federal levels, visited municipal and public companies, and established contacts with US Congress, green banks, professional NGOs, and academia. To follow up the LEDS Study Tour, MERP organized a press briefing, where three MPs shared their knowledge of the practical implementation of policies and measures and lessons learned during this one-week study tour to the northeast US states and Washington, DC. Another important outcome of the LEDS Study Tour became the establishment in the parliament of the Inter-factional Union "Green Energy of Changes," with 23 members registered by end of March 2017. The Inter-factional Union will promote the Clean Energy and Low Emission Development agenda in the Ukrainian legislative branch. It will cooperate with the Ukrainian executive branch, academia, and civil society as well as with Ukrainian Caucus of the US Congress.
Implementation of Paris Agreement Provisions —National GHG Inventory Reporting The Project continued providing support to SAEE on the implementation of EU Directive 2009/28/EC. The Project drafted the national standard “Biofuels and bio liquids: Greenhouse gas emissions. Technical requirements" and started the relevant consultations with key stakeholders, including profile technical committees. During Project Q15, MERP will work to finalize the text of the national standard based on the comments and suggestions from the stakeholders. Task 4.2: Implementing LEDS-REDS Through Support in Developing and Introducing CE Technologies and Energy Services The details on the current portfolio of CE projects are provided under the Activity 2 section of the report. Task 4.3: Developing a Uniform Database on LEDS-REDS and Exchanging Experiences and Best Practices with Other Countries Participating in Enhanced Capacity for Low Emission Development Strategies (EC-LEDS) The Project continued populating the UA-LEDS database for Ukraine based on stakeholder comments. Cross-Cutting Activities Donor Coordination In February 2017, the Project met with EU Delegation representatives to discuss EU and USAID Project positions regarding the thermal energy section in the draft National Energy Strategy 2035. The USAID Project, EU Delegation, and International Finance Corporation (IFC) conducted a coordination meeting regarding the draft Law on Commercial Metering. It was agreed that the current version of the draft law requires substantial improvement before it goes to the second reading.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 33 In February 2017, the Project and USAID Contracting Officer’s Representative (COR) conducted a coordination meeting with EBRD. The meeting was focused on the following topics: (i) preparation of pre-feasibility studies for thermo-modernization of public buildings, using ESCO mechanism, in Kremenchuk and Odesa; (ii) potential support for the preparation of similar studies for the cities of Ivano-Frankivsk, Kyiv, Kharkiv, and Kryvyi Rih; (iii) pre-feasibility study of the utilization of heat pumps at “Lvivvodokanal” utility company (EBRD client under existing loan); (iv) necessity to have energy management in place to ensure the EE implementation of projects, specifically in public buildings sector; (v) other areas of cooperation. The Project organized a donor coordination meeting to discuss DH sector competitive reform. A wide range of donors and stakeholders participated in the meeting, including USAID, IFC, EBRD, Swedish Embassy/ Swedish International Development Cooperation Agency (SIDA), KfW, NEFCO, EU, Denmark, advisors to GOU, and SAEE representatives. During the discussion, the participants supported financial unbundling and third-party administration, and noted the need to refurbish pipe systems. However, they provided reserved comments on the suggested model of thermal energy contracting. As a result of the donors’ coordination meeting, the USAID Project will work further on evaluating the potential and consequences of the new market organization structure. In March 2017, the Project initiated donor coordination focused on the progress of assistance provided to NEURC by MERP on incentive based regulation tariff methodology. Representatives from the World Bank, EBRD, Swedish Embassy, and the EU CoM support project attended the meeting. The participants expressed their support of the content of the pricing reform presented by the USAID Project. In March 2017, the Project participated in a meeting with NEURC and the World Bank/SIDA project, which was aimed at reaching better coordination over the activities of projects working on the same incentive based regulation area. As a result of the meeting, NEURC stated it would allocate more efforts to coordinating the work by the two projects. Anti-Corruption During the reporting period the Project engaged civil society and the public sector in the fight against corruption in the energy sector and supported and coordinated a network of organizations capable of identifying corruption in the energy sector and demanding transparency. The network includes civil society groups, anti-corruption “watchdog” organizations, and investigative journalists. Specific activities included the following: Conducting research and preparing analytical materials focusing on anti-corruption issues in the energy and housing and communal services sectors Informing the public about the level of equipment of heat meters: – Based on data provided by NEURC, civil network OPORA produced a series of information materials using infographics on heat meters. Specifically, on January 12, an infographic was published concerning the rate that licensees of NEURC establish building meters of heat in different regions of Ukraine. The material posted in the social networks received over 5,400 views. – In February 2017, civil network OPORA published an infographic, based on MinRegion information dedicated to the level of equipment of apartment buildings with heat meters in the regional section as of February 1, 2017. The infographic’s total coverage was over 6,700 views in social networks. Informing the public about the mechanisms of consumer protection in communal services
34 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT Developing informational materials and distributing information on the ZHYTLO page about potential corruption and/or abuse Moderating the ANTILAPA open group in Facebook. The page collects information on corruption cases and corruption risks in the energy, housing, and communal services sectors. As of the end of the reporting period, the page had 1,675 participants, including famous journalists, civil society activists, and officials. During the reporting period, active contributors left 59 posts devoted to corruption in energy and utilities, or corruption as a phenomenon. Ensuring regular communication and the exchange of information with leading anti- corruption and journalism organizations and advocating for transparency in the energy sector. In particular, this included participation in several public and media events, the presentation and distribution of informational materials related to increasing the transparency of tariff calculations, utility companies’ reporting on investment programs, and increasing the transparency of procurements by utility companies. Gender and Inclusive Development As per contract requirement, MERP ensures that men and women are equally supported through Project activities and that gender awareness and gender dynamics are taken into consideration. Gender issues are cross-cutting for all MERP’s activities. Strengthening women’s roles in the design, implementation, management, and use of sustainable energy solutions is critical for reaching development goals. During the reporting period women were actively involved in Project activities on both national and local levels: 393 persons took part in MERP events, 157 women (40%) and 236 men (60%). MERP works with a wide range of people, assuring inclusive development for all groups of the populace. The Project provides opportunities for everyone to take part in seminars, workshops, roundtables, etc., regardless of age, sex, ethnic origin, health status, family structure, sexual orientation, education, employment, income, housing, food security, safety, or any other dimensions of human diversity. During the reporting period, MERP developed a draft gender impact assessment report. The purpose of the assessment is to analyze and review gender integration in MERP activities. The assessment report will be finalized in Project Q15.
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36 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT C. DELIVERABLES
Fourteenth Quarter deliverables and reports of MERP are as follows: MERP Thirteenth Quarterly Report, October 1 – December 31, 2016 Standard MERP Task Order (MTO) PowerPoint Presentation Basic talking points on main assistance areas (part of MTO PowerPoint presentation) List of MTO accomplishments by tasks and activities MTO Fact Sheet The list of the most important documents and materials produced under MERP during Q14 of the Project is presented in Table 10 below.
Table 10. Most important documents and materials produced under MERP during Q14 of the Project # Activity Task/Subtask Month Report Title Language 1. Activity 1 Task 1.5 January Video – “Energy Saving in Private Buildings” Ukrainian 2. Activity 1 Task 1.5 January Video – “Energy Saving in Apartments” Ukrainian 3. Activity 1 Task 1.5 January Video – “What is an OSBB’s Strength?” Ukrainian Report “Development of Changes to Asset Task 1.2 4. Activity 1 January Valuation Methodology for the Purpose of Ukrainian (Subtask 1.2.3) Incentive Based Regulation” Task 1.2 MERP letter to Mr. Vovk on asset valuation 5. Activity 1 January Ukrainian (Subtask 1.2.3) methodology as of 03 January, 2017 Report “Pilot Survey on Quality of Certain Task 1.2 6. Activity 1 January Types of Utility Services and Consumer Ukrainian (Subtask 1.2.3) Readiness to Pay for Better Quality Services” MERP letter to Mr. Vovk on survey of quality Task 1.2 7. Activity 1 January and consumer readiness to pay, as of 05 January, Ukrainian (Subtask 1.2.3) 2017 Report “Recommendations for Improving Task 1.2 8. Activity 1 January Transparency of Regulatory Decisions on Tariff Ukrainian (Subtask 1.2.3) Formation and Setting” MERP letter to Mr. Vovk on transparency of Task 1.2 9. Activity 1 January making regulatory decisions in tariffs, as of 26 Ukrainian (Subtask 1.2.3) January, 2017 The Procedure/Rules on Accounting by Types of Task 1.2 10. Activity 1 January Licensed activities for entities in district heating Ukrainian (Subtask 1.2.4) sector, Draft MERP letter to Mr. Vovk on accounting Task 1.2 11. Activity 1 January separation by types of licensed activities in Ukrainian (Subtask 1.2.4) district heating, as of 27 January, 2017 The Report “Recommendations on Considering Task 1.2 Ukrainian 12. Activity 1 January Special Aspects about Performance of Utility (Subtask 1.2.3) Companies in Tariff Model” Task 1.2 MERP letter to Mr. Vovk on special aspects in 13. Activity 1 January Ukrainian (Subtask 1.2.3) tariff model, as of 27 January, 2017
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 37 Table 10. Most important documents and materials produced under MERP during Q14 of the Project # Activity Task/Subtask Month Report Title Language Task 1.2 List of Quality Indicators for District Water 14. Activity 1 January Ukrainian (Subtask 1.2.3) Supply and Wastewater Treatment Services Task 1.2 MERP letter to Mr. Vovk on quality indicators 15. Activity 1 January Ukrainian (Subtask 1.2.3) for water and wastewater, as of 27 January, 2017 Draft NEURC letter to State Property Fund on Task 1.2 16. Activity 1 January providing draft amendment to Methodology Ukrainian (Subtask 1.2.3) #293 Task 1.2 Draft amendment to Methodology #293 by State 17. Activity 1 January Ukrainian (Subtask 1.2.3) Property Fund MERP letter to Mr. Mashliakivsky on draft Task 1.2 18. Activity 1 January amendment of methodology asset valuation, as Ukrainian (Subtask 1.2.3) of 27 January, 2017 The Report “Analysis of social norms for consumption of housing and communal services. 19. Activity 1 Task 1.3 February Ukrainian Recommendations on the improvement of the norms” Draft Resolution by Government of Ukraine on 20. Activity 1 Task 1.3 February State Social Standards in the Area of Communal Ukrainian Services MERP letter to Mr. Zubko on social norms’ 21. Activity 1 Task 1.3 February Ukrainian improvement, as of 01 February, 2017 MERP letter to Mr. Reva on social norms’ 22. Activity 1 Task 1.3 February Ukrainian improvement, as of 01 February, 2017 MERP letter to Mr. Savchuk on social norms’ 23. Activity 1 Task 1.3 February Ukrainian improvement, as of 01 February, 2017 Report “Recommendations on Establishment of Task 1.2 Key Performance Indicators in Heating Sector 24. Activity 1 February Ukrainian (Subtask 1.2.4) and on the Initial Data for Assessing the Value of Indicators” MERP letter to Mr. Vovk on key performance Task 1.2 25. Activity 1 February indicators for district heating and the initial data, Ukrainian (Subtask 1.2.4) as of 08 February, 2017 Report “Pilot Survey on Quality of Certain Task 1.2 Types of Utility Services and Consumer 26. Activity 1 February Ukrainian (Subtask 1.2.3) Readiness to Pay for Better Quality Services”, revised MERP letter to Mr. Vovk on survey of quality Task 1.2 27. Activity 1 February and consumer readiness to pay, as of 27 Ukrainian (Subtask 1.2.3) February, 2017 Concept Strategy for Introduction of Competition in District Heating Sector 28. Activity 1 Task 1.1 February English (Generation) in Ukraine, Presentation for Donors’ meeting, in .ppt and .pdf (2 documents) List of Quality Indicators for District Water Task 1.2 29. Activity 1 March Supply and Wastewater Treatment Services, Ukrainian (Subtask 1.2.3) revised MERP letter to Mr. Yevdokimov on revised list Task 1.2 30. Activity 1 March of service quality indicators for wastewater, as of Ukrainian (Subtask 1.2.3) 03 March, 2017 31. Activity 1 Task 1.2 March The Procedure/Rules on Accounting by Types of Ukrainian
38 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT Table 10. Most important documents and materials produced under MERP during Q14 of the Project # Activity Task/Subtask Month Report Title Language (Subtask 1.2.4) Licensed activities for entities in district water supply and wastewater treatment sector, Draft MERP letter to Mr. Vovk on accounting Task 1.2 32. Activity 1 March separation by types of licensed activities in water Ukrainian (Subtask 1.2.4) and wastewater, as of 09 March, 2017 Analytical Report on International Experience Task 1.2 over Thermal Energy Generation Pricing 33. Activity 1 March English (Subtask 1.2.3) Regulatory Methods under Incentive Based Regulation Analytical Report on Rate of Return Practice for Task 1.2 Incentive Based Regulation in District Heating 34. Activity 1 March English (Subtask 1.2.3) and District Water Supply and Wastewater Treatment Sectors Introduction of Incentive Based Regulation in Heating sector and Centralized Water Supply Task 1.2 and Sewage Sector, in the Framework of the 35. Activity 1 March English (Subtask 1.2.3) Implementation of the USAID Municipal Energy Reform in Ukraine Project, Presentation for Donors’ meeting, in .ppt and .pdf (2 documents) 36. Activity 1 Task 1.5 March Videos – Your Home 2. Episodes 15-24 Ukrainian Outdoor public service announcement (PSA) -6 37. Activity 1 Task 1.5 March Ukrainian graphic posters 38. Activity 1 Task 1.5 March “Tariffs Explained” leaflet Ukrainian International experience to support “Green” Energy and Waste-to-Energy in Municipalities, 39. Activity 2 Task 2.6 March Ukrainian Presentation in .pptx and .pdf formats (2 documents) Presentation “International examples of supporting “green energy” (district heating) 40. Activity 2 Task 2.6 March English projects in municipalities”, Presentation in .pptx and .pdf formats (2 documents) Report on Methodology for Monitoring and 41. Activity 2 Task 2.2 March Assessment of State Energy Efficiency Loans Ukrainian Compensation Program MERP letter to Mr. Savchuk on methodology to 42. Activity 2 Task 2.2 March monitor “warm credits” program, as of 09 Ukrainian March, 2017 Energy Audit reports on 40 public buildings in 43. Activity 2 Task 2.5 January Ukrainian the city of Odesa (40 documents) Report on the activities of PEF "OptimEnergo" for January 2017 with the interim report of the 44. Activity 2 Task 2.7 January Ukrainian energy audit CE "Belgorod- Dnistrovskteploenerho" Report on the Energy Audit of the city of Izmail, including recommendations on energy efficiency measures, renewable energy sources and 45. Activity 2 Task 2.7 January investment projects in support of the Ukrainian development and implementation of the Sustainable Energy and Climate Action Plan of the City of Izmail
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 39 Table 10. Most important documents and materials produced under MERP during Q14 of the Project # Activity Task/Subtask Month Report Title Language 46. Activity 2 Task 2.7 January SECAP of the City of Izmail until 2030 Ukrainian Presentations on “Implementation of an energy 47. Activity 2 Task 2.3 January management system in accordance with standard Ukrainian ISO-50001 in Sumy city” part 2, 3 (2 documents) Report on training workshop for the Energy management team of the Education Department 48. Activity 2 Task 2.3 January of the City of Sumy within the energy Ukrainian management system implementation of ISO- 50001 Presentation on “Control of heat consumption by buildings of Department of Education in the city of Sumy: Monitoring, measurement and 49. Activity 2 Task 2.3 January Ukrainian analysis. Discrepancies, correction, corrective and preventive actions. (Standard ISO-50001 p.4.6.1, p.4.6.4)” Energy Audit reports on 12 buildings in the town 50. Activity 2 Task 2.7 February Ukrainian of Bolgrad, Odesa Oblast (12 documents) Energy Audit reports on 12 residential and public 51. Activity 2 Task 2.7 February buildings in the town of Chornomorsk, Odesa Ukrainian Oblast (16 documents) Feasibility study of the project “Comprehensive 52. Activity 2 Task 2.2 February thermal modernization of educational facilities of Ukrainian the city of Ternopil” Preliminary feasibility study of the project 53. Activity 2 Task 2.5 February “Improving the energy efficiency of buildings in Ukrainian the public sector of the City of Odesa” Report “Estimated resource potential of biomass 54. Activity 2 Task 2.7 February Ukrainian for biofuels in Odesa Oblast” Preliminary feasibility study “Calculations of the 55. Activity 2 Task 2.7 February gas and electric performance of the landfill Ukrainian polygon in the city of Odesa” Summary of results of the energy scanning of 50 56. Activity 2 Task 2.5 February Ukrainian public buildings in the town of Kremenchuk. Report “On the preparation of a preliminary feasibility study for improving the energy 57. Activity 2 Task 2.2 February Ukrainian efficiency of 40 public buildings in the city of Ivano-Frankivsk” Report on the activities of OSBB 58. Activity 2 Task 2.5 March (condominiums/housing building cooperatives) Ukrainian resource center for clean energy Improving the energy efficiency of the DH 59. Activity 2 Task 2.7 March Ukrainian system of the town of Yuzhne Preliminary feasibility study “Technical and economic efficiency of the heat pump station 60. Activity 2 Task 2.2 March Ukrainian under construction for sewage treatment facilities in the city of Lviv” Presentation “Increasing the energy efficiency of 61. Activity 2 Task 2.7 March urban water supply systems, wastewater Ukrainian treatment plants, management of solid waste”.
40 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT Table 10. Most important documents and materials produced under MERP during Q14 of the Project # Activity Task/Subtask Month Report Title Language Draft concept of the introduction of a municipal 62. Activity 2 Task 2.7 March energy management system in the town of Ukrainian Yuzhne The results of the meetings and plans for implementing a municipal energy management 63. Activity 2 Task 2.7 March Ukrainian system in the towns of Severodonetsk and Rubizhne. Energy audit of the district heating system of the 64. Activity 2 Task 2.7 March Ukrainian town of Rubizhne Preliminary feasibility study of the project 65. Activity 2 Task 2.7 March "Modernization of Rubizhne town street lighting Ukrainian based on LED lamps" Preliminary feasibility study of the project 66. Activity 2 Task 2.7 March "Modernization of Yuzhne city street lighting Ukrainian through the use of LED lamps" Energy audit of the district heating system of the 67. Activity 2 Task 2.7 March Ukrainian city of Odesa Preliminary feasibility study of Pumping Station 68. Activity 2 Task 2.7 March Ukrainian modernization in the town of Yuzhne Development of the documentation for the 69. Activity 2 Task 2.7 March improvement of energy management in the Ukrainian towns of Rubizhne and Yuzhne Comparative analysis of two methods for 70. Activity 2 Task 2.7 March Ukrainian determining the heat load of the building. Results of preliminary calculations of gas and 71. Activity 2 Task 2.7 March energy performance of the landfill polygon in the Ukrainian city of Odesa. Preliminary modeling assessments of the capacity of greenhouse reduction gas due to certain 72. Activity 4 Task 4.1 February Ukrainian measures from a catalog of policies and actions of low-carbon development strategy 73. Activity 4 Task 4.1 February USAID-sponsored EC-LEDS Study Tour Report English 74. Activity 4 February Presentation “LEDS Update March 2017” Ukrainian Medium Term Government priority actions plan 75. Activity 4 Task 4.1 February Ukrainian till 2020 Progress report on assistance provided to SAEE on the development of “National standardization 76. Activity 4 Task 4.1 March Ukrainian biofuel and bio liquid, greenhouse gas emissions, technical requirements”. Action plan on implementing the Concept of 77. Activity 4 Task 4.1 March state policy in the field of climate change for the Ukrainian period 2030
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42 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT D. SCHEDULES AND MILESTONES
The list of milestones for Q14 of the Project and completion status are presented in Table 11, Table 12, and Table 13.
Table 11. Q14 Milestones for Activity 1: Improve CE Regulatory and Legislative Enabling Environment Completion Task/Milestone Deadline Comments Status Task 1.1: Developing Enabling Legislative and Policy Environment M 1.1.3. Laws on Housing and Communal Mar 31, Not The laws were not Services Commercial metering adopted by 2017 completed considered/adopted by Verkhovna Rada Rada. M 1.1.7. Draft secondary legislation to Jan 31, Completed support implementation of EU Directive 2017 28/2009/EU developed and submitted for discussion and comments Task 1.2: Assistance to NEURC Sub-task 1.2.3. Improving Heat Tariff Setting M 1.2.3.1. Suggestions and Feb 28, Completed Recommendations developed, verified, 2017 agreed with NEURC and sent to State Property Fund of Ukraine M 1.2.3.2. Procedure to establish RAB for Mar 31, Not generating entities is developed 2017 completed
M 1.2.3.4. Methodologies for calculating Mar 31, Not tariffs based on the incentive-based 2017 completed regulation in water & wastewater and district heating improved/developed. M 1.2.3.5. Establishment of tariffs for water & wastewater and district heating based on the incentive based regulation tested and testing results approved by the NEURC. Sub-task 1.2.4. Developing Utility Benchmarking M 1.2.4.1 Rules on accounting by licensed Feb 28, Partially Draft documents developed and type of activity in district heating sector 2017 completed submitted to NEURC enacted by NEURC. M 1.2.4.2. Rules on accounting by licensed type of activity in water & wastewater sector enacted by NEURC.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 43 Table 11. Q14 Milestones for Activity 1: Improve CE Regulatory and Legislative Enabling Environment Completion Task/Milestone Deadline Comments Status Subtask 1.2.2: Capacity Building M 1.2.1.1. Annual Work and Capacity Dec 31, Completed Building plans developed and agreed with 2016 NEURC. Task 1.3: Supporting Improvement of Social Safety Net for Vulnerable Population M 1.3.2. Draft GOU decree on Social Dec 31, Completed norms developed 2016
Table 12. Q14 Milestones for Activity 2: Promote Investment in CE Technologies and Applications Completion Task/Milestone Deadline Comments Status Task 2.2. Assisting Municipalities with Planning, Preparing, and Financing for CE Projects М 2.2.1 SEAPs approved by the city Mar 31, Partially Kyiv, Kryvyi Rih and Pavlohrad are councils. 2017 completed expected to approve SEAPs in Q15 М 2.2.2 Capacities of cities regarding Feb 28, Completed attraction of investment to clean energy 2017 and energy efficiency projects strengthened. Task 2.3. Introduction of Energy Management Systems M 2.3.1. Two cities applied for ISO 50001 Mar 31, Not Cities received comprehensive certification 2017 completed support, but not yet applied Task 2.6. Preparation of Sustainable Energy Public Awareness Plan and Development of Related Materials M 2.6.1. Public events organized to Dec 31, Completed support SEAPs approval. 2016 Task 2.7. Implementing Sub-Activity 2 Tasks in Odesa Oblast and Ukrainian territories affected by the conflict with Russia M 2.7.4 Local capacity built in Municipal Mar 31, Completed Energy Management. 2017
44 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT Table 13. Q14 Milestones for Activity 4: Enhance Capacity for the GOU in LEDS Completio Task/Milestone Deadline Comments n Status M 4.1.1. National GHG Inventory Report Mar 31, Not New deadline is April 30, 2017 for 1990-2015 submitted 2017 completed M 4.1.5. MRV Analytical Report developed Feb 28, Not New deadline is August 31, 2017 2017 completed
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46 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT E. PROBLEMS
The list of key challenges affecting MERP implementation are presented below: Lack of finance and limited capacity at the local (municipal) level prevent effective (rapid) implementation of EE projects identified in SEAPs and affect the implementation of energy management. The macroeconomic situation (e.g., interest rates, currency exchange) has a considerable effect on commercial and international financial institutions lending and investment. There is a lack of political will at the central governmental level to implement tariff-setting methodologies and other regulatory acts (e.g., those that may potentially lead to tariff increases). Despite the above factors, the Project continued making very good progress in accomplishing the SOW and corresponding Work Plan.
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48 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT F. PLANS
F.1 ACTIVITY 1: PLANNED ACTIVITIES IN QUARTER 15 F.1.1 TASK 1.1: DEVELOPING ENABLING LEGISLATIVE AND POLICY ENVIRONMENT Support adoption of the Law on Energy Efficiency in Buildings by Rada (upon request) Support adoption of the Law on Commercial Metering by Rada Support adoption of the Law on Housing and Communal Services by Rada Support implementation of the Law on Housing and Communal Services (upon request of MinRegion and after adoption) Assist SAEE, and other beneficiaries (upon request), to develop primary legal acts for DH market operations and domestic solid biofuel market operations Conduct cost benefit analysis (modelling) to assess potential introduction of DH market based operations for selected cities and utility companies. Discuss the results with donor community, SAEE, MinRegion, and NEURC Assist SAEE, and other beneficiaries (upon request), to develop secondary legal acts for district heating market operations (after primary legislation is adopted) On as needed basis (upon request) provide assistance to MinRegion expert groups to initiate and develop legal and regulatory documents on municipal energy sector reform Assist GOU with implementation of National Action Plan on renewable energy (RE) and/or EE by developing sub-laws, incentive mechanisms, and methodologies F.1.2 TASK 1.2: ASSISTANCE TO NEURC Subtask 1.2.3: Improving Heat Tariff Setting Improve the methodology for valuation of assets of natural monopolies and entities operating in adjacent markets and dealing with co-generation (production of electric and heat energy), with focus on valuation of assets of entities operating in the centralized water supply and wastewater and district heating sectors. The methodology was approved by the State Property Fund of Ukraine on March 12, 2013 (Resolution #293). Develop the procedure for determining of the regulatory base of assets for entities dealing with production of heat energy Develop methodological recommendations on the long-term business plans (investment programs) for licensees Improve existing legislation on incentive-based tariff regulation NEURC Resolutions #356, #357; #550). Develop the tariff calculation methodology based on the principles of the incentive based regulation for heat energy generation Develop and implement the service quality regulation system for centralized heat and water supply and wastewater sectors
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 49 Subtask 1.2.4. Developing Utility Benchmarking Develop rules/regulations on accounting by licensed type of activity by entities (incentive-based regulation) Assist the NEURC to develop regulatory reporting forms for licensees operating in the heating and centralized water supply and wastewater sectors who shifted to incentive- based regulation (or to improve the existing forms) Develop and implement benchmarking for determining the performance indicator to be set by a regulatory authority as a task for gradual reduction of unproductive costs F.1.3 TASK 1.3: SUPPORTING IMPROVEMENT OF SOCIAL SAFETY NET FOR VULNERABLE POPULATION Develop concept paper for transition to monetized targeted assistance to consumers of housing and utility services F.1.4 TASK 1.4: SUPPORTING EE STANDARDS Support development of State Standards of Ukraine aimed at implementation of Directive 2010/30/EU of the European Parliament and Council of 05/19/2010 Support introduction of energy management (ISO 50001) and energy audit (ISO 50002) standards in Ukraine F.1.5 TASK 1.5: PUBLIC INFORMATION AND AWARENESS Develop outdoor materials and video PSAs, as well as advertisements for social media on issues related to: – Energy efficiency – Benefits of HOA creation – State and municipal loan compensation program for EE measures – Other topics upon requests from MinRegion, SAEE, MinSocPolicy, GOU Develop information materials on: – Energy efficiency – Investments into EE in residential sector (state and municipal programs) – Incentive based tariff regulation (understanding of these steps is a guarantee of effective work of communal enterprises) – Social protection measures for low income consumers – Monetization of communal subsidies as a tool to stimulate EE in residential sector Preproduction of a third season of TV Program “Your Home” to promote themes of CE/EE; HOAs as agents for EE reform in residential sector; EE loan compensation opportunities; explain changes related to tariff reform and social safety net; highlight results and progress of EE reform in residential sector due to the work of USAID/MERP, partners and of a third season of TV Program “Your Home” Support expert briefings for media on range of story options, including benefits of EE in residential sector, AE resources, benefits of HOAs, and incentive-based tariff reform
50 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT Hold regional workshops in alliance with SAEE to educate journalists and communications personnel at MERP partner city administrations on issues related to CE/EE, benefits of HOAs to involve them in energy education reform and to stimulate them to work with public on these issues Disseminate range of information related to CE/EE, social safety net, and tariff reform through: – TV and radio – Roundtables and expert opinions – Call-in shows – Analytical articles in electronic and printed media Promote topics through social media, MERP websites, partners’ web sites, and Facebook pages. Cooperate with local HOA/CE Resource Centers; communal service enterprises; Regional Social Protection Offices; Association of Ukrainian Cities (AUC) regional, local NGOs; MERP partner cities to distribute information materials among residents of municipalities Cooperate with manufacturers of EE materials and equipment, such as Henkel, Danfoss, Rehau, Vekka, and others to enhance outreach campaign on EE in MERP partner cities through: – Support of information/exhibition corners at HOA/CE Resource Centers – Conducting joint public events Support wide outreach campaign through range of activities in partner cities, such as Energy Efficiency Days, USAID Field Days, Sustainable Energy Weeks, etc. Support telephone hotline and develop range of materials to educate citizens on benefits of ownership (HOAs development) as primary motivating force for energy savings in residential buildings; state/municipal loan compensation programs on EE measures; counselling regarding EE measures implementation, their order, saving potential from each, etc. F.2 ACTIVITY 2: PLANNED ACTIVITIES IN QUARTER 15 F.2.1 TASK 2.2: ASSISTING MUNICIPALITIES WITH PLANNING, PREPARING, AND FINANCING FOR CE PROJECTS Provide assistance in adoption of SEAPs for MERP partner cities Conduct trainings for partner cities in energy audits of public buildings (application of GOU standard) in conjunction with Task 2.7 activities Disseminate information on investment opportunities in partner cities to international financial institutions, private sector, and governmental institutions responsible for implementation of EE agenda Produce a quarterly digest on investment opportunities and best practices and disseminate the digest among key stakeholders
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 51 Conduct workshop on expanding scope of functions of Clean Energy Advisory Centers (CEACs) to attract investments for clean energy projects in residential buildings. Assist CEACs with legal, technical, economic, ecological, and other key issues regarding attraction of investments to clean energy projects in residential buildings Prepare investment proposals (pre-feasibility studies, business plans, design documentation) for EE and CE projects for partner cities On as needed basis provide post-signing assistance (e.g., preparation of technical specifications and capacity building) to project implementation units in partner cities Support implementation of CE demonstration projects in residential buildings by providing technical assistance, developing design documentation F.2.2 TASK 2.3: INTRODUCTION OF ENERGY MANAGEMENT SYSTEMS Support certification of cities in energy management in accordance with ISO 50001 Organize dissemination of this experience to other cities in region through roundtables, webinars, and other dissemination tools F.2.3 TASK 2.4: DCA LOAN GUARANTEE Conduct monitoring of utilization rate of USAID DCA with Bank Lviv When requested by the Bank, conduct training (capacity building) seminars with Bank Lviv When requested by the Bank, conduct analysis of project proposals F.2.4 TASK 2.5: SUPPORT MECHANISMS THAT MOBILIZE PRIVATE SECTOR INVESTMENT Assist with investment attraction and implementation of municipal energy performance contracts (EPCs) Assist SAEE with conducting training seminars/workshops on EPC mechanism promotion and implementation Assist SAEE with conducting training seminars/workshops on RE promotion and projects implementation Support development of CE projects based on public-private partnership arrangements F.2.5 TASK 2.6: PREPARATION OF SUSTAINABLE ENERGY PUBLIC AWARENESS PLAN AND DEVELOPMENT OF RELATED MATERIALS Hold periodic working group meetings on communication issues to adjust information strategy and assure its successful implementation in cities Assure multifaceted public awareness campaign on EE/AE through development, distribution, and promotion of targeted information materials (posters, brochures, info graphic, PSAs) in MERP partner cities Promote themes of EE/AE; explain changes related to tariff reform through TV and radio Roundtables and expert briefings
52 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT Call-in shows Analytical articles in electronic and printed media Conduct public hearings on SEAP, support Sustainable Energy Weeks and EE Days in MERP partner cities Support web sites of beneficiaries, stakeholders, and partners with information materials Disseminate best practices Develop information materials (brochures/posters, etc.) and conduct set of workshops for MERP partner cities to show potential of various AE sources in their regions F.2.6 TASK 2.7: IMPLEMENTING SUB-ACTIVITY 2 TASKS IN ODESA OBLAST AND UKRAINIAN TERRITORIES AFFECTED BY THE CONFLICT WITH RUSSIA Conduct trainings in energy management for partner localities in Odessa Region and Eastern Ukraine Conduct internationally recognized training and certification in energy management Assist partner cities in Eastern Ukraine and in Odessa region in preparing energy management documentation, procedures, and tools Conduct trainings for partner cities and localities in energy audits of buildings (based on Ukrainian Energy Audits of Buildings (EAB) standard)—in conjunction with Task 2.2 Conduct training and certification of local professionals in energy audits of buildings (based on ENSI methodology and software) Conduct energy audits for key municipal service areas, key utility companies, and public buildings to identify most promising long-term investment proposals, GHG emissions baseline, and reduction potential Assist partner cities with development or improvement of energy plans and present them to stakeholders Conduct public hearings on energy plans (SEAPs/SECAPs) Support approval process for energy plans by cities Develop regional sustainable energy plan for Odessa Oblast with appropriate budget support Prepare investment proposals (business plans, feasibility studies, project descriptions, cost estimates, and other documentation) for EE and CE projects for partner localities Support establishing and/or transfer of Condominium Advisory Centers into CEACs in order to attract investments to clean energy projects in residential buildings Support implementation of demonstration projects promoting clean energy use and energy conservation F.3 ACTIVITY 3: PLANNED ACTIVITIES IN QUARTER 15 F.3.1 CROSS-CUTTING (ANTI-CORRUPTION) Support legislative acts (national and local) designed to fight corruption in municipal energy sector (in coordination with Task 1.1 activities)
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 53 Support local anti-corruption initiatives Support collection, analysis, publication, and distribution of information on anti-corruption Disclose information to public (anti-corruption monitoring) Conduct local press conferences, presentations, and discussions to advocate transparency and disclosure in energy sector Cooperate with NGOs, anti-corruption watchdog organizations, and investigative journalists or agencies in conducting advocacy campaigns to increase transparency in municipal energy and communal services sector F.4 ACTIVITY 4: PLANNED ACTIVITIES IN QUARTER 15 F.4.1 TASK 4.1: STRENGTHENING INSTITUTIONAL CAPACITY IN PLANNING LEDS- REDS Provide technical, expert, and advisory support to budgetary entity “National GHG Center” of MinEcology during desk review process of National GHG Inventory Report 1990–2014 and in energy sector statistics and timeline to National GHG Inventory Center of MinEcology during preparation of National GHG Inventory Report 1990–2015 Provide technical and expert assistance on 7th National Climate Change Communication Report to MinEcology Provide support to MinEcology on implementing Cabinet of Ministers Decree on approval of State Climate Policy Concept and other supporting documentations Provide support to MinEnergy (upon request) on draft Energy Strategy till 2035 development and consultations Provide assistance to MinEcology on LEDS Action Plan development process—draft LEDS policy document, conduct broad stakeholder consultation process, and presentation of the outcomes Develop and support expert discussion of analytical reports on Paris Agreement provisions conducted in accordance with MinEcology request Develop Carbon Sequestration Section of LEDS policy document and contribute to overall drafting of LEDS policy document Support Paris Agreement implementation processes, including Ukrainian Nationally- Determined Contribution (NDC) development and submission to United Nations Framework Convention for Climate Change (UNFCCC) upon request of MinEcology Conduct analysis and develop analytical paper on municipal and installation level of measurement, reporting, and verification (MRV): lessons learned and recommendations Conduct MRV seminar for municipal heating entities in one or two partner cities F.4.2 TASK 4.2: IMPLEMENTING LEDS-REDS THROUGH SUPPORT IN DEVELOPING AND INTRODUCING CE TECHNOLOGIES AND ENERGY SERVICES Advise and support state bodies, existing and emerging high-level working groups, members of Verkhovna Rada, and inter-factional groups and state committees on climate change issues and inclusion of climate change in their agendas
54 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT Provide ongoing technical and administrative support to MinEcology on climate change international activities, including but not limited to UNFCCC process Provide technical and administrative support to State Working Group on LEDS Action Plan under MinEcology. Support GOU working groups to draft relevant legislation for LEDS policies and measures—performed in conjunction with Task 1.1 Provide administrative and technical support to state Inter-agency Commission on UNFCCC implementation meetings F.4.3 TASK 4.3: DEVELOPING UNIFORM DATABASE ON LEDS-REDS AND EXCHANGING EXPERIENCES AND BEST PRACTICES WITH OTHER COUNTRIES PARTICIPATING IN EC-LEDS Conduct satisfaction survey for UA-LEDS database UA-LEDS database population www.lowemission.org.ua and transfer to partner agency The updated list of milestones for Q15 of the project is presented in Table 14, Table 15, and Table 16.
Table 14. Q15 Milestones for Activity 1: Improve CE Regulatory and Legislative Enabling Environment Task/Milestone Deadline Comments Task 1.1: Developing Enabling Legislative and Policy Environment M 1.1.1. Law on Energy Efficiency in Buildings adopted June 30, 2017 by Rada. M 1.1.2. Law on Commercial Metering adopted by June 30, 2017 Rada. M 1.1.3. Law on Housing and Communal Services June 30, 2017 adopted by Rada. M 1.1.5. Laws for DH market operations registered in April 30, 2017 New proposed deadline is September Rada 30, 2017. Task 1.2. Assistance to National Energy & Communal Services Regulatory Commission (NEURC) Sub-task 1.2.3. Improving Heat Tariff Setting
M 1.2.3.2. Procedure to establish RAB for generating May 31 2017 entities is developed M 1.2.3.4. Methodologies for calculating tariffs based Apr 30, 2017 on the incentive-based regulation in water & wastewater and district heating improved/developed.
M 1.2.3.5. Establishment of tariffs for water & wastewater and district heating based on the incentive based regulation tested and testing results approved by the NEURC. Sub-task 1.2.4. Developing Utility Benchmarking Task 1.3. Supporting Improvement of Social Safety Net for Vulnerable Population
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 55 Table 14. Q15 Milestones for Activity 1: Improve CE Regulatory and Legislative Enabling Environment Task/Milestone Deadline Comments M 1.3.1. Recommendations on improvement of the May 31, 2017 subsidy program developed. Task 1.5. Public Information and Awareness M 1.5.1. Public information materials and PSAs on May 1, 2017 EE/CE and social safety nets developed. M 1.5.2. Production and broadcasting of the second April 30, 2017 season of TV Program “Your home” conducted
Table 15. Q15 Milestones for Activity 2: Promote Investment in CE Technologies and Applications Task/Milestone Deadline Comments Task 2.2. Assisting Municipalities with Planning, Preparing and Financing for Clean Energy Projects М 2.2.1 SEAPs approved by the city councils. May 31, 2017 Task 2.3. Introduction of Energy Management Systems M 2.3.1. Two cities applied for ISO 50001 certification May 31, 2017
Task 2.6. Preparation of Sustainable Energy Public Awareness Plan and Development of Related Materials M 2.6.1. Public events organized to support SEAPs May 31, 2017 approval.
Table 16. Q15 Milestones for Activity 4: Enhance Capacity for the GOU in LEDS Task/Milestone Deadline Comments Task 4.1. Strengthening institutional capacity in planning LEDS-REDS M 4.1.1. National GHG Inventory Report for 1990-2015 April 30, 2017 submitted Task 4.2. Implementing LEDS-REDS through support in developing and introducing clean energy technologies and energy services M 4.2.1. LEDS-related inter-factional union established April 30, 2017 and operational
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USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 57 G. PERFORMANCE INDICATORS
Collection Year 1 Year 2 Year 3 Year 4 Total
Unit of Measurement and and Base No. Key Performance Indicator Data Source Reporting line Frequency
Target Actual Target Actual Target Actual Target Actual Target Actual
Project Purpose: Enhanced Energy Security Units: Tons of oil equivalent/per thousand USD Energy Intensity (context 0,69 0,63 0,8 1,0 Sources: GOU (State Statistics Annually9 n/a n/a n/a n/a n/a indicator) 2012 2013 2014 2015 Committee, Ministry of Economy, 0.1 SAEE); World Bank; IEA reports Definition: Energy intensity as units of energy per unit of GDP Justification: Context indicator provided by the USAID Mission. This measures the energy efficiency of a nation's economy. Disaggregated By: N/A Unit: percentage 37.9 34.3 32.6 35 Net energy imports as percent of Sources: GOU (State Statistics 2012/ 2013/ 2014/ 2015/ Annually n/a n/a n/a n/a n/a energy use (context indicator)10 Committee and Ministry of Energy); 30.4 25.9 27.2 31.6 0.2 World Bank; IEA reports 2012 2013 2014 2015 Definition: Ratio of net energy imported and energy used for all economic sectors. Justification: Context indicator provided by the USAID Mission. This measures dependence of Ukrainian economy from imports of energy resources. Disaggregated By: N/A
Unit: metric tons of CO2 equivalent per thousand USD Emission Intensity (context 2.99 2,87 2,72 1,76 Sources: GOU (State Statistics Annually n/a n/a n/a n/a n/a indicator) 2011 2012 2013 2014 0.3 Committee and Ministry of Environment); World Bank Definition: Emission intensity as ratio of GHG emissions produced by Ukraine’s economy to GDP Justification: Context indicator provided by the USAID Mission. This measures the average GHG emission rate from national economic activities.
9 For all context indicators MERP expects a 4 to 7 month lag for FY required M&E Plan reporting of ACTUAL numbers. Municipalities, GOU entities are only available on a calendar year (CY) basis, NOT quarterly, and even then NOT UNTIL CY annual reports are released in March-April time frame. For international organizations’ index data, we expect a lag of 12 months. 10 First number reflects Energy Imports and the second – Net Energy Imports
58 USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT Collection Year 1 Year 2 Year 3 Year 4 Total
Unit of Measurement and and Base No. Key Performance Indicator Data Source Reporting line Frequency
Target Actual Target Actual Target Actual Target Actual Target Actual
Disaggregated By: N/A Unit: Number of people, in 0* thousands *Data Number of beneficiaries with Sources: Implementing partners: collecti improved energy services due to Energy companies / utilities; Annually 0 120 700 23911 580 3,723 400 1,800 on in USG assistance municipalities, Ministry of Regional pro- Development, Construction, Housing cess 0.4 and Communal Services (MinRegion) Definition: This is the number of people who benefit from improved energy services due to USAID assistance. Illustrative examples of improved energy service include a new electricity connection, improved cook stoves, improved access to gas, increased number of hours of electricity service, reduced outages and reduced voltage fluctuations. Justification: This is standard indicator 4.4.1-31. The number of beneficiaries of USAID- assisted energy services indicates increased availability of energy for more rapid and sustained economic growth and social development. Disaggregated By: Geographical unit, gender Objective 1.0: Improved Energy Policies 49.01 Calcula- Unit: Aggregate index based on 25 Index of environmental ted in 79,69 indicators Annually n/a n/a n/a n/a n/a n/a n/a performance (context indicator) 2014 2016 Sources: Columbia University (2012 data) 1.0.1 Definition: Environmental performance index based on the experience of the Yale Center for Environmental Law and Policy (YCELP) and the Center for International Earth Science Information Network (CIESIN) at Columbia University. “Index” as an aggregate of performance indicators, which generally implies conversion to common units (or a unitless scale) and weighted or unweighted aggregation, i.e., averaging, adding, or applying other mathematical operations. Justification: Context indicator provided by the USAID Mission. The strength of the EPI is in its expert consensus-based framework that identifies critical environmental policy issues and calculates scientifically rigorous metrics on a common and comparable scale. Disaggregated By: N/A Number of laws, policies, Unit: Number of documents strategies, plans, agreements or Sources: Implementing partners; regulations addressing climate Ministry of Energy; MinRegion; change and or biodiversity Ministry of Environment; Ministry of Annually 0 2 4 3 5 4 6 3 12 1.0.2 conservation officially proposed, Economy; Rada Committees; adopted, or implemented as a Association of Ukrainian Cities; result of USG assistance NEURC; SAEE Definition: Laws, policies, strategies, plans, agreements or regulations include those measures developed to address climate change and/or biodiversity conservation issues. If a measure is not yet
11 Number of people, in thousands, affected by investments.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 59 Collection Year 1 Year 2 Year 3 Year 4 Total
Unit of Measurement and and Base No. Key Performance Indicator Data Source Reporting line Frequency
Target Actual Target Actual Target Actual Target Actual Target Actual
adopted, it must at least be formally proposed within an official government process to be reported. Justification: This is standard 4.8.2-28 that measures critical adoption of climate change laws, policies, strategies, regulations needed for municipal energy reform. Activities use this indicator to monitor achievement towards targets related to results statements of the adaptation results framework. USG programs aggregate data for this indicator to track progress of the global portfolio towards high-level outcomes of the adaptation pillar. Disaggregated By: Type of documents and their approval stage (based on legal score card)
Sub-objective 1.1 Legislation that supports CE/EE investments is in force Unit: Aggregate Index Under Business Environment for Energy Sources: World Bank Group leads develop Annually n/a n/a n/a n/a n/a n/a n/a n/a Index (context indicator) the preparation of the BEE index in -ment close collaboration with other MDBs by WB 1.1.1 Definition: Business Environment For Energy (BEE) Index (administered by Clean Investment Fund). The BEE index tracks policy indicators related to improving the business environment for investments in renewable energy, energy efficiency, and energy access in each country. Justification: Context indicator provided by the USAID Mission. The BEE index permits the analysis of the progress on enabling environment conditions for each country, as a benchmark for monitoring progress over time. Disaggregated By: N/A Number of policy reforms/ laws/ regulations/administrative Unit: Number of documents procedures drafted and presented for public or stakeholder Sources: Implementing partners; consultation to enhance sector Ministry of Energy; MinRegion; Annually 0 5 13 4 23 4 22 3 16 governance and/or facilitate Ministry of Environment; Ministry of private sector participation and Economy; Rada Subcommittee on Communal Services; Association of 1.1.2 competitive markets as a result of USG assistance Ukrainian Cities; NEURC; NERC
Definition: Number of reforms, regulations, and procedures drafted by USG implementers and discussed with local stakeholders Justification: This is standard 4.4.1-33 FAF indicator that measures critical adoption of policy/procedural improvements needed for sector reform. An improved enabling environment is essential for attracting investment and improving the sustainability of all energy services. Disaggregated By: Type of documents and their approval stage (based on legal score card)
Intermediate result (outcome) 1.1.2.1 Advanced coordination of GOU and donors established Unit: Number of Working Group Number of GOU Working Group meetings meetings assisted by USG to 1.1.2.1 Sources: Implementing partners; Semi-annually 0 8 17 (34) 8 62 8 21 6 21 30 support legal and regulatory Ministry of Energy; MinRegion; municipal energy reforms Ministry of Environment; Ministry of Economy; Rada Subcommittee on
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Unit of Measurement and and Base No. Key Performance Indicator Data Source Reporting line Frequency
Target Actual Target Actual Target Actual Target Actual Target Actual
Communal Services; Association of Ukrainian Cities; NEURC Definition: Number of GOU WG meetings organized and assisted by the project experts to advance improvement of legal and regulatory environment of municipal energy reform. Justification: This is project level indicator measuring project efforts in coordinating GOU agencies in municipal energy reform. Disaggregated By: N/A Advanced e-based donor Unit: Process indicator (S1-S4) coordination platform developed Sources: Implementing partners; Semi-annually 0 S1/S2 S1/S2 S3/S4 S3/S4 S4 S4 S4 S4 and used to support municipal donors energy reform 1.1.2.2 Definition: E-based platform developed to support advanced donor coordination on municipal energy reform. Process indicator: S1 – concept developed; S2 – technically implemented; S3 – training organized; S4 – e-based tool is used Justification: Indicator of improved donor coordination with support of IT-tool. Support and facilitate exchange of agenda, legal and technical documents, public outreach materials and best practices Disaggregated By: N/A Sub-objective 1.2 GOU implement a sound LEDS-REDS Unit: Number of entities Number of institutions with Sources: Implementing partners; improved capacity to address Ministry of Energy; MinRegion; climate change issues as a result Ministry of Environment; Ministry of Annually 0 8 7 8 39 7 9 2 25 of USG assistance Economy; Rada committees; professional associations; 1.2. municipalities Definition: Institutions with improved capacity to address climate change issues have new or increased ability to use new or different approaches, processes, strategies, or methodologies to mitigate and/or adapt to climate change. Measuring improved institutional capacity to address climate change, an initial baseline assessment of the targeted capacity and a post-intervention assessment. Relevant institutions include partner government or regional government institutions (such as ministries, departments, or commissions), private sector entities, local civil society organizations, and trade unions, among others. Justification: This is standard indicator 4.8.2-14 that measures government ability and improved capacity to implement LEDS-REDS Disaggregated By: Type of entities Intermediate result (outcome) 1.2.1. Better understanding of GCC and LEDS-REDS issues Unit: Number of people Number of people receiving Sources: Implementing partners; training in global climate change Semi-annually 0 200 256 200 532 300 418 300 176 1000 GOU entities; municipalities; industry as a result of USG assistance professionals and their associations 1.2.1 Definition: Training is defined as a learning activity for participants involving 1) a setting intended for teaching or transferring knowledge, skills, or attitudes; 2) formally designated instructors or lead persons; and 3) a defined curriculum, learning objectives, and outcomes. This indicator focuses on delivery of training that was made possible through full or partial funding from the USG. This could include provision of funds to pay teachers, providing hosting facilities, or other key contributions necessary to ensure training was delivered. Justification: This is standard 4.8.2-6 GCC indicator that measures increased knowledge on GCC and LEDS-REDS Disaggregated: Gender
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 61 Collection Year 1 Year 2 Year 3 Year 4 Total
Unit of Measurement and and Base No. Key Performance Indicator Data Source Reporting line Frequency
Target Actual Target Actual Target Actual Target Actual Target Actual
Intermediate result (outcome) 1.2.2 Better use of analytical tools for LEDS-REDS Number of GOU and local Unit: Number of entities government entities using TIMES- Sources: Ministry of Energy; Ukraine model or MEIS for MinRegion; Ministry of Environment; Semi-annually 0 8 7 6 7 5 10 1 1 20 planning and projecting GHG Ministry of Economy; municipalities 1.2.2 emission reduction SAEE; SAEI; implementing partners Definition: Number of national and local government entities trained on TIMES-Ukraine or MEIS and able to use model for LEDS-REDS, i.e., SEAPs Justification: Indicator of capacity building on TIMES-Ukraine at the GOU level and MEIS at the municipal level which ensures analytical support for LEDS-REDS Disaggregated By: Type of entities Sub-objective 1.3 GOU apply improved tariff methodologies and target household subsidies Number (and percentage) of Unit: Number of companies GOU-regulated utility companies Sources: NEURC, regulated utilities, that apply cost-reflective, Annually 0 0 0 0 0 10 n/a 90 100 associations of utilities, incentive-based tariff(s) as a result municipalities, implementing partners 1.3.1 of USG assistance Definition: Number of regulated utilities that applied cost-reflective methodology with incentive towards EE investments Justification: Indicator of introduction of cost-reflective tariffs that lead to EE investments in municipal utilities Disaggregated By: Geographic unit Percentage of Ukraine consumers Unit: Percentage served by GOU-regulated utilities Sources: NEURC , regulated that apply cost-reflective, Annually 0 0 0 0 0 2 n/a 18 20 utilities, associations of utilities, incentive-based tariff(s) as a result municipalities, implementing partners 1.3.2 of USG assistance Definition: Percentage of consumers served by regulated utilities that apply new cost reflective incentive based tariff methodology Justification: Indicator of introduction of cost-reflective tariffs that lead to better service to end-consumers Disaggregated By: Geographic unit Intermediate result (outcome) 1.3.2.1 Improved capacity of the Regulator and utilities on developing and using incentive tariffs and benchmarking methodologies Energy market Regulator’s Unit: Process indicator (S1-S4) capacity as a result of USG Sources: NEURC ; municipal Semi-annually 0 S1/S2 S1/S2 S2/S3 S2 S312 S2 S4 S2 S4 assistance utilities; implementing partners 1.3.2.1.1 Definition: National Energy and Communal Services Regulatory Commission improved its capacity to regulate utilities in accordance with the best international practices. Process indicator: S1 – OCA conducted to identify areas for improvement; S2 – Capacity Building Plan prepared and implemented; S3 – Regulatory Information Management System developed and operational; S4 – International Best practices transferred and used
12 USAID cancelled this task.
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Unit of Measurement and and Base No. Key Performance Indicator Data Source Reporting line Frequency
Target Actual Target Actual Target Actual Target Actual Target Actual
Justification: Indicator of capacity building for NEURC; measures progress of improved regulatory capacity to support market reform Disaggregated By: N/A Transparent incentive based tariff Unit: Process indicator (S1-S4) methodologies developed and Sources: NCCSMR; municipal Semi-annually 0 S1/S2 S1/S2 S2 S2 S3 S1-S2 S4 S1-S2 S4 approved by National Regulator utilities; implementing partners 1.3.2.1.2 Definition: Methodologies for cost-recovery incentive tariffs developed with assistance of USG programs. Capacity built for the Regulator, its regional offices and municipal utilities to use them. Process indicator: S1 – Methodologies developed and approved; S2 – Training and capacity building seminars provided; S3 - Methodologies tested on pilot utilities; S4 – Enforcement started Justification: Indicator of introduction and capacity building on new tariff and benchmarking methodologies needed to improve financial and operation performance of municipal utilities Disaggregated: N/A Intermediate result (outcome) 1.3.2.2 Adverse effect of tariff increases on vulnerable population is mitigated Number of people that benefit Unit: Number of people from strengthened social policy Sources: Implementing partners; Semi-annually 0 5,000 2,000 10,000 3,686,048 20,000 11,826,670 25,000 12,839,377 60,000 and improved subsidies system Ministry of Labor; State Statistics 1.3.2.2 (direct, means tested, monetized) Agency; municipalities Definition: Number of people in the cities involved in improved social safety-net protection program developed with USG assistance Justification: Indicator of improvement of subsidies system needed for enforcement of cost-recovery tariffs Disaggregated By: Geographic unit; gender Sub-objective 1.4 GOU applies modern EE standards Number of EE and CE standards Unit: Number of documents 1 developed and approved by the Sources: Implementing partners; 1 developed developed Semi-annually 0 2 2 2 1 2 but not 0 but not 6 GOU as a results of USG MinRegion; MinEconomy; SAEE; approved yet approved 1.4 assistance professional associations yet Definition: Number of EE and CE standards prepared and approved with USG assistance Justification: Indicator of improvement of energy standards in accordance with requirements of Energy Community Disaggregated By: N/A Objective 2.0: Increased Energy Efficiency Unit: Million cubic meters of gas Energy saved as a result of USG Sources: Implementing partners; assistance13 GOU entities; municipalities; private Annually 0 0 0 70 118.7 83 186.7 113 266 2.0 partners; utilities; IFIs; commercial banks Definition: Measures the amount of energy saved through efficiency or substitution measures indicated in SEAPs , LEDS-REDS sectorial strategies and implemented with USG assistance. It takes
13 Indicator targets for Energy Saved use economic and energy price assumptions. If the economic situation changes dramatically (more than 20%, e.g., currency exchange rate), MERP will recommend revision of the proposed targets for this indicator.
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 63 Collection Year 1 Year 2 Year 3 Year 4 Total
Unit of Measurement and and Base No. Key Performance Indicator Data Source Reporting line Frequency
Target Actual Target Actual Target Actual Target Actual Target Actual
into account total savings over a 5-year project life. Justification: Indicator of energy saved from implementation of policy and project measures. Disaggregated By: Geographic unit Sub-objective 2.1 Increased access to CE production and EE improvement services Unit: Number of projects Number of CE/EE improvement Sources: Implementing partners; projects prepared and energy companies / utilities; Annually 0 0 0 6 6 5 27 4 15 implemented as a result of USG municipalities, MinRegion, IFIs, assistance commercial banks and private 2.1 investors Definition: Number of CE/EE projects prepared for IFIs, commercial banks, or private sector investments by project experts, including feasibility studies, business plans, technical specifications, tender documents Justification: Indicator that municipalities and utilities are moving forward productively in preparation of investment proposals and securing funding for making CE/EE improvements Disaggregated By: Geographic unit Intermediate result (outcome) 2.1.1 Sustainable energy planning and energy management introduced 0 Number of low emissions Unit: Number of plans (3 being development strategies developed Sources: Implementing partners; Semi-annually 0 6 improved 5 6 4 9 0 16 15 as a result of USG assistance energy companies / utilities; ; 4 under (LEDS, SEAP, other) municipalities develop 2.1.1.1 ment) Definition: Number of strategic action energy plans developed, completed and presented for approval in 15 cities (in accordance with Covenant of Mayors requirements) with Project assistance. Justification: Indicator that selects municipalities taking productive steps toward developing and implementing a long-term, economically efficient, and environmentally sustainable energy strategy, using where possible renewable energy sources. Disaggregated By: Geographic unit Number of cities involved in Unit: Number of cities energy management as a result of Sources: Implementing partners; Semi-annually 0 6 7 5 15 4 13 0 35 15 USG assistance municipalities and utilities 2.1.1.2 Definition: Number of cities that developed and approved energy management systems based on ISO 50001. Justification: Indicator of energy management systems in the cities to sustain municipal energy reforms Disaggregated By: Geographic unit Sub-objective 2.2 Expanded opportunities for training in CE/EE Unit:: Number of labor-hours in Labor hours of training completed training 2.2 in technical energy fields Sources: Implementing partners; Annually 0 3,680 7,328 3,200 4 8 , 3 5 0 2,400 25,625 1,280 10,560 supported by USG assistance GOU entities; municipalities; industry professionals and their associations
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Unit of Measurement and and Base No. Key Performance Indicator Data Source Reporting line Frequency
Target Actual Target Actual Target Actual Target Actual Target Actual
Definition: This indicator uses the following equation (number of training sessions x number of persons x number of hours) to express the number of USG-supported training hours that were completed by training participants. Justification: This is standard indicator 4.4.1-34. Indicator of capacity building to ensure future ability to reform and sustain the sector reforms. Disaggregated By: Type of person trained; type of training provided; gender Intermediate result (outcome) 2.2.1 Local capacity to implement CE/EE initiatives through direct donor awards is improved Number of local organizations Unit: Number of organizations engaged in capacity building to Sources: Implementing partners; Semi-annually 0 3 5 2 4 0 5 0 5 prepare for receiving direct donor municipalities; NGOs, industry assistance professionals associations 2.2.1 Definition: Number of local NGOs and professional associations involved in training on improved organizational, financial management, HR, and technical capacity to be qualified for USAID and other donor funding Justification: Indicator of capacity building for local NGOs and professional associations to ensure future ability to reform and sustain the sector reforms. Disaggregated By: Geographic unit Sub-objective 2.3 Increased public appreciation of EE benefits Unit of Measure: Percentage of people Public acceptance of energy ≈10 (data Sources: Implementing partners; Efficiency and clean energy is being municipalities; industry professionals Annually 0 5 10 10 10 90.9 25 50 measures as a result of USG collected, associations and CSOs; utilities; assistance survey) 2.3 HOAs associations and Resource Centers Definition: Percentage of people surveyed who express support of a shift to energy efficiency and clean energy measures Justification: Indicator of how USG assistance improved public awareness and support to municipal energy efficiency and clean energy measures in 15 partner cities Disaggregated By: Geographic unit; gender Intermediate result (outcome) 2.3.1 Targeted outreach campaign prepared and implemented Number of events undertaken to Unit: Number of events promote energy-efficient reforms Sources: Implementing partners; and institutionalize a public Semi-annually 0 8 12 15 42 7 34 8 10 30 participation process professional associations; municipalities; GOU entities 2.3.1 Definition: Number of public events undertaken to promote energy-efficient reforms and institutionalize public participation processes. Includes public opinion surveys, conferences, roundtables, high- level discussions, public hearings, public city councils, hearings and public information campaign activities. Justification: Indicator of how USG assistance support public events needed for official and public acceptance for municipal energy reform, i.e., CE/EE plans, programs and project cities Disaggregated By: Geographic unit Objective 3.0: More Private Investment in Energy Sector 3.0 Amount of investment leveraged Unit: Millions of US Dollars Annually 0 0 0 55 71.2 65 112 80 200
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 65 Collection Year 1 Year 2 Year 3 Year 4 Total
Unit of Measurement and and Base No. Key Performance Indicator Data Source Reporting line Frequency
Target Actual Target Actual Target Actual Target Actual Target Actual
in US dollars from private and Sources: Implementing partners; public sources for climate change energy companies / utilities; as a result of USG assistance investors; banks; IFIs; commercial banks Definition: Funding leveraged, as a result of USAID assistance, for climate change programs, that support actions, activities, projects or programs that reduce or sequester GHGs or increase capacity to adapt to the impacts of climate variability and change. Funding may be leveraged from the public sector, e.g., other donors, or private sector financing, e.g., corporate investments, and must be additional to USG funds invested in a program and must advance the objectives established by the USG-supported program. Leveraged funds can include funding transferred to a common funding instrument, delivered in parallel or provided in-kind. Justification: This is standard indicator 4.8.2-10. USG funds are intended to be catalytic and to have sustainable benefits. Sustained private investment is a positive indicator of a supportive enabling environment. Disaggregated By: Geographic unit; investment / lending source Sub-objective 3.1 Reduced GHG emissions Quantity of GHG emissions Unit: 1000 metric tons of CO2 equiv. reduced or sequestered as a Sources: Implementing partners; result of USG assistance in Annually 0 0 0 132 224.5 157 353.2 214 503 municipal utilities; municipalities; energy, industry, urban, and or 14 energy service companies 3.1 transport sectors Definition: This indicator reports the quantity of greenhouse gas (GHG) emissions, estimated in metric tons of CO2-equivalent, reduced, sequestered, and/or avoided, as a result of USG activities, as compared to a baseline level of GHG emissions. Justification: This is mandatory standard indicator 4.8-7. Indicator of GHG emission reduction resulting from all project activities. Disaggregated By: N/A Intermediate result (outcome) 3.1.1 Based on improved GHG accounting, mitigation actions developed National Inventory System Unit: Process indicator (S1-S4) functioning in accordance with Sources: Implementing partners; Semi-annually 0 S1 S2 S2 S3-S4 S3 S3-S4 S4 S4 S4 latest IPCC requirements SAEI; MinEcology 3.1.1.1 Definition: National Inventory System enhanced according to international best practices (IPCC requirements) with expansion to forecasting use and local customization, and deployed. Justification: Proper accounting of GHG is a basis for GHG planning and mitigation. Process indicator: S1 – Gap analysis conducted; S2 – Recommendations prepared; S3 – Enhancement measures developed; S4 – Implementation started Disaggregated By: N/A Number of climate change Unit: Number of tools mitigation tools, technologies and 3.1.1.2 Sources: Ministry of Energy; Min- Semi-annually 0 0 0 2 2 4 5 4 0 10 methodologies developed and Region; Ministry of Environment; adopted as a result of USG Ministry of Economy; municipalities,
14 Indicator targets for quantity of GHG emissions use economic and energy price assumptions. If the economic situation changes dramatically (more than 20%, e.g., currency exchange rate), MERP will recommend revision of the proposed targets for this indicator.
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Unit of Measurement and and Base No. Key Performance Indicator Data Source Reporting line Frequency
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assistance utilities; SAEE; SAEI; implementing partners
Definition: Number of methodologies, technologies and tools developed to support CO2 emission reduction plans and LEDS-REDS implementation Justification: Indicator of development of enabling tools, i.e., methodologies and technologies, for implementation of LEDS-REDS at both national and local levels Disaggregated By: Types of tools Sub-objective 3.2 Increased capacity to identify and use new funding for increasing EE and CE production at the municipal level Unit: Number of loans Number of CE/EE loans (except Sources: Implementing partners; DCA) prepared and executed as a Annually 0 0 0 2 2 2 3 2 6 IFIs, private investors, commercial result of USG assistance 3.2.1 banks Definition: Number of loans for EE and CE projects prepared and executed with assistance of USG Justification: Indicator of attraction of commercial funding for CE and EE projects at the municipal level Disaggregated By: Geographic unit Unit: Ratio of value of loans issued DCA utilization ratio including under guarantee to total value of Under number of loans (for all DCA guaranteed portfolio, in percentage Annually 0 5 calcu- 10 10.59 20 20 20 55 arrangements) Sources: Implementing partners; lation 3.2.2 Commercial banks Definition: Measures utilization of DCA partial guarantee by the partner banks for financing of EE projects Justification: Indicator of utilization of DCA partial guarantee. Used for evaluation of efficiency of DCA program Disaggregated By: Geographic unit Intermediate result 3.2.2.1 New financial mechanisms developed and implemented at the municipal level Unit: Number of mechanisms Number of financial mechanisms Sources: Implementing partners; Semi-annually 0 0 0 2 1 2 2 2 6 6 developed with USG assistance ESCOs, private investors, municipalities 3.2.2.1 Definition: Number of new financial mechanisms prepared and used at the municipal level. It includes concept papers, due diligence documents, and agreements for ESCOs/EPCs, GDAs, PPPs, others for financing of CE/EE projects Justification: Indicator of extension of financial mechanisms for CE/EE projects Disaggregated By: Geographic unit; type of mechanisms Number (and percentage) of GOU- Unit: Number of utility companies regulated utility companies that Sources: Implementing partners; achieve or pass the break-even ESCOs, private investors, Annually 0 0 0 10 186 180 210 233 3.2.2.2 point as a result of USG municipalities assistance Definition: Number of utilities that improved their financial performance as a result of introduction of cost recovery tariffs and participation in capacity building events organized with USG assistance
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Unit of Measurement and and Base No. Key Performance Indicator Data Source Reporting line Frequency
Target Actual Target Actual Target Actual Target Actual Target Actual
Justification: Indicator of improved financial performance of utilities resulted from tariff increase and improved business operation, i.e., implementation of EE investment programs cutting losses Disaggregated By: Geographic unit
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USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 69
U.S. Agency for International Development 1300 Pennsylvania Avenue, NW Washington, DC 20523 Tel: (202) 712-0000 Fax: (202) 216-3524 www.usaid.gov
USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 1