MUNICIPAL ENERGY REFORM PROJECT (MERP) SIXTEENTH QUARTERLY REPORT JANUARY 1 – MARCH 31, 2017
October 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 – SIXTEENTH QUARTERLY REPORT
Key to cover photos:
MUNICIPAL ENERGY REFORM PROJECT (MERP)
SIXTEENTH QUARTERLY REPORT
JULY 1 – SEPTEMBER 30, 2017 CLEAN ENERGY IDIQ: AID-OAA-I-13-00015 Contract: AID-121-TO-13-00006
October 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 – SIXTEENTH QUARTERLY REPORT
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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 ...... 14 B.1 Project Team and Procurement Actions ...... 14 B.1.1 Consulting Agreements ...... 14 B.1.2 Subcontracts ...... 14 B.2 Costs ...... 14 B.3 Environmental Compliance ...... 14 B.4 Progress and Accomplishments By Activity ...... 17 B.4.1 Activity 1: Improve CE Regulatory and Legislative Enabling Environment ...... 17 B.4.2 Activity 2: Promote Investment in CE Technologies and Applications ...... 30 B.4.3 Activity 3: Capacity Building and Dissemination ...... 44 B.4.4 Activity 4: Enhance Capacity for the GOU in LEDS ...... 44 C. DELIVERABLES ...... 48 D. MILESTONES ...... 55 E. PROBLEMS ...... 59 F. PLANS ...... 61 F.1 Activity 1: Planned Activities in Quarter 17 ...... 61 F.2 Activity 2: Planned Activities in Quarter 17 ...... 63 F.3 Activity 3: Planned Activities in Quarter 17 ...... 64 F.4 Activity 4: Planned Activities in Quarter 17 ...... 64 G. PERFORMANCE INDICATORS ...... 69
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT III 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 (USD) ...... Error! Bookmark not defined. Table 4. Status of NEURC Resolutions Prepared with MERP Assistance ...... 23 Table 5. Funding by City under SEAP Measures Implementation ...... 31 Table 6. Projects Included in the Final List for EIB UMIDP ...... 31 Table 7. Summary of Information on the Projects Supported ...... 34 Table 8. Current Project Pipeline ...... 34 Table 9. Current Status of Design and Cost Documentation Development for Residential Sector Demo Projects ...... 38 Table 10. Energy Audits of Public and Residential Buildings in Eastern Ukraine ...... 40 Table 11. Energy Audits of Public and Residential Buildings in Odesa Oblast ...... 42 Table 12. Most Important Documents and Materials Produced under MERP during Q16 of the Project ...... 48 Table 13. Q16 Milestones for Activity 1: Improve CE Regulatory and Legislative Enabling Environment ...... 55 Table 14. Q16 Milestones for Activity 2: Promote Investment in CE Technologies and Applications ...... 56 Table 15. Q16 Milestones for Activity 4: Enhance Capacity for the GOU in LEDS ...... 57 Table 16. Q17 Milestones for Activity 1: Improve CE Regulatory and Legislative Enabling Environment ...... 65 Table 17. Q17 Milestones for Activity 2: Promote Investment in CE Technologies and Applications ...... 66 Table 18. Q17 Milestones for Activity 4: Enhance Capacity for the GOU in LEDS ...... 67
IV USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT ACRONYMS
AE Alternative energy BEE Business Environment for Energy EECU Association of Energy Efficient Cities of Ukraine ARVI Aggregated Recovery Value Indicator CBP Capacity Building Plan CCS Center for Climate Strategies CE Clean Energy CEAC Clean Energy Advisory Center CE RC Clean Energy Resource Center CFR U.S. Code of Federal Regulations CHP Combined Heat and Power CIESIN Center for International Earth Science Information Network CMU Cabinet of Ministers of Ukraine CoM Covenant of Mayors CPFF Cost Plus Fixed Fee CSO Civil Society Organization CTF Clean Technology Fund 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 EFOM Energy Flow Optimization Model EIB European Investment Bank EM Energy Management ENU Eastern Ukrainian National University
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT V EPC Energy Performance Contract ERC Environmental Review Checklist ESCO Energy Service Company EU European Union EUR Euro (currency) GCC Global Climate Change GDA Global Development Alliance GDP Gross National Product GHG Greenhouse Gas(es) GOU Government of Ukraine HOA Homeowners Association HORECA Hotel, Restaurant, Cafe / Catering IEA International Energy Agency IEE Initial Environmental Examination IEEC Institute for Environment and Energy Conservation IEF Institute for Economics and Forecasting IFI International Financial Institution IHS Individual Heating Substation IPCC Intergovernmental Panel on Climate Change IRG International Resources Group KfW Kreditanstalt für Wiederaufbau kWh Kilowatt hour(s) LEDS Low Emission Development Strategies M2 Square meters M3 Cubic meters MARKAL MARKet and Allocation Model MDI Municipal Development Institute M&E Monitoring and Evaluation MERP Municipal Energy Reform Project MinEcology Ministry of Ecology and Natural Resources MinEconomy Ministry of Economy
VI USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT MinEnergy Ministry of Energy MinJustice Ministry of Justice MinRegion Ministry of Regional Development, Construction, Housing and Communal Services MinSocPolicy Ministry of Social Policy MMP Mitigation Measures Plan MRV Monitoring, Reporting, and Verification MTO MERP Task Order MWh Megawatt hours MW Megawatts NECSRC National Energy and Communal Services Regulatory Commission NEURC National Energy and Utility Regulatory Commission NEFCO Nordic Environment Finance Corporation NGO Nongovernmental Organization OPORA All Ukrainian Public Organization “Civic Network OPORA” PEST Political, Economic, Social, Technological analysis PPP Public-Private Partnership PSA Public Service Advertisement/announcement Q Quarter RC Resource Center RE Renewable Energy REDS Resource Efficiency Development Strategies REP Regional Energy Plan 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 SME Small and Medium Enterprises SMM Social Media Marketing SoW Scope of Work SWOT Strengths, Weaknesses, Opportunities, Threats analysis
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT VII TIMES The Integrated MARKAL-EFOM System MEIS Municipal Energy Information System TA Technical Assistance T&M Time and Materials UAH Ukrainian Hryvna (currency) UMIDP Ukrainian Municipal Infrastructure Development Program UNFCCC United Nations Framework Convention for Climate Change USAID United States Agency for International Development USD United States dollar (currency) VR Verkhovna Rada, Supreme Council of Ukraine WB World Bank YCELP Yale Center for Environmental Law and Policy
VIII USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT
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USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT IX
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, a subsidiary of RTI International, 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 the increased production of clean energy (CE) in large towns and cities will reduce the consumption of conventionally produced 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 the 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 CE/EE in cities by assisting municipalities with: Planning, preparing, and financing CE projects Introducing energy management (EM) systems Supporting the implementation of Development Credit Authority (DCA) loan guarantees Supporting mechanisms that mobilize private sector investment, 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 July 1, 2017, through September 30, 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 (M&E) plan.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 1
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2 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT A. SUMMARY OF PROGRESS AND ACCOMPLISHMENTS
The overall objective of MERP 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 conventionally produced energy while cutting GHG emissions, energy expenditures, and overall energy imports (i.e., natural gas from Russia). Under Activity 1, the Project continued supporting GOU and the Ukrainian parliament in approving key legislative and regulatory acts related to municipal energy reform. Law on Commercial Metering of Heat Energy and Water Supply On June 22, 2017, the Verkhovna Rada (VR) adopted the Law of Ukraine on Commercial Metering of Heat Energy and Water Supply.1 After adoption of the law, The Ministry of Regional Development, Construction, Housing and Communal Services (MinRegion) requested the Project’s assistance in supporting development of secondary legislation to support implementation of the law. According to the law, 16 pieces of secondary legislation (by-laws) are to be developed and adopted. The Project started supporting development of the drafts, “Methodology on Allocation of Consumed Services in the Building to Individual Consumers” and “Order for Taking on Record Customer Meters.” Law on Housing and Communal Services During the reporting period, a draft bill was on the agenda of several VR plenary meetings, but it was not considered by the VR. Law on EE of Buildings On July 20, 2017, the President of Ukraine signed the Law of Ukraine on Energy Efficiency of Buildings. The law was developed with USAID MERP support. National Energy Strategy until 2035 In August 2017, the Cabinet of Ministers of Ukraine (CMU) approved the Energy Strategy of Ukraine until 2035: Security, Energy Efficiency, Competitiveness. The Strategy envisions almost 50 percent reduction in energy consumption by the Ukrainian economy by 2030 and significant increase in national energy production through renewable energy (RE) sources—up to 25 percent of energy shall be generated using RE by 2035. Prime Minister Mr. Volodymyr Groysman expressed gratitude to all partners involved in development of the strategy. USAID MERP worked on selected areas of the draft strategy.
1 The name of the law is different from the name of draft bill Commercial Metering of Communal Services. http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=59553
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 3 Concept for the Implementation of State Policy in the Field of Heat Supply In August 2017, the CMU approved the Concept for the Implementation of State Policy in the Field of Heat Supply, aimed to reduce the consumption of natural gas and other energy resources for the production of heat energy, financial recovery, and attraction of new investment to the sector, and introduction of a transparent, efficient system of payments between the participants of the heat energy market. The Project supported development of the concept. Municipal Energy Sector Reform In July 2017, CMU adopted the resolution, "On Amendments to Item 23 of the procedure for the distribution of funds transferred to the current accounts with special use regime used for payments to natural gas supplier entrusted with special responsibilities."2 The resolution allowed district heating (DH) utilities to unlock financing of investment programs, including those funded by international financial institutions (IFIs). MERP supported these changes by providing analytical inputs. DH and Biomass Market Development Following the adoption of the Law on Heat Supply earlier this year,3 the CMU approved the “Methodology of estimation of weighted average tariffs, where natural gas is used for thermal energy production, transport and supply, for population, institutions and organizations financed from state or municipal budgets”. The State Agency on Energy Efficiency and Energy Saving of Ukraine (SAEE) calculated and published weighted average tariffs for thermal energy produced using natural gas in relevant administrative regions (Oblasts). These changes to the Law on Heat Supply were implemented before the 2017–2018 heating season started, facilitating transition from fossil to alternative fuels in the thermal energy generation segment. MERP engaged in the task of modeling real DH systems. The modeling effort aims to assess the technical potential to integrate and optimize the existing systems, and to evaluate costs and benefits of integration and optimization, including potential access of third parties to the networks. MERP provided SAEE with the analytical reports, Best International Practices to Organize Market of Solid Biofuels in Europe and Legal Barriers Preventing Development of Market for Solid Biofuels in Ukraine. Both reports are intended for use in drafting a legislative package for solid biofuels market establishment in Ukraine. Assistance to NEURC Capacity Building During the reporting period, the Project organized three seminars for the National Energy and Utility Regulatory Commission (NEURC) and licensees from partner cities. The seminars were dedicated to incentive tariff setting in DH and water sectors, and reporting for water sector utilities. IFI Loans NEURC intensified work related to approval of IFI loans attracted by licensees operating in the heating sector. In August 2017, as part of public consultation process, NEURC’s placed relevant resolution on its website.4 The Project provided its comments to NEURC on the draft resolution.
2 http://www.kmu.gov.ua/control/ru/cardnpd?docid=250136716 3 USAID MERP supported the development of the Law on Heat Supply (adopted in March 2017). 4http://www.nerc.gov.ua/data/filearch/Proekty/poekty_oznaky_regulatornyh_aktiv/2017/pr_274/pr_274_09.08.2017.pd f.
4 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT The comments reflected the necessity to incorporate provisions of draft documents, which were developed by MERP and submitted to MinRegion and NEURC. Development of Service Quality Monitoring Methodology Heating Sector During the reporting period, the Project finalized work on the list of indicators applicable to the heating sector. In August 2017, the list of indicators, which took into account NEURC comments, was submitted to the regulator. The task is completed. The Project continued assistance to NEURC in developing reporting forms for monitoring service quality indicators and tools for automated monitoring quality in the heating sector. Support Changes to the Asset Valuation Methodology for Natural Monopolies in the DH and Water and Wastewater Sectors Valuation of Assets: Heating Sector During the reporting period, the Kyiv-based company, Kyivenergo, concluded an agreement for development of aggregated recovery value indicators (ARVI) for heat energy transportation. The valuation of assets for three DH companies is to be completed in October 2017. As the next step, final changes should be made to the asset valuation methodology. Valuation of Assets: Centralized Water Supply and Wastewater treatment Sector Regarding ARVI development and pilot evaluation of assets of water supply and sewage companies, no progress can be reported during the period. As of the date of this report, water supply and sewage companies had not taken a decision to finance the evaluation. Improvement of Regulatory Reporting Forms In August 2017, the reporting forms #13-water supply, “Report on indicators for reliability of water supply and quality of potable water” and #14-water supply/sewage “Report on indicators for commercial quality of centralized water supply and (or) sewage services”5 took effect. In September 2017, NEURC Resolution #717 On approval of the rules on reports submitted to NEURC by subjects operating in district heating and centralized water supply and sewage sectors took effect. The Project assisted NEURC in developing draft resolutions. Assist NEURC in the Gradual Introduction of Incentive Tariff Regulation for Heating and Heating Sector In July 2017, NEURC adopted the package of four draft resolutions on incentive-based regulation in DH (Tariff Formation Order, Tariff Setting Procedure, Determining Rate of Return, and Order for Determining the Regulatory Base of Assets). MERP assisted NEURC with the development of the package. During the proceedings, the Chair of NEURC publicly thanked the Project for its support in developing the incentive-based regulatory package for thermal energy transportation. The resolutions will take effect after official publication. Centralized Water Supply and Wastewater Treatment Sector In September 2017, NEURC adopted the package of four resolutions establishing incentive- based regulation in the centralized water supply and sewage sector (Tariff Formation Order, Order for Determining Rate of Return, Tariff Setting Procedure, and Order for Determining the Regulatory Base of Assets). The USAID Project assisted NEURC with the development of the
5 http://www.nerc.gov.ua/?news=6366.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 5 package. The Chair of NEURC publicly thanked the USAID Project for its assistance; The Vice- minister of MinRegion expressed full support for the adopted incentive-based regulation. The resolutions will take effect after official publication. Development of a Mechanism to Use Benchmarking Indicators Based on an Analysis of Best International Practice Heating Sector MERP revised the report, Recommendations on Establishment of Key Performance Indicators in Heating Sector and on the Initial Data for Assessing the Value of Indicators, to address comments provided by NEURC, and submitted the report to the regulator for review. The Project completed preparation of first draft of the report, Benchmarking of Utility Companies Operating in the Heating Sector. Develop Methodological Recommendations on Accounting for Licensed Types of Activities In September, NEURC organized a public hearing for draft of Procedure (Rules) for separated accounting by type of licensed activity for the DH sector (cost plus methodology). The Project developed the draft NEURC resolution. It is expected that NEURC will adopt the draft resolution in October 2017. Improvement of Regulatory Reporting Forms In September 2017, NEURC Resolution No. 717 On approval of the rules for reports which entities operating in district heating and centralized water supply and sewage sectors submit to NEURC took effect. The resolution was developed by NEURC with the Project’s assistance. The resolution establishes new reporting forms for NEURC licensees. Centralized Water Supply and Sewage In June 2017, the Project submitted to NEURC the final draft of the Rules and Procedures of Accounting by Licensed Type of Activity in the Centralized Water Supply and Sewage Sector. On September 8, 2017, following review by NEURC, the document was posted on NEURC’s website6 for public consultation. During the reporting period, the Project also started revision of Procedure/Rules for accounting by licensed type of activity in the heating sector and Procedure/Rules for accounting by licensed type of activity in DH and centralized water supply and sewage sector for reflecting the accounting specificities for the companies that will transition to incentive-based regulation. Supporting Improvement of the Social Safety Net for the Vulnerable The Project finalized and submitted to Ministry of Social Policy (MinSocPolicy) the report, Concept for the Transition to Monetized Social Assistance. The report provides four possible scenarios for subsidies system development: (1) preserving the status quo; (2) partial monetization to unused amounts; (3) partial monetization to eliminate offset payments; and (4) full monetization.
6 http://www.nerc.gov.ua/?news=6458, item 21
6 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Public Information and Awareness Campaign MERP Campaign Results and Recognition According to the results of a survey conducted by Kyiv International Institute of Sociology,7 from 85.6 to 86.9 percent of the adult population of Ukraine strongly supports or rather supports Energy Efficiency and Clean Energy measures. More than 18 percent of the adult population of Ukraine could recognize MERP information materials, and over 20 percent of Ukrainians saw at least one episode of the TV program, Your Home. Adjusting Communication Strategy to Current Priorities MERP held several working group meetings on communications issues, attended by the representatives of the GOU, SAEE, and nongovernmental organizations (NGOs). A separate meeting was dedicated to major aspects of the newly adopted Law on Commercial Metering of Heat Energy and Water Supply. The law came into force and immediately public and media generated a number of myths. To dispel the most prevalent myths related to the law, the MERP team created a question and answer publication and a number of infographic posters that were distributed through official websites and Facebook pages of the CMU, MERP, and the Zhytlo web portal. Video PSAs The Project started production of series of new public service advertisements (PSAs). This time, the campaign will educate consumers of communal services about their rights and the possibilities for the implementation of EE/alternative energy (AE) measures, installation of metering equipment, verification of energy consumption, and use of “warm loan” programs to improve EE in the residential sector. The PSAs will be broadcast through regional and national TV channels, placed in social media marketing (SMM) and online versions of printed media outlets, and on MERP and partners websites, including the governmental portal (teplo.gov.ua). Your Home TV Program The Project team developed a new format and concept, prioritized topics, and completed the production of a pilot episode of the third season of the Your Home TV program. The pilot was approved by the UA-One TV Channel8 for broadcast through their network on a free-of-charge basis. The new season will include 15 episodes, which will be on the air during prime time (7:00 pm) of UA-One TV Channel every Thursday. Two previous seasons of the Your Home program included 54 episodes. According to UA-One channel ratings, the program was in the top 10 most popular programs of the channel. In addition, Your Home was broadcast over 35 Ukrainian regional TV channels with an audience of 4.7 million people. Promotion of “Warm Loans” Program Outreach Materials During the reporting period, MERP and SAEE continued promoting the “warm loans” program. In particular, the brochure, Energy Saving: What to Do and Where to Get Money? was updated. Over the course of the Project, over 140,000 copies of this brochure were printed (including
7 The survey was conducted with Project support in September 2017 and covered 110 cities and villages in all oblasts of Ukraine. 8 UA-One is the national channel, covering all geographical regions of Ukraine with a potential audience of approximately 10 million people.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 7 100,000 by SAEE and partners) and distributed by SAEE and MERP in partner cities and throughout Ukraine. Hotline on EE/AE During the preceding year, the MERP hotline served about 8,312 clients, half of them during the last quarter, which exceeds by 25 percent the number of Ukrainians who used services of the state counseling line on EE. During August, the hotline beat the record with almost 1,000 calls. Educating Journalists on EE/AE and Correct Terminology During the reporting period, the USAID Project conducted four trainings for journalists entitled Key Information on Energy Efficiency in Media. This time, interactive educational sessions and press-tours took place in Dnipro, Lviv, Odesa, and Zaporizhzhia and gathered about 90 journalists from MERP partner cities and regions. Public Outreach Materials and Events to Support Energy Sector Reform As of September 30, 2017, the Project team disseminated 323,000 brochures and posters9 to raise awareness about EE/AE, tariff regulation, and homeowner association (HOA) creation and management. Informational materials were developed and/or updated, printed, and published on the MERP website. 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). Monitoring of SEAPs Implementation for Partner Cities In September, MERP, jointly with EU CoM East Project, organized the training, Reporting Procedures for Covenant of Mayors, which included: Reporting Objectives and Tasks, Monitoring the Emission Cadaster, and Reporting on the Implementation of the SEAP. Investment Mobilization under SEAPs Implementation As of the end of the reporting period, the cities mobilized (actual and planned investments) approximately US dollars 153 million for SEAP implementation during calendar years (CY) 2015–2017. Investment Mobilization: New Projects Development MinRegion issued the finalized list of potential beneficiaries of the European Investment Bank’s (EIB) Ukrainian Municipal Infrastructure Development Program (UMIDP).10 Five projects in the category of Energy Efficiency in the Buildings were prepared by the USAID Project. The preparation covered energy audits of over 240 public buildings and preparation of in-depth prefeasibility studies. The total value of these projects is over USD 78 million, or about 14 percent of funding envisioned under the loan program. The projects envision monetary savings of USD 5.2 million and CO2 emissions reduction of 31,212 tons on an annual basis. As of the end of the reporting period, the Project mobilized funding for 13 new projects valued at USD 96.8 million, with estimated annual CO2 emissions reduction of 200,000 tons.
9 Does not include infographics and analytical materials/publications. 10 http://www.minregion.gov.ua/napryamki-diyalnosti/international-cooperation/internat-cooperation/do-uvagi- potentsiynih-uchasnikiv-spilnogo-z-yeib-proektu-programa-rozvitku- munitsipalnoyi-infrastrukturi-ukrayini-shhodo-zatverdzhennya-poperednogo-pereliku-proektiv-prmiu/
8 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Kropyvnytskyi In July 2017, the Project signed a memorandum of understanding with the city of Kropyvnytskyi. The memorandum envisions a specific area of focus, assistance in preparation of feasibility studies for attraction of investments in EE and AE sources. Kremenchuk In September 2017, Mayor of Kremenchuk Vitalii Maletskyi, at the meeting with European Bank for Reconstruction and Development (EBRD) directors, announced 11 that the city plans to support thermal modernization of public buildings in Kremenchuk, including schools, kindergartens, and hospitals. The city is expected to secure funds for up to USD 12 million from the EBRD, a grant from the Eastern Europe Energy Efficiency and Environmental Partnership (E5P), and support from the Clean Technology Fund (CTF). The prefeasibility study for thermal modernization project in Kremenchuk City was developed as part of cooperation between the city, EBRD, and MERP. Zaporizhzhia In September 2017, the Project conducted a meeting with Kreditanstalt für Wiederaufbau (KfW) technical experts to discuss further support to the thermomodernization of public buildings project planning. The City of Zaporizhzhia was identified as the top candidate for up to USD 30 million in loans, with the priority given to thermomodernization of the public buildings. MERP finalized the prefeasibility study for project on installation of individual heating stations in the buildings of the Aleksandrovsky, Voznesensky, Dniprovsky and Komunarivsky districts of the city of Zaporizhzhia. The project, valued at about USD 15 million, envisions installation of 1,030 individual heating substations in public, residential, and tertiary buildings. The estimated energy savings (natural gas and electricity) are about 12,000 kilowatt hours (KWh) on an annual basis. Kryvyi Rih MERP finalized a prefeasibility study for the potential IFI-funded project on improving the energy efficiency of buildings of the budget sphere of Kryvyi Rih. The project covers implementation of EE measures in 50 public buildings. The study covers three alternative packages (options) valued between USD 4 and 25 million, depending on the set of measures to be implemented and funding sources. Chernihiv The Project started work on the feasibility study for modernization of the electric transport sector, which will enable the city to mobilize and utilize a euro (EUR) 6.1 million loan (~USD 7 million) from EIB. In total, the pipeline includes 87 projects (based on requests from the cities), including 61 active12 projects (valued at ~USD 479 million). Post-signing Support At the end of the reporting period, MERP was instrumental in providing post-signing support to five IFI-funded projects valued at approximately USD 74 million. The funding organizations for these projects are EBRD, World Bank (WB), and the Nordic Environment Finance Corporation (NEFCO).
11 https://kremen.gov.ua/index.php/news/main/8806 12 Project proposals developed and under development.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 9 Development of the Catalogs of Investment Projects During the reporting period, MERP developed project proposals for the Catalogue and Investment Strategy of Kramatorsk. Development of the concept of the project for increasing effectiveness of public transport of Kramatorsk During the reporting period, the Project developed the Concept Paper for Increasing Effectiveness of Public Transport of Kramatorsk. This comprehensive document includes in- depth analysis of the existing public transportation system and measures (projects) aimed to increase its efficiency, decrease CO2 emissions, and improve quality of services provided to the public. Funding Mobilized for Residential EE As a result of the joint MERP and SAEE campaign on “warm loans” promotion and other program support actions, 261,367 loans (valued at ~USD 183.6 million), including 237,360 loans for EE equipment and materials (valued at ~USD 158.5 million) and 1,224 loans to HOAs, had been issued under the State Program to support residential EE.13 Before the campaign began in June 2015, such loans had been taken by only 3,984 households and one HOA for Ukrainian hryvna (UAH) 71 million (less than USD 3 million). Introduction of Energy Management Systems In April 2017, CMU adopted the resolution,14 On approval of a plan of implementation of energy management in budget institutions. The Project assisted with implementing this plan. In August 2017, SAEE officially issued a report containing inter alia recommendations to local authorities on the implementation of the EM system in public buildings via its website. The recommendations make provisions on: (i) Introduction of EM systems in budget institutions funded at the expense of local budgets; (ii) Monitoring of consumption of fuel and energy resources by budgetary institutions; (iii) Material incentives for those responsible for implementing EM systems in budget institutions; and (iv) Establishment of energy consumption limits by budgetary institutions. The implementation of the EM system will enable energy savings ranging from 5 to 8 percent due to energy-efficient consumer behavior, and up to 20 percent reduction of power consumption due to the establishment of energy-efficient operation of facilities without additional investment. The report and recommendations were developed by MERP in cooperation with SAEE.15 Development Credit Authority (DCA) Loan Guarantee As of the end of the reporting period, Bank Lviv had received 47 applications and issued 22 loans for a total of UAH 9.684 million, EUR 1.95 million, and USD 0.55 million (total value of ~USD 3.024 million). During the reporting period, the bank issued three loans to local SMEs. Cumulative Utilization Percent of DCA guarantee according to the Bank’s Credit Monitoring System is 37 percent.
13 As of September 30, 2017. 14 http://www.kmu.gov.ua/control/uk/publish/article?art_id=249947129&cat_id=244276429 15 http://saee.gov.ua/uk/news/1923, http://saee.gov.ua/sites/default/files/ENERGY_MANAGEMENT_14_08_2017.docx
10 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Support Mechanisms That Mobilize Private Sector Investment Cooperation with Ukrgasbank to Attract Investments in EE and AE Projects In July 2017, MERP and Ukrgasbank signed the memorandum of understanding on cooperation. Through joint efforts, the partners will promote implementation of best practices in energy saving and transparency of the municipal energy reform process in Ukraine, and help the USAID Project partner cities attract investments in EE/AE projects. Based on the request from the bank, the Project developed topics for the trainings on EE measures and EE/RE projects for the staff of Ukrgasbank. Support to ESCO Mechanisms Implementation During the reporting period, the Project began its support of the introduction of energy service in public buildings of Odesa Oblast localities. It is expected that at least 10 ESCO contracts, covering about 50 public buildings, will be concluded in Q17 of the Project. Support to HOA/CE RC Operations As of the end of the reporting period, MERP HOA/CE Resource Centers (RCs) outreach efforts resulted in the following: 4,591 public outreach events on the local level (including trainings and meetings on establishing HOAs), and 14,410 initiative groups or/and individuals received consultations on legal, administrative, and technical issues. Some 3,747 new HOAs were created from the beginning of 2015 through September 30, 2017, which is about 32.8 percent of all new HOAs (11,428) established in Ukraine during the same period. Support to Implementation of CE Demonstration Projects in Multifamily Residential Buildings During the reporting period, the Project was working on design and cost documentation and on preparation for obtaining state expertise clearance for the demo projects. The documentation for four projects was finalized. Sustainable Energy Days in Partner Cities During the reporting period, the USAID Project team supported USAID Field Days in Lutsk and Odesa. Implementing Sub-Activity 2 Tasks in Odesa Oblast and Ukrainian Territories Affected by the Conflict with Russia Eastern Ukraine Myrnohrad, Pokrovsk, Rubizhne Sustainable Energy and Climate Action Plan (SECAPs) In September 2017, draft energy audit reports for Myrnohrad and Rubizhne were completed and provided to the cities for review/comments. Energy Audits and Specific Project Support The Project supported cities in identification of EE/CE measures and projects. In particular, this included preparation of project proposals and energy audits for the cities of Lysychansk, Bahmut, Rubizhne, Mariupol, Kharkiv, Donetsk, and Luhansk Oblast Administrations. The Project finalized energy audits of public and residential buildings for partner cities located in Luhansk and Donetsk oblasts and in Kharkiv. The overall value of the proposed EE measures is USD 25.54 million.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 11 Support to CE HOA Advisory Centers As a result of the assistance from the Project, four new CE HOA Advisory Centers were established in the cities of Mariupol, Dobropillya, Bahmut, and Severodonetsk. The centers were opened in cooperation with city administrations. USAID MERP provided training, and supplied the centers with all necessary equipment, furniture, outreach materials while the city administrations allocated the office space and paid for necessary renovations. Odesa Oblast Energy Planning The Project finalized SECAPs preparation for partner cities (Reni, Balta, Yuzhne, Chornomorsk, and Bolhrad) in Odesa Oblast. Energy Audits and Specific Project Support The Project supported cities in identification of EE/CE measures and projects. In particular, this included support to the cities of Odesa, Yuzhne, and Teplodar. The Project finalized energy audits of public and residential buildings for partner cities located in Odesa Oblast. The overall value of proposed EE measures is USD 18.5 million. Regional Energy Planning (REP) The Project continued collection of information necessary for the development of the Regional Energy Plan (REP) of Odesa Oblast, developed the REP concept and action plan on REP development (in line with REP development methodology provided by EnEffect), and determined the timeframe and key stakeholders16 of Odesa REP. Capacity Building The Project conducted the final session of training for energy auditors, Energy Audit in Buildings, in a series of three. About 32 participants successfully passed the final test and obtained certificates for energy audit in buildings. Demonstration Projects The Project started preparation of design and cost documentation for demonstration projects to be implemented in Odesa Oblast and in Eastern Ukraine. The Project developed three environmental review checklists (ERCs) for demo projects to be implemented in the Odesa region. Under Activity 4, the Project continued supporting the GOU with Low Emission Development Strategies (LEDS). Paris Agreement Implementation: State Climate Policy Action Plan During the reporting period, MERP continued providing support to the Ministry of Ecology and Natural Resources (MinEcology) on State Climate Policy Concept implementation through developing supporting documents for GOU approval of a draft Climate Policy Concept Action Plan. The draft action plan, developed with MERP assistance, outlines specific activities, policies, and measures to be implemented by the GOU, including all agencies and ministries and local authorities, to achieve LED and to implement Paris Agreement provisions.
16 As of September 2017, the Advisory Committee had 10 members representing relevant departments of Odesa Oblast State Administration.
12 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT During the reporting period, MERP finalized the LEDS Action Plan process and presented a draft national LEDS policy document at the final Third LEDS Conference on September 26, 2017. Implementation of Paris Agreement Provisions: National GHG Inventory Enhancement During the reporting period, MERP finalized its support to partner cities and MinEcology on monitoring, reporting, and verification (MRV) of GHG emissions, and developed its Analytical Report on Lessons Learned during MRV Trainings Courses.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 13 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.2 COSTS B.3 ENVIRONMENTAL COMPLIANCE MERP is taking steps to conform to 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 (MMP), and Monitoring Plan. It is anticipated that many Project activities will not have any effect on environment and human health in Ukraine. Although some Project activities may have some effect, in most cases any environmental/health effects are expected to be positive; increased EE and greater use of CE will reduce energy consumption and GHG emissions.
14 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT The preliminary environmental assessment of Project activities found the 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 because 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, and 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 20 documents/sets of documents that fall under negative determination with conditions: 1. Sustainable Energy and Climate Action Plan of Chornomorsk City 2. Sustainable Energy and Climate Action Plan of Bolhrad City 3. Sustainable Energy and Climate Action Plan of Yuzhne City 4. Sustainable Energy and Climate Action Plan of territorial community of Balta 5. Prefeasibility study on degasification of solid waste landfill for Lysychansk City 6. Energy scanning of generating capacities and distribution networks of Bakhmut-Energiya LLC 7. Energy audit reports of 15 public and 5 residential buildings for the City of Kharkiv 8. Energy audit reports of 7 public and 5 residential buildings for the City of Pokrovsk 9. Energy audit of DH system in Rubizhne City 10. Prefeasibility study for the project, Improving the Energy Efficiency of Buildings in the Budget Sphere of Mariupol City 11. Prefeasibility study on the project, Improving the Energy Efficiency of Water Supply and Sewage Systems Communal Entity "Mariupol VU VKG" for the City of Mariupol 12. Energy audit of DH system of City of Odesa 13. Proposals for energy-efficient modernization of the system of thermal energy transportation in the City of Yuzhne 14. Prefeasibility study on the modernization of the Yuzhne City water supply and sanitation stations 15. Proposals for the modernization of outdoor lighting system in the City of Yuzhne 16. Assessment of solar energy potential in Odesa Oblast
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 15 17. Energy audit reports of 9 buildings of East Ukrainian National University 18. Prefeasibility study on the installation of individual heating stations in the buildings of the Aleksandrovsky, Voznesensky, Dniprovsky and Komunarivsky districts of the City of Zaporizhzhia 19. Prefeasibility study on improving the EE of buildings of the budget sphere of Kryvyi Rih 20. Prefeasibility study for the construction of CHP production plant (working on husk pellets) in Teplodar city of Odesa Oblast No adverse environmental impact is likely, although, according to 4.3.5 of the IEE, it is recommended to encourage the assisted municipalities to integrate environmental and/or health considerations into the project/plans to mitigate adverse effects on the local environment. According to the Project MMP and the SEAP or SECAP, projects involving the construction of new energy supply/heating facilities or upgrade of existing facilities should undergo the national environmental assessment process, including 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. During the reporting period, the Project developed three ERCs for demo projects, which are going to be implemented in Odesa region. 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 because all activities (except 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, and 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 complies 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.
16 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 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 Commercial Metering of Heat Energy and Water Supply17 Law on Housing and Communal Services (reg. #1581-D) National Energy Strategy until 2035 Concept for the implementation of state policy in the field of heat supply DH and Biomass Market Development regulatory framework Law on Commercial Metering of Heat Energy and Water Supply On June 22, 2017, the VR adopted the Law of Ukraine on Commercial Metering of Heat Energy and Water Supply.18 The law determines the grounds for providing commercial metering for heat energy services, hot water supply, and centralized water supply, and providing appropriate metering information for consumers of such services. The law also envisions equipping buildings with commercial accounting means and engineering systems to ensure that metering is carried out in accordance with the design documentation, construction norms, and regulations. After adoption of the law, MinRegion requested assistance from the project with development of secondary legislation to support implementation of the law. According to the law, 16 pieces of secondary legislation (by-laws) are to be developed and adopted, including nine GOU resolutions, one NEURC resolution, and six orders of MinRegion. For development of these by- laws, MinRegion established a working group and for each of the by-laws, members of the working group formed informal sub-groups. The Project started supporting development of the drafts, Methodology on Allocation of Consumed Services in the Building to Individual Consumers and Order for Taking on Record Customer Meters. Earlier, the Project provided support in drafting the law and actively supported its consideration by the VR. Law on Housing and Communal Services On May 16, 2017, the VR recommended the bill on housing and communal services19 for a repeated second reading. The Project assisted the Committee on Construction, Urban Development and Housing of the VR with preparing the bill for the second reading. During the reporting period, the draft bill was on the agenda of several VR plenary meetings, but it was not considered by the VR.
17 Law No. 2119-VIII dated 22.06.2017. 18 The name of the law is different from the name of draft bill, Commercial Metering of Communal Services. See: http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=59553 19 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=57371
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 17 Law on EE of Buildings On July 20, 2017, the President of Ukraine signed the Law of Ukraine on Energy Efficiency of Buildings, adopted by the VR earlier in June. The law defines the legal, socioeconomic, and organizational principles for activities in the field of EE of buildings and aims at reducing energy consumption in buildings. The law establishes minimum requirements for the EE of buildings, provides mechanisms for raising funds for the implementation of energy-efficient measures, and guarantees the financing of measures to improve the EE of buildings (Energy Efficiency Fund). The law was developed with USAID MERP support. National Energy Strategy until 2035 In August 2017, the CMU approved the Energy Strategy of Ukraine until 2035: Security, Energy Efficiency, Competitiveness. The Strategy envisions almost 50 percent reduction in energy consumption by the Ukrainian economy by 2030 and significant increase in national energy production through renewable energy (RE) sources—up to 25 percent of energy shall be generated using RE by 2035. Prime Minister Mr. Volodymyr Groysman expressed gratitude to all partners involved in development of the strategy. USAID MERP worked on selected areas of the draft strategy. Concept for the Implementation of State Policy in the Field of Heat Supply In August 2017, the CMU approved the Concept for the Implementation of State Policy in the Field of Heat Supply, aimed to reduce the consumption of natural gas and other energy resources for the production of heat energy, financial recovery, and attraction of new investment to the sector, and introduction of a transparent, efficient system of payments between the participants of the heat energy market. The Concept includes short-term, medium-term and long-term action plans focused on the following main areas, inter alia, (i) Technological upgrade of heat supply systems; (ii) Increasing the share of AE sources in production of thermal energy, up to 40 percent in 2035; (iii) Introduction of incentive-based tariffs; (iv) Simplification of procedures for implementation of investment projects; (v) Reducing consumption of thermal energy through all the stages of technological process, down to 80–60 kWh per square meter (m2) annually, and others.
Municipal Energy Sector Reform In July 2017, the CMU adopted the Resolution "On Amendments to Item 23 of the procedure for the distribution of funds transferred to the current accounts with special use regime used for payments to natural gas supplier entrusted with special responsibilities."20 The resolution allowed for the transfer of funds to the account of a heat supply/heat-generating entity to be increased by the value of funds dedicated to financing of investment programs, and the transfer of funds to the account of the natural gas supplier to be reduced by the same amount. This change allowed DH utilities to unlock financing of investment programs, including those funded by IFIs. MERP supported these changes by providing an analytical report (2016) that included: (i) analysis of CMU Resolution #217 21 impact on situation in DH sector, (ii) analysis of MinRegion suggestions to amend the CMU Resolution #217; (iii) support to MinRegion provision to include into transfer formula payments for IFIs on investment programs approved by NEURC; and (iv) recommended further steps beyond the MinRegion suggestions.
20 http://www.kmu.gov.ua/control/ru/cardnpd?docid=250136716 21 Resolution establishes priority shares for money transfers on behalf of DH entity.
18 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT DH and Biomass Market Development Following the adoption of the Law on Heat Supply earlier this year,22 on September 6 the CMU has approved the “Methodology of estimation of weighted average tariffs, where natural gas is used for thermal energy production, transport and supply, for population, institutions and organizations financed from state or municipal budgets”. The methodology sets the rules on calculating the incentivizing tariff for heat produced from AE sources, thus reducing potential administrative burden and increasing accessibility of “green” investors to existing DH networks. On September 25, SAEE calculated and published weighted average tariffs for thermal energy produced using natural gas in relevant administrative regions (Oblasts). These changes to the Law on Heat Supply were implemented before the 2017–2018 heating season started, facilitating transition from fossil to alternative fuels in the thermal energy generation segment. Following the adoption of the Law on Heat Supply, which incentivizes thermal energy production from biofuels, and continuing efforts over the development of a framework for third-party access in DH, MERP engaged in the task of the modeling real DH systems. The modeling effort aims to assess the technical potential to integrate and optimize the existing systems, and to evaluate costs and benefits of integration and optimization. The modeling will serve as a basis for final suggestions for the third-party access framework under development. During the quarter, data were collected on the Zaporizhzhia DH system and Vinnytsia DH system. GIS modeling software was uploaded with data from the DH systems and work on calculations began. MERP provided SAEE with the analytical reports, Best International Practices to Organize Market of Solid Biofuels in Europe and Legal Barriers Preventing Development of Market for Solid Biofuels in Ukraine. Both reports are intended for use in drafting a legislative package for solid biofuels market establishment in Ukraine, which is under development. MERP participated in the International Conference, Biomass for Energy 2017, with a presentation on international practices to organize of solid biofuels markets and discussion on current barriers and future prospects in Ukraine. The presentation aimed to popularize the market organization concept among industry experts and other stakeholders. Advocacy Campaign to Support Legal and Regulatory Changes To support the approval process for the key legal acts, the Project conducted an extensive advocacy campaign. Specific activities included the following: Participating in working groups of the VR; Holding a series of talks with representatives of the CMU and Members of Parliament; and Advocating the need for adoption through media events and various communication activities. B.4.1.2 Task 1.2: Assistance to NEURC Capacity Building During the reporting period, the Project organized three seminars for NEURC and licensees from partner cities: 1. In July 2017, a seminar was held on “Drafts of tariff formation rules and tariff setting procedure for incentive-based tariffs for heat energy transportation: application
22 USAID MERP supported the development of the Law on Heat Supply (adopted in March 2017).
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 19 specifics, conditions for transition to incentive-based tariffs, identification of essential components, results of test calculations.” The seminar was conducted to present main provisions of four draft NEURC resolutions on incentive-based regulation in heating sector developed with assistance of the Project. 2. In July 2017, a seminar was held on “Drafts of a tariff formation order and a tariff setting procedure for incentive-based tariffs in centralized water supply and sewage sector.” The seminar was conducted to discuss drafts of NEURC resolutions on tariff formation and tariff setting rules and procedures (including application specificities, conditions for applying incentive-based tariffs, and essential components of tariffs) developed with assistance of the Project. 3. In September 2017, a seminar was held on “Reports submitted to NEURC by licensees operating in centralized water supply and sewage sector and respective rules about the reports.” The Project presented the main provisions of the Reporting Rules established by NEURC Resolution # 717 On approval of the rules on reports submitted to NEURC by subjects of economic activities in heating and centralized water supply and sewage sectors. The resolution approved the new regulatory reporting forms, which were developed by NEURC with assistance from the Project. IFI Loans During the reporting period, NEURC intensified work related to approval of IFI loans attracted by licensees operating in the heating sector. In July 2017, NEURC held two meetings with MERP, EBRD, and licensees to discuss relevant NEURC resolutions. The meetings were attended by the NEURC Commissioner, Director of Heating Department, Head of Investment Policy Division, and representatives of heating companies having IFI loans (cities of Lutsk, Lviv, Chernivtsi, Zhytomyr, Cherkasy, Ternopil, and Ivano-Frankivsk). In August 2017, as part of public consultation process, NEURC placed on its website23 Draft Resolution On approval of the order for concurring with NEURC the loans from IFIs attracted for investment projects by entities who deal with generation of heat energy (except heat energy generated at heat and power plants, thermoelectric power stations, nuclear plants, and cogeneration plants which use non-conventional or renewable energy sources), transportation of heat energy by main and local (distribution) networks, and supply of heat energy. In September 2017, the Project provided its comments to NEURC on the draft resolution. The comments reflected the necessity to incorporate provisions of draft documents, which were developed by MERP experts and submitted to MinRegion and NEURC in August of 2016. As of October 1, 2017, comments provided by MERP and other stakeholders (EBRD and licensees) were not posted on NEURC’s website, and the date for public hearings on the draft resolution was not set. Development of Service Quality Monitoring Methodology Heating Sector During the reporting period, the Project continued to work on the list of indicators applicable to the heating sector. In Q15, the Project submitted to NEURC the report on the list of service quality indicators for heating services, and received comments from NEURC. In the letter, NEURC expressed appreciation for USAID Project assistance regarding development of the list of service quality
23http://www.nerc.gov.ua/data/filearch/Proekty/poekty_oznaky_regulatornyh_aktiv/2017/pr_274/pr_274_09.08.2017.p df.
20 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT indicators, but emphasized that the list should be revised and further developed. NEURC’s Strategic Planning and Development Department prepared the comments, which included both technical and methodological points. During the reporting period, the Project organized several meetings with NEURC to discuss the list of indicators. The revision process was finalized in August 2017 and the list of indicators, which took into account NEURC comments, was submitted to the regulator. No further comments are expected from the regulator. The task regarding assistance to NEURC in developing the list of indicators for monitoring service quality in heating sector is completed. During the reporting period, the Project continued assistance to NEURC in developing reporting forms for monitoring service quality indicators and in developing the tools for automated monitoring quality in the heating sector. As of the end of the reporting period, the Project completed development of a first draft of the tools, and testing of the tools was in progress. The tools and monitoring forms for quality indicators in the heating sector will be presented to NEURC and licensees at the seminar at the end of October or early November 2017. Support Changes to the Asset Valuation Methodology for Natural Monopolies in the DH and Water and Wastewater Sectors During the reporting period, the Project did not work on changes to the asset valuation methodology. Further work is “on standby” until ARVIs are developed and proposed changes are tested by conducting pilot valuation of assets of utility companies. Valuation of Assets: Heating Sector During the reporting period, the Scientific Institute of Building Production has been developing ARVIs for heat energy transportation in the framework of the agreement concluded by Kyiv- based company, Kyivenergo. In August 2017, the first draft of ARVIs for heat energy transportation was developed and provided to Deloitte & Touche for testing. Testing of ARVIs is carried out simultaneously with valuation of assets in heat energy transportation for two companies: Kyivenergo and Chernihiv Heating Company Oblteploenergo. The work on ARVIs is to be completed in October 2017. As the next step, final changes should be made to the asset valuation methodology. Pilot asset valuation for heat energy transportation is financed by heating companies themselves. Valuation of Assets: Centralized Water Supply and Wastewater Treatment Sector As regards ARVI development, pilot evaluation of assets of water supply and sewage companies and relevant changes in the asset valuation methodology, no progress can be reported during the period. As of the date of this report, water supply and sewage companies have not taken a decision to finance the evaluation on their own. Improvement of Regulatory Reporting Forms On August 22, 2017, the reporting forms #13-water supply Report on indicators for reliability of water supply and quality of potable water and #14-water supply/sewage Report on indicators for commercial quality of centralized water supply and (or) sewage services24 were published in the official government newspaper Uryadovyi Kurier. Based on this, NEURC Resolution #226 took effect. On September 14, 2017, NEURC Resolution #717 On approval of the rules on reports submitted to NEURC by subjects operating in district heating and centralized water supply and sewage
24 http://www.nerc.gov.ua/?news=6366.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 21 sectors took effect. The resolution established the new reporting forms for NEURC licensees in DH and centralized water supply and sewage sectors. The Project assisted NEURC in developing draft resolutions, including the reporting forms for the water supply and sewage sector, and guidelines for completing the forms. In Q17, the Project will develop reporting forms for licensees transitioning to incentive-based regulation in heating and centralized water supply and sewage sectors. Assist NEURC in the Gradual Introduction of Incentive Tariff Regulation for Heating and Water Utilities During the reporting period, the Project assisted NEURC in developing the package of draft secondary legislation to implement incentive-based tariff regulation in the DH, transportation, and water supply and wastewater treatment sectors. In addition to NEURC draft resolutions on the approval of tariff formation rules for incentive-based tariffs, the Project assisted in developing draft resolutions on the approval of the tariff-setting procedure, rules for determining the regulatory base of assets, and rules for determining the regulatory rate of return. A total of eight draft resolutions were prepared: four resolutions for the heating sector and four resolutions for the water supply and sewage sector. Heating Sector On May 30, 2017, four drafts of NEURC resolutions on incentive-based regulation were considered by NEURC and, on June 2, 2017, were posted on NEURC’s website for public consultation. The deadline for comments and proposals was July 5, 2017. During the reporting period, the Project assisted NEURC in preparing final versions of resolutions. The Project prepared comments on two draft NEURC resolutions: On approval of the order for formation of incentive-based tariffs for heat energy transportation by main and local (distribution) networks and On setting of the regulatory rate of return for subjects carrying out (or intending to carry out) activities on heat energy transportation by main and local (distribution) networks. MERP provided comments on the necessity of disclosure of the methodology for determining rate of return, adjustment of the forecasted necessary return based on the target quality indicator, and on the need in (not) receiving the approval from the local self-government body for transfer to incentive-based tariffs. This was done because draft resolutions posted on NEURC’s website were, in these provisions, different from the versions proposed by the Project. On July 12–13, 2017, NEURC posted on its website analysis of comments and proposals on draft resolutions received under the formal public consultation procedure. On July 19, 2017, the Project participated in the public discussion of the comments collected on draft resolutions on incentive-based regulation, including Tariff Formation Order, Tariff Setting Procedure, and Determining Rate of Return. The minutes of the public discussion are available on NEURC’s website. On July 27, 2017, four draft resolutions on incentive-based regulation in the heating sector (Tariff Formation Order, Tariff Setting Procedure, Determining Rate of Return, and Order for determining of the Regulatory Assets Base) were approved by NEURC.25 The resolutions will take effect on the day of the official publication in the government newspaper Uryadovyi Kurier. As of the end of the reporting period, the resolutions had not been published.
25 http://www.nerc.gov.ua/?news=6284, item 17.
22 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Centralized Water Supply and Wastewater Treatment Sector On May 30, 2017, two draft NEURC resolutions on incentive-based tariffs in the centralized water supply and wastewater treatment sectors (Tariff Formation Order and Order for Determining the Regulatory Rate of Return) were considered by NEURC. Two other draft resolutions (Tariff Setting Procedure and Order for Determining Regulatory Base of Assets) were considered on June 15, 2017. Out of two draft resolutions considered on May 30, 2017, only one draft resolution, On setting the regulatory rate of return for subjects carrying out (or intending to carry out) economic activities on centralized water supply and sewage, was posted on NEURC’s website for public consultation. The deadline for comments/proposals was July 17, 2017. On July 10, 2017, NEURC published on its website three other drafts of NEURC resolutions (Tariff Formation Order, Tariff Setting Procedure, and Order for Determining Rate of Return). The deadline for comments/proposals was August 22, 2017. The Project provided formal comments to NEURC under the public consultation procedure. The Project commented on the necessity of disclosure of the methodology for determining the rate of return, determining target quality indicators, and on the need to obtain (no) permits from the local self-government body for licensee’s transfer to incentive-based tariffs. The Project also organized several working meetings with NEURC’s Water Supply and Sewage Department to assist NEURC to prepare final versions of draft resolutions. On August 23, 2017, NEURC posted on its website analysis of comments and proposals on draft resolutions received under the formal public consultation procedure.26 On August 30, 2017, NEURC organized a public discussion of the comments on draft resolutions on Tariff Formation Order and Determining Rate of Return. The minutes of public discussion are available on NEURC’s website. On September 14, 2017, at the open meeting, NEURC approved27 four resolutions on incentive- based regulation for the area of centralized water supply and sewage (Tariff Formation Order, Determining Rate of Return, Tariff Setting Procedure, and Order for Determining the Regulatory Base of Assets). The resolutions will take effect on the day of official publication in the government newspaper Uryadovyi Kurier. As of the end of the reporting period, the resolutions had not been published. The details on consideration, publication, and approval of the resolutions are summarized in Table 4.
Table 4. Status of NEURC Resolutions Prepared with MERP Assistance
# Resolution Status/Comments
Heat energy transportation Considered by NEURC on May 30, 2017, On approval of the Tariff Formation Procedure for published on NEURC’s website on June 2, 2017. 1 incentive-based tariffs for heat energy transportation Comments and proposals received posted on by main and local (distribution) heating networks NEURC’s website on July 12, 2017. Open meeting to discuss draft resolution
26 http://www.nerc.gov.ua/?newstype=999 27 http://www.nerc.gov.ua/?news=6476, item 16.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 23 Table 4. Status of NEURC Resolutions Prepared with MERP Assistance
# Resolution Status/Comments organized on July 19, 2017. On July 27, 2017, resolution approved by NEURC. On July 31, 2017, the resolution (#967) was posted on NEURC’s website: http://www.nerc.gov.ua/?id=26672. Considered by NEURC on May 30, 2017, published on NEURC’s website on June 2, 2017. Comments and proposals received posted on On approval of the Procedure for determining the NEURC’s website on July 12, 2017. regulatory base of assets of subjects of natural Open meeting to discuss draft resolution 2 monopolies carrying out (or intending to carry out) organized on July 19, 2017. economic activities on heat energy transportation by On July 27, 2017, resolution approved by main and local (distribution) heating networks NEURC. On July 31, 2017, resolution (#966) was posted on NEURC’s website: http://www.nerc.gov.ua/?id=26671. Considered by NEURC on May 30, 2017, published on NEURC’s website on June 2, 2017. In the Project’s version, the regulatory rate of return was developed as a weighted average cost capital formula. In the version discussed at the NEURC meeting, the rate of return was set at On setting the regulatory rate of return of subjects 12.5%. carrying out (intending to carry out) heat energy Comments and proposals received posted on 3 transportation by main and local (distribution) heating NEURC’s website on July 12, 2017. networks (without stating the size of the rate of return) Open meeting to discuss draft resolution organized on July 19, 2017. On July 27, 2017, resolution approved by NEURC. On July 31, 2017, resolution (#965) was posted on NEURC’s website: http://www.nerc.gov.ua/?id=26670. Considered by NEURC May 30, 2017, published on NEURC’s website on June 2, 2017. Comments and proposals received posted on NEURC’s website on July 12, 2017. Open meeting to discuss draft resolution On approval of the Procedure for setting incentive- 4 organized on July 19, 2017. based tariffs (heat energy transportation) On July 27, 2017, resolution approved by NEURC. On July 31, 2017, resolution (#964) was posted on NEURC’s website: http://www.nerc.gov.ua/?id=26669.
Centralized water supply and sewage
Considered by NEURC May 30, 2017. On approval of the Tariff Formation Procedure for On July 10, 2017, draft resolution posted on 1 setting incentive-based tariffs for centralized water NEURC’s website for review/comments. supply and sewage Comments and proposals received posted on NEURC’s website on August 23, 2017.
24 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Table 4. Status of NEURC Resolutions Prepared with MERP Assistance
# Resolution Status/Comments Open meeting to discuss draft resolution organized on August 30, 2017. On September 14, 2017, resolution (#1132) was posted on NEURC’s website: http://www.nerc.gov.ua/?id=28246 Considered by NEURC May 30, 2017, published on NEURC’s website on June 14, 2017. In the Project’s version, the regulatory rate of return was developed as a weighted average cost capital formula. In the version discussed at the NEURC meeting, the rate of return was set at On setting the regulatory rate of return of subjects 12.5%. carrying out (intending to carry out) centralized water Comments and proposals received posted on supply and sewage (without stating the size of the rate 2 NEURC’s website on August 23, 2017. of return) Open meeting to discuss draft resolution
organized on August 30, 2017. On September 14, 2017, resolution was adopted by NEURC. On September 20, 2017, resolution (#1134) was posted on NEURC’s website: http://www.nerc.gov.ua/?id=27628. Considered by NEURC on June 15, 2017. On July 10, 2017, draft resolution posted on NEURC’s website for review/comments. Comments and proposals received posted on On approval of the Procedure for determining the NEURC’s website on August 23, 2017. regulatory base of assets of subjects of natural 3 monopolies carrying out (intending to carry out) Open meeting to discuss draft resolution economic activities on centralized water supply and organized on August 30, 2017. sewage On September 14, 2017, resolution was adopted by NEURC. On September 20, 2017, resolution (#1135) was posted on NEURC’s website: http://www.nerc.gov.ua/?id=27937. Considered by NEURC on June 15, 2017. On July 10, 2017, draft resolution posted on NEURC’s website for review/comments. Comments and proposals received posted on NEURC’s website on August 3, 2017. On approval of the Procedure for the setting incentive- 4 Open meeting to discuss draft resolution was based tariffs (on water supply/sewage) organized on August 30, 2017. On September 14, 2017, resolution was adopted by NEURC. On September 20, 2017, resolution (#1133) was posted on NEURC’s website: http://www.nerc.gov.ua/?id=27936. To support the approval process of NEURC resolutions, the Project started test calculation of tariffs for Chernihiv Heating Company. It is expected that the test calculation will be completed in October 2017. Test calculation of tariffs for the centralized water supply and sewage sector will start in October 2017.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 25 Development of a Mechanism to Use Benchmarking Indicators Based on an Analysis of Best International Practice Heating Sector During the reporting period, the Project completed revision of the report on Recommendations on Establishment of Key Performance Indicators in the Heating Sector and on the Initial Data for Assessing the Value of Indicators. The report was revised to reflect comments provided by NEURC on the list of indicators. On September 8, 2017, the report was submitted to NEURC for review. As at the end of the reporting period, NEURC comments were pending. In August 2017, the Project also worked on preparation of first draft of the report on Benchmarking of Utility Companies Operating in the Heating Sector and on Clustering of Business Entities Dealing with Heat Energy Production, Transportation, and Supply. Preparation of this report will be completed in Q17 of the Project. Develop Methodological Recommendations on Accounting for Licensed Types of Activities Heating Sector In May 2017, the Project submitted to NEURC the final draft of the Rules and Procedures of Accounting by Licensed Type of Activity in the District Heating Sector. The final draft took into account comments received from NEURC, and requests for accounting separation into: (1) production of thermal energy (four business units, including purchased thermal energy); (2) transport of thermal energy (three business units); (3) supply of thermal energy (single business unit); (4) other licensed activities except the ones above; (5) nonlicensed activities (two business units, communal services priced by NEURC); and (6) nonlicensed activities (three business units, including balancing, issue of technical conditions, and connection to network). On July 27, 2017, the document was considered by NEURC.28 On August 3, 2017, NEURC posted the draft of the rules and procedures on its website for public consultation. The deadline for comments was September 4, 2017.29 In the comments on the draft, NEURC specifically stated that the draft was prepared with assistance from USAID MERP, and that it was part of preparation for the implementation of accounting separation rules by type of licensed activity. The website noted that the rules will be common for all licensees operating in the DH sector and applicable to other types of activities carried out by licensees, and will help create a reliable information database for tariff formation, comparison and monitoring for different licensees, avoiding cross-subsidization, increasing transparency of regulatory processes, and improving the regulatory policy. On September 15, 2017, the analysis of comments received was posted on NEURC’s website. On September 25, 2017,30 NEURC conducted public hearings on the draft rules and procedures. The Rules and Procedures of Accounting by Licensed Type of Activity in the District Heating Sector were approved by NEURC on public proceedings of October 10, 2017.31
28 http://www.nerc.gov.ua/?news=6284, item 16. 29 http://www.nerc.gov.ua/?id=26752. 30 http://www.nerc.gov.ua/index.php?news=6524. 31 http://www.nerc.gov.ua/?news=6607, item 15.
26 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Centralized Water Supply and Sewage In June 2017, the Project submitted to NEURC the final draft of the Rules and Procedures of Accounting by Licensed Type of Activity in the Centralized Water Supply and Sewage Sector. The final draft incorporates comments received from NEURC, and requests for accounting separation into: (1) licensed, drinking water supply (production, transportation, supply); (2) licensed, sewage (collection, transportation, purification); (3) other licensed activities except the ones above; (4) nonlicensed activities in communal areas; and (5) nonlicensed activities, other. The draft rules and procedures include reporting on separate accounts. On September 8, 2017, following review by NEURC, the document was posted on NEURC’s website32 for public consultation. On September 14, 2017, NEURC considered the draft rules and procedures.33 As at the end of the reporting period, the draft rules and procedures were not posted on NEURC’s website. During the reporting period, the Project also started revision of rules and procedures for accounting by licensed type of activity in the heating sector and rules and procedures for accounting by licensed type of activity in the DH and centralized water supply and sewage sectors. These revisions aim to reflect the accounting specificities for the companies that will transit to incentive-based regulation. B.4.1.3 Task 1.3: Supporting Improvement of the Social Safety Net for the Vulnerable Develop Concept Paper for Transition to Monetized Targeted Assistance to Consumers of Housing and Utility Services During the reporting period, the Project finalized and submitted to MinSocPolicy the report, Concept for the Transition to Monetized Social Assistance. The report provides four possible scenarios for developing a subsidies system: (1) maintaining the status quo; (2) partial monetization to unused amounts; (3) partial monetization to eliminate offset payments; and (4) monetization. The report provides recommendations for the full monetization option, and develops a three-phase path to implement the full monetization scenario (October 2017–May 2018 for partial monetization of unused subsidies amounts; June 2018–December 2019 for elimination of clearing settlements; and June 2019–December 2021 for full monetization of subsidies). B.4.1.4 Task 1.4: Supporting EE Standards MERP continued assisting the GOU in the development of the national standard, Rules for the Energy Labelling of Translucent Building Envelope Structures. B.4.1.5 Task 1.5: Public Information and Awareness Campaign Adjusting Communication Strategy to Current Priorities During the reporting period, MERP held several meetings of the Working Group on Communications, attended by the representatives of the GOU, SAEE, All Ukrainian Public Organization (Civic Network OPORA), MDI, and the Association of Energy Efficient Cities of Ukraine (EECU). During the first meeting, the group members discussed a concept of scenarios for new PSAs, which will be a part of a new outreach phase of the Project campaign. These PSAs will focus on rights and possibilities of utility service consumers for the implementation of EE/AE measures, installation of metering equipment, verification of energy consumption, and
32 http://www.nerc.gov.ua/?news=6458, item 21. 33 http://www.nerc.gov.ua/?news=6476, item 12.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 27 use of “warm loan” programs. The campaign will also promote among Ukrainians the importance of personal responsibility in taking the appropriate actions to achieve comfortable homes while lowering their energy bills. A separate meeting of the working group was dedicated to major aspects of the newly approved Law on Commercial Metering of Heat Energy and Water Supply. The law came into effect on August 2, 2017, and immediately a number of myths were generated by the public and media. To dispel the most prevalent myths related to the law, the MERP team created a question and answer publication and a number of infographic posters that were distributed through official websites and Facebook pages of the CMU, MERP, and the Zhytlo web portal. In just a few days, over 50 national and regional media outlets picked up MERP materials and published corresponding information explaining wording and real situations related to the provisions of the law. Video PSAs During the reporting period, the Project started production of series of new PSAs focused on priority topics of energy sector reform identified by the Working Group on Communications. This campaign aims to educate consumers of communal services about their rights and possibilities for the implementation of EE/AE measures, installation of metering equipment, verification of energy consumption, and use of “warm loan” programs to improve EE in the residential sector. As of the end of the reporting period, the scenarios of four video PSAs were developed and most of the scenes had been filmed. The concepts and scenarios of the videos were developed in close cooperation with representatives of the CMU, MinRegion, and SAEE. Final pick shots of all PSAs will include reference to MERP’s website (merp.org.ua), governmental portal (teplo.gov.ua) and hotline number on EE to provide the audience with sources of more comprehensive information on relevant topics. The PSAs will be broadcast through regional and national TV channels, placed in SMM and online versions of printed media outlets, and on MERP and partners’ websites, including the governmental portal (teplo.gov.ua). Your Home TV Program The Project team developed a new format and concept, prioritized topics, and completed the production of a pilot episode of the third season of the Your Home TV program. The pilot was approved by the UA-One TV Channel34 for broadcast through their network on a free-of-charge basis. The launch of the third season is scheduled for October 13, 2017. It will include 15 episodes (24 minutes each) that will be on the air during prime time (at 7:00 pm) of UA-One every Thursday. Each episode of the program will feature problematic situations typically found in multiapartment buildings in Ukraine, and provide tips on how to address them. Episodes will also include expert opinions on legal and/or technical issues, as well as lifehacks for making a home more energy efficient. Two previous seasons of the Your Home program included 54 episodes. According to UA-One channel ratings, the program was in the top 10 most popular programs of the channel. In addition, Your Home was shown on 35 Ukrainian regional TV channels with an audience of 4.7 million, while among 4.5 million Facebook users, it has had 1,138,701 views. The most recent survey conducted under the project showed that about 20 percent of Ukrainians watched the program.
34 UA-One is the national channel, covering all geographical regions of Ukraine with potential audience of approximately 10 million people.
28 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Promotion of “Warm Loans” Program Outreach Materials During the reporting period, MERP and SAEE continued promoting the “warm loans” program. In particular, the brochure Energy Saving: What to Do and Where to Get Money? was updated. It features conditions of the “warm loans” government program, under which individuals, HOAs, and housing cooperatives may take loans from a number of banks and then receive from 30 to 70 percent reimbursement of the costs from the state for EE materials and equipment. The brochure also describes major EE measures in multiapartment buildings, including insulating the building envelope and roofing, replacing old windows and entrance doors with energy-efficient ones, and other measures. Overall, during the course of the Project, over 140,000 copies (including 100 000 printed by SAEE and the project partners) of this brochure were printed and distributed by SAEE and MERP in the Project partner cities and other regions. Hotline on EE/AE Due to a broad advertisement campaign through USAID Project video PSAs, billboards, Internet resources, and the excellent professional reputation of the operator, the USAID MERP hotline on EE grew in popularity among Ukrainians. During a 1-year period, it served about 8,312 clients, half of them during the last quarter, which exceeds by 25 percent of the number of Ukrainian, who used services of the state counseling line on EE. During the month of August, the hotline beat the record with almost 1,000 calls. During the reporting period, 2,952 clients were served by the hotline, launched by MERP in cooperation with Kyiv City Administration and SAEE to address the most urgent issues faced by Ukrainian communal service consumers. Most of questions were related to the conditions of the “Warm loans” state program and subsidies for communal services; the rest included issues on the establishment and effective management of HOAs, energy saving measures in multiapartment buildings, and legal aspects of the relationship between consumers and their energy suppliers. In addition, MERP promotes the “warm loan” program via its PSAs, billboards, and Your Home TV program. The Project also communicates the benefits of the program through media events, such as press briefings featuring best practices for EE in the residential sector, study tours to EE sites, and trainings for journalists. Educating Journalists on EE/AE and Correct Terminology During the reporting period, the USAID Project conducted four trainings for journalists entitled Key Information on Energy Efficiency in Media. The trainings included interactive educational sessions and press tours in Dnipro, Lviv, Odesa, and Zaporizhzhia, and gathered about 90 journalists from MERP partner cities and regions. The first day of the 2-day trainings included interactive lectures and practical exercises on a variety of topics, such as modern energy- efficient technologies, the specifics of construction of energy-efficient and passive buildings, correct use of key terminology related to the housing and communal services sector, as well as myths on subsidies, tariff regulation, and the establishment and functioning of HOAs. The first day ended with the site visits to the most successful condominium HOAs that took part in the government “warm loans” program, implemented energy-efficient projects, and achieved substantial results in energy saving. During the second day of trainings, the journalists learned about new technologies in presenting information and the importance of adapt their materials to new media and different platforms. As part of the practical exercise, they were grouped into mini-editorial boards and worked on the development of interesting and motivating articles based on the problems and situations that are typical for most Ukrainian multiapartment buildings. They had to resolve these problems by using the information received at the training
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 29 to find creative approaches to provoke interest and motivate the audience to action. Authors of the best materials were awarded USAID-branded souvenirs. Public Outreach Materials and Events to Support Energy Sector Reform As of September 30, 2017, the Project team disseminated 323,000 brochures and posters to raise awareness about EE/AE, tariff regulation, and HOA creation and management. Informational materials were developed and/or updated, printed, and published on the MERP website. To satisfy demands for outreach materials in our partner cities, MERP updated all brochures and posters, and printed over 100,000 copies in September 2017. These outreach materials had been delivered previously to most partner cities and will be distributed through HOA/CE RCs and at targeted municipal events, such as Sustainable Energy Weeks and EE Days. 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 Energy Planning MERP continued assisting partner cities with the approval of SEAPs. To date, 15 new SEAPs have been prepared (first and second groups of cities), and 14 of them have been approved by the city councils. Kyiv SEAP The Project received confirmations (letters) from the city administration that the SEAP is being considered by the city administration. Kherson SEAP During the reporting period, the Project was working to review the Kherson SEAP so that it meets CO2 emissions reduction targets established by the CoM. The finalization of the plan and consecutive approval is expected in Q17 of the Project. SEAPs Implementation Monitoring of SEAPs Implementation for Partner Cities In September, MERP, jointly with EU CoM East Project, organized the training, Reporting Procedures for Covenant of Mayors–Reporting Objectives and Tasks–Monitoring the Emission Cadaster–Reporting on the Implementation of the SEAP. The training was focused on reporting requirements and procedures of the CoM, including objectives and targets of reporting, monitoring of cadaster of emissions, and reports on SEAP implementation. The Project experts presented to training participants the templates of survey tables and explained in detail the process of identifying the sources of monitoring data by sector. Investment Mobilization under SEAPs Implementation The Project updated information on SEAP implementation in partner cities. As of the end of the reporting period, the cities mobilized (actual and planned investments) approximately USD 153 million for SEAP implementation during CY2015–2017. The funding mobilized by partner cities35 during CY2015–CY2017 is presented in Table 5.
35 Excludes associated partners and cities where SEAPs have not been approved by the city councils (Kyiv).
30 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Table 5. Funding by City under SEAP Measures Implementation
Investment Investment Investment Total SEAP Planned in # Partner City Made in 2015 Made in 2016 Investments, Adoption 2017 “000” UAH “000” UAH “000” UAH “000” UAH Ivano- 1 July 28, 2015 61,384 95,996 733,176 890,556 Frankivsk 2 Ternopil Aug 18, 2016 11,445 42,274 53,719 3 Rivne April 21, 2016 11,265 124,864 134,800 270,929 4 Dnipro Mar 11, 2015 89,375 16,727 118,799 224,901 5 Sumy Sept 28, 2016 13,568 169,203 164,554 347,325 April 26, 2017 6 Kryvyi Rih 77,784 60,772 138,556 (new) 7 Kramatorsk April 22, 2015 34,659 13,226 339,218 387,102 8 Kherson Feb 20, 2015 19,501 39,874 59,376 9 Zaporizhzhia Mar 25, 2015 32,285 48,450 115,221 195,956 10 Lutsk Oct 6, 2015 29,843 47,221 181,787 258,851 11 Chernihiv June 4, 2015 48,466 109,879 150,013 308,358 12 Vinnytsia Feb 24, 2017 437,325 147,254 584,579 13 Khmelnytskyi May 18, 2016 72,200 161,105 233,305 14 Pavlohrad May 24, 2017 21,100 21,100
TOTAL in “000” UAH 340,346 1,264,194 2,370,072 3,974,612
Approximate Value in “000” USD 15,700 48,431 88,664 152,796
Investment Mobilization: New Projects Approved MinRegion issued the finalized list of potential beneficiaries of EIB, UMIDP, which passed quality and feasibility criteria as well as financial review by the Ministry of Finance of Ukraine.36 Five projects in the category of EE in the buildings were prepared by the Project. The preparation covered energy audits of over 240 public buildings and preparation of in-depth prefeasibility studies. The total value of these projects is over USD 78 million or about 14 percent of funding envisioned under the loan program. The details on the projects prepared by MERP are provided in Table 6.
Table 6. Projects Included in the Final List for EIB UMIDP Approved Project Beneficiary Project Details Value, “000” USD
"Zaporizhzhia Energy Thermomodernization of 60 public buildings (schools, 19,598.7 Agency" established by kindergartens, medical facilities) in Zaporizhzhia will
36 http://www.minregion.gov.ua/napryamki-diyalnosti/international-cooperation/internat-cooperation/do-uvagi- potentsiynih-uchasnikiv-spilnogo-z-yeib-proektu-programa-rozvitku- munitsipalnoyi-infrastrukturi-ukrayini-shhodo-zatverdzhennya-poperednogo-pereliku-proektiv-prmiu/
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 31 Table 6. Projects Included in the Final List for EIB UMIDP Approved Project Beneficiary Project Details Value, “000” USD Zaporizhzhia City Council result in (on annual basis): Energy savings of 22,344,440 kWh or equivalent of 2,116,611 cubic meters (m3) of natural gas; Reduction of energy costs by USD 1,083,333; CO₂ emissions reduction of 6,665 tons. Implementation of the EE measures in 33 buildings in the educational sector will result in (on annual basis): Energy savings of 13,468,454 kWh or equivalent of Sumy City Council 1,275,819 m3 of natural gas; 6,852.4 Reduce energy costs by USD 638,970; CO₂ emissions reduction of 3,366 tons. Thermal modernization of 93 public buildings of educational sector (schools and kindergartens) will result in (on annual basis): Ternopil City Council Energy savings of 33,833,412 kWh or equivalent of 30,490.0 3,204,921 cubic meters of natural gas; Reduction of annual costs by USD 1,979,627; CO₂ emissions reduction of 11,348 tons. Complex thermal modernization of 31 public (schools, kindergartens, and medical facilities) will result in (on annual basis): Khmelnytskyi City Council Energy savings of 16,552,053 kWh or equivalent of 7,899.1 1,567,918 m3 of natural gas; Reduction in annual costs by USD 606,060; CO₂ emissions reduction of 4,916 tons. Thermomodernization of 25 public buildings (schools, kindergartens, and medical facilities) will result in (on annual basis): Chernihiv City Council Energy savings of 15,394,400 kWh or equivalent of 8,529.3 1,458,258 m3 of natural gas; Reduction in annual costs by USD 847,865; CO₂ emissions reduction of 4,827 tons.
Total 78,406.5
The projects envision monetary savings of USD 5.2 million and CO2 emissions reduction of 31,212 tons annually. In addition, the above projects will have considerable social effects. As of the end of the reporting period, the Project mobilized funding for 13 new projects valued at USD 96.8 million, with estimated annual CO2 emissions reduction of 200,000 tons. Investment Mobilization: New Projects Development During the reporting period, the Project supported cities in mobilizing funding for EE/CE investments.
32 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Kropyvnytskyi In July 2017, the Project signed a memorandum of understanding with the City of Kropyvnytskyi. The memorandum envisions specific area of focus: assistance in preparation of feasibility studies to attract investments in EE and AE sources, and promotion of coordination of investments of IFIs to improve EE and use of AE sources. In August 2017, the Project conducted an introductory meeting with the Head of City Council, deputy city mayors, and heads of the educational and health care departments. The parties discussed potential areas of cooperation, including development of project proposals, support in sustainable energy planning, ESCO and public-private partnership (PPP) mechanisms implementation, HOA development, informational campaigns, and other areas. USAID Project Deputy Chief of Party (DCOP) informed the city that because the project is nearing completion, assistance will be limited to preparation of a prefeasibility study for thermomodernization of buildings. Based on the agreement with the city SoW, the Project began the selection of local service provider to conduct energy audits and prepare feasibility study for thermomodernization of public and residential buildings in the city. Kremenchuk In September 2017, the Mayor of Kremenchuk Vitalii Maletskyi, at the meeting with EBRD directors, announced37 that the city plans to support thermal modernization of public buildings in Kremenchuk including schools, kindergartens, and hospitals. The city is expected to secure funds for up to USD 12 million from the EBRD and grant funds from the E5P, as well as funding from the CTF. The prefeasibility study for thermal modernization project in Kremenchuk City was developed as a cooperative venture among the city, EBRD, and the Project. Zaporizhzhia In September 2017, the Project conducted a meeting with a KfW technical expert. The meeting y for thermomodernization of public buildings prepared by MERP and potential project implementation support. The parties agreed on further steps to cooperate on finalization of the project proposal. The Project informed KfW that post-signing support will not be provided because the Project is nearing completion. The meeting was organized in the framework of KfW’s visit to USAID Project partner city Zaporizhzhia on September 4–5, 2017. The visit aimed to identify priority projects for a potential KfW loan in the amount of EUR 25 million (~USD 30 million). The City of Zaporizhzhia was identified as the top candidate for the loan with priority given to thermomodernization of the public buildings. MERP will continue work on the update of the prefeasibility study in Q17 of the project. MERP finalized the prefeasibility study, Installation of Individual Heating Stations in the Buildings of the Aleksandrovsky, Voznesensky, Dniprovsky and Komunarivsky districts of the city of Zaporizhzhia. The project, valued at about USD 15 million, envisions installation of 1,030 individual heating substations in public, residential, and tertiary buildings. The estimated energy savings (natural gas and electricity) are about 12,000 KWh on an annual basis. Kryvyi Rih MERP finalized the prefeasibility study for the potential IFI-funded project, Improving the Energy Efficiency of Buildings of the Budget Sphere of Kryvyi Rih. The project covers implementation of EE measures in 50 public buildings. The feasibility study covers three alternative packages
37 https://kremen.gov.ua/index.php/news/main/8806
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 33 (options) valued between USD 4 and 25 million depending on the set of measures to be implemented and funding sources. The energy savings for the options are estimated at 11–31 million KWh on an annual basis. The city is expected to use its own and existing IFI resources (EBRD, NEFCO) for project implementation. Chernihiv The Project started work on the feasibility study for modernization of the electric transport sector, which will enable the city to mobilize and utilize EUR 6.1 million loan (~USD 7 million) from EIB. The feasibility study will be finalized in Q17 of the project. A summary of information on the projects supported is presented in Table 7.
Table 7. Summary of Information on the Projects Supported Status Number of Projects New requests received38 Projects with MERP support 66 Of them: Post-signing support provided 5 New project proposals developed 54 Project proposals under development 7 Stopped/Suspended 21 Total 87
The details on the current projects pipeline by area and type are presented in Table 8.
Table 8. Current Project Pipeline
# of Approximate Value, USD Million Area Projects New Projects Post-signing Support Total District Heating 26.0 162.1 54.9 216.9 Energy Management 2.0 Public Buildings 29.0 191.2 19.1 210.3 Residential Buildings 1.0 7.5 7.5
Solid Waste 12.0 7.0 7.0
Street Lighting 6.0 2.4 2.4 Transport 5.0 80.9 80.9 Water/Wastewater 6.0 27.8 27.8 Total 87.0 478.9 74.0 552.8
In total, the pipeline includes 87 projects (based on requests from the cities), including 61 active39 projects (valued at ~USD 479 million).
38 With the exception of support to updates of feasibility studies: Zaporizhzhia, Chernihiv, Teplodar. 39 Project proposals developed and under development.
34 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Post-signing Support As of the end of the reporting period, MERP was instrumental in providing post-signing support to five projects funded by IFIs (EBRD, WB, and NEFCO) valued at approximately USD 74 million. Development of the Catalogs of Investment Projects Development of the Catalog of Investment Projects and Investment Strategy of Kramatorsk During the reporting period, the Project developed project proposals for the Catalogue and Investment Strategy of Kramatorsk. In September 2017, the project submitted the first draft of Investment Projects Catalogue to the city for review and comments. The Catalog of Investment Projects and Investment Strategy of Kramatorsk will be completed in Q17 of the project. Development of the Concept of the Project for Increasing Effectiveness of Public Transport of Kramatorsk During the reporting period, the Project developed the Concept Paper for Increasing Effectiveness of Public Transport of Kramatorsk. This comprehensive document includes in- depth analysis of existing public transportation system and measures (projects) aimed to increase its efficiency, decrease CO2 emissions, and improve quality of services provided to the public. In September 2017, local authorities considered the concept, and no substantial comments were received from the city. The public presentation of the concept will be organized in October 2017. Funding Mobilized for Residential EE As a result of the joint MERP and SAEE campaign on the “warm loans” promotion and other program support actions, 261,367 loans (valued at ~USD 183.6 million), including 237,360 loans for EE equipment and materials (valued at ~USD 158.5 million) and 1,224 loans to HOAs, had been issued under the State Program to support residential EE.40 Before the campaign began in June 2015, such loans had been taken by only 3,984 households and one HOA for UAH 71 million (less than USD 3 million). B.4.2.2 Task 2.3: Introduction of Energy Management Systems National Level In April 2017, the CMU adopted the Resolution41 On approval of a plan of implementation of energy management in budget institutions, following the relevant decision of the Committee on European, Euro-Atlantic Integration, International Cooperation and Regional Development in February. During the reporting period, the Project assisted with implementing this plan by developing a methodology for monitoring, guidelines for EM, limits for energy consumption, and use of funds received from savings. In August 2017, SAEE officially issued a report containing inter alia recommendations to local authorities on the implementation of the EM system in public buildings via its website. The recommendations make provisions on: (i) Introduction of EM systems in budget institutions funded at the expense of local budgets; (ii) Monitoring of consumption of fuel and energy
40 As of September 30, 2017. 41 http://www.kmu.gov.ua/control/uk/publish/article?art_id=249947129&cat_id=244276429
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 35 resources by budgetary institutions; (iii) Material incentives for those responsible for implementing EM systems in budget institutions; and (iv) Establishment of energy consumption limits by budgetary institutions. The implementation of EM will enable 5 to 8 percent energy saving due to energy-efficient consumer behavior, and up to 20 percent reduction of power consumption due to the establishment of energy-efficient operation of facilities without additional investment. The report and recommendations were developed by MERP in cooperation with SAEE.42 Municipal Level In July 2017, the City of Sumy approved an EM concept based on ISO-50001-2014. The approval resulted from extended assistance provided to the city by MERP. The city also decided to undertake EM certification. In September 2017, MERP experts conducted an internal audit of the Department of Education and Culture (this department represents the most energy- consuming share of public buildings: kindergartens, schools, etc.) to assess its readiness for certification. The audit showed that this department is prepared for certification by an external independent body. However, the city does not have funding to undergo certification in 2017. 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 47 applications and issued 22 loans for a total of UAH 9.684 million, EUR 1.95 million, and USD 0.55 million (total value of ~USD 3.024 million). During the reporting period, the bank issued three loans to local SMEs. Cumulative utilization percent of DCA guarantee, according to the Bank’s Credit Monitoring System, is 37 percent. B.4.2.4 Task 2.5: Support Mechanisms That Mobilize Private Sector Investment MOU Signing with Ukrgasbank to Attract Investments in EE and AE Projects In July 2017, MERP and Ukrgasbank signed the memorandum of understanding on cooperation. Through joint efforts, the partners will promote implementation of best practices for energy saving, and transparency of the municipal energy reform process in Ukraine, and help the USAID Project partner cities attract investments in EE and AE projects. Conduct Trainings for Partner Banks (Ukrgasbank) on EE Measures and EE/RE projects Based on the request from the bank, the Project developed training topics for the trainings on EE measures and EE/RE projects to be conducted for the staff of Ukrgasbank in Q17 of the project. The topics include: EE improvements in multiapartment buildings: technical, financial, and organizational and legal aspects; Implementation of EE measures in the wood processing industry (training for bank personnel and clients). Implementation of EE measures in the garment industry from bank loans (training for bank personnel and clients); Implementation of EE measures in HORECA from bank loans (training for bank personnel and clients); Activities of ESCOs;
42 http://saee.gov.ua/uk/news/1923, http://saee.gov.ua/sites/default/files/ENERGY_MANAGEMENT_14_08_2017.docx
36 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Assessing objectivity of energy audit reports on public and multiapartment residential buildings; Legal and financial issues regarding operations of HOAs; Loans for implementation of investment projects to entities operating in heating, water supply, and sewage sectors; and Loans for RE projects. It is expected that the bank will select two to three topics for the trainings. Support to ESCO Mechanisms Implementation During the reporting period, the Project started support to introduction of energy service in public buildings of Odesa Oblast localities. The project experts will: (1) conduct analysis of energy service potential in the public buildings sector (up to 120 buildings will be analyzed, about 50 selected for detailed ESCO implementation feasibility assessment and follow-on support); (2) provide support for procurement of energy service, conclusion and registration of energy service contracts. It is expected that at least 10 ESCO contracts, covering about 50 public buildings, will be concluded in Q17 of the Project. Support to HOA/CE RC Operations Generating Responsible Home Ownership through Establishment and Support of HOA/CE RCs MERP continued providing HOA/CE RCs with capacity building, outreach, legal, technical, economic, ecological, and other key areas of support related to EE/AE projects and the attraction of investments for their implementation in residential buildings. As of the end of the reporting period, MERP’s HOA/CE RC outreach had completed the following: 4,500 public outreach events (4,591) on the local level (including trainings and meetings on establishing HOAs) and 14,410 initiative groups or/and individuals received consultations on legal, administrative, and technical issues. Some 3,747 new HOAs were created from the beginning of 2015 through September 30, 2017, which is about 32.8 percent of all new HOAs established in Ukraine during the same period (11,428). Support to State-funded EE Partial Loan Compensation Programs for HOAs and Households Through an advocacy campaign, the Project supported continuation and expansion of the “warm loans” program. On July 12, 2017, the CMU adopted changes to the program, which provide an additional UAH 300 million. As a result, the banks resumed issuance of "warm loans" for the population and HOAs.43 On July 13, 2017, VR adopted the bill on amendments to the Law of Ukraine On the State Budget of Ukraine for 2017 to continue the implementation of EE measures among the population within the framework of the program of "warm loans." Following adoption of the bill, the project advocated for the additional funding to be used for implementation of energy-efficient measures for condominiums.
43 Because the funds that were provided by the state budget expired, banks temporarily stopped issuing loans for the introduction of energy-efficient measures.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 37 As a result of the joint MERP and SAEE campaign on “warm loans” promotion and other program support actions, 261,367 loans (value of ~USD 183.6 million), including 237,360 loans for EE equipment and materials (value of ~USD 158.5 million) and 1,224 loans to HOAs,44 had been issued under the State Program to support residential EE.45 Before the campaign began in June 2015, such loans had been taken by only 3,984 households and one HOA for UAH 71 million (less than USD 3 million). Support to Implementation of CE Demonstration Projects in Multifamily Residential Buildings During the reporting period, the Project was working on design and cost documentation and on preparation for obtaining state expertise statements for the demo projects. Current status of design and cost documentation development for residential sector demo projects and corresponding project values are provided in Table 9.
Table 9. Current Status of Design and Cost Documentation Development for Residential Sector Demo Projects
Status of Project # City/HOA Description Design Value, Documentation “000” UAH
Zaporizhzhia Reconstruction of the heating system in the 9- Finalized, story 144-apartment building (change from vertical obligatory 1 7,017 “Charivnyi to horizontal pipe system with installation of expertise to be Svitanok” individual regulation and metering devices) conducted
Development of design and estimate documentation for the project on reconstruction of Finalized, Lviv the artificial electrical lighting system in the obligatory 2 5,570 “Initsiativa” staircases with use of photovoltaic cells, and of expertise to be the hot water supply system with use of solar conducted collectors in 9-story 107-apartment building
Development of design and estimate Kamyanets – documentation for the project on reconstruction of Finalized, the artificial electrical lighting system in the obligatory 3 Podilsky 0,186 staircases of 5-story 30-apartment building and expertise “Lermontova-2” adjacent territory with use of photovoltaic solar conducted cells Finalized, Lviv Reconstruction of the heating system of 212- obligatory 4 3,787 “MZhK-1” apartment building expertise to be conducted
Reconstruction of the artificial electrical lighting Dnipro system in the staircases of 9-story 108-apartment Final Draft 5 “Krasnopilska 4A” building and adjacent territory with use of Prepared photovoltaic solar cells
44 Dwelling for about 80,000 families. 45 As of September 30, 2017.
38 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT
B.4.2.5 Task 2.6: Preparation of a Sustainable Energy Public Awareness Plan and Development of Related Materials Sustainable Energy Days in Partner Cities During the reporting period, the USAID Project team supported USAID Field Days in Lutsk and Odesa. The aim of the events was to present and promote the USAID Projects working in Ukraine in different areas, including EE, civil society, justice, health care and education, among others. During the information fair, Project information kiosks distributed about 2,000 copies of materials on EE, AE, and HOA development, and tariff regulation. In addition, the Project team organized a variety of games, quizzes, master classes, and creative labs for young people to provide them with knowledge on energy-efficient technologies and CE applications. 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 Myrnohrad, Pokrovsk, Rubizhne SECAPs During the reporting period, the Project continued work on energy audit reports for partner cities, development of SECAPs, and investment strategies in support of SECAP implementation. In September 2017, draft energy audit reports for Myrnohrad and Rubizhne were completed and provided to the cities for review/comments. Drafts of SECAPs of Myrnohrad, Pokrovsk, and Rubizhne will be completed and provided to the cities for review/comments in October 2017. Energy Audits and Specific Project Support During the reporting period, the Project supported cities in identification of EE/CE measures and projects, including the following: The Project finalized a prefeasibility study on degasification of solid waste landfill for Lysychansk City; The Project finalized and presented an energy audit of generating capacities and distribution networks of “Bakhmut-Energiya” (Bahmut heating utility company); The Project finalized an energy audit of the DH system of Rubizhne City; The Project presented a prefeasibility study for the project. Improving the Energy Efficiency of Buildings in the Budget Sphere of Mariupol City; The Project finalized and presented a prefeasibility study on the project, "Improving the Energy Efficiency of Water Supply and Sewage Systems of Communal Entity "Mariupol VU VKG" for the City of Mariupol; Based on the request received from the city, the Project started additional in-depth energy audit of the DH system of Mariupol. The Project started a prefeasibility study for complex thermomodernization of public buildings in Kharkiv using IFI resources. At the request of Oblast Administration, the Project started energy audits of public buildings in Donetsk Oblast, which should allow to draw state budget financing;
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 39 In cooperation with Oblast Administration, the Project started assessment of public buildings in Luhansk Oblast to allow for replacement of fossil fuels used for heating with locally available renewable sources (biomass). The biomass assessment for Donetsk and Luhansk oblasts started as well. The Project finalized energy audits of public and residential buildings for partner cities located in Luhansk, Donetsk oblasts, and Kharkiv. These audits will form a basis for thermomodernization and will enable municipalities to bring IFIs and private and public sector funding to the implementation of EE measures. A summary of energy audits results is presented in Table 10.
Table 10. Energy Audits of Public and Residential Buildings in Eastern Ukraine
Number of Buildings Estimated Value of City Proposed EE Public Residential Total Measures, USD million
Pokrovsk 7 5 12 1.38
Myrnohrad 4 8 12 1.93
Severodonetsk 7 5 12 3.08
Rubizhne 7 10 17 1.33
Bahmut 14 5 19 0.95
Dobropillya 5 9 14 0.55
Slovyansk 18 8 26 6.46
Kharkiv 15 5 20 9.86
Total 77 55 132 25.54
Support to HOA CE Advisory Centers During the reporting period, the Project provided methodological, organizational, and consultancy support to the new partner cities of Luhansk and Donetsk oblasts in establishing CE Advisory Centers (CEACs). During July and August 2017, the Project conducted two introductory seminars for new partners from Luhansk and Donetsk regions to present best practices used by existing CEAC operations. The first seminar for new HOA CEACs from Donbass region (Donetsk and Luhansk Oblasts) was conducted in Lutsk on July 20–21, 2017. The seminar participants shared best practices used by the Lutsk HOA “Luchany,” visited three local HOAs, and Lutsk Centre for Energy Efficiency and Energy Saving. The seminar was attended by representatives of 10 partner cities (Bahmut, Dobropillya, Kramatorsk, Mariupol, Myrnohrad, Rubizhne, Pokrovsk, Severodonetsk, Sloviansk, and Lutsk). The second seminar was conducted in Zaporizhzhia on August 9–10, 2017. The seminar participants shared best practices and experience from the local HOA CEAC “Victoria” (Association of Housing Building Cooperatives and Co-owners of Multi-apartment Buildings),
40 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT visited REHAU windows production facilities, and participated in the master class on Ceresit insulation. participants from nine partner cities (Bahmut, Dobropillya, Kramatorsk, Mariupol, Myrnohrad, Pokrovsk, Rubizhne, Severodonetsk, Zaporizhzhia) attended the seminar. As a result of the assistance from the Project, four new HOA CEACs were established in the cities of Mariupol, Dobropillya, Bahmut, and Severodonetsk. The centers were opened in cooperation with city administrations. The Project supplied the centers with all necessary equipment, furniture, and outreach materials, and the city administrations allocated the office space and paid for necessary renovations. Mariupol The HOA CEAC in Mariupol was the first one opened in the new partner cities of the Donetsk region. The establishment of the center was initiated by the city council and local NGO, Council of Chairmen of Mariupol HOAs. The opening took place on August 21, 2017, and was followed by a seminar for local HOAs. The seminar focused on technical, financial, organizational, and legal issues related to increasing EE of HOA buildings. Dobropillya The opening of HOA CEAC took place on August 29, 2017. The opening was followed by the seminar for local HOAs (including HOAs from Myrnohrad and Pokrovsk), representatives of Dobropillya City Council, representatives of Single Housing Management Service, and representatives of companies providing housing stock maintenance services in the City of Dobropillya. Bahmut The opening of the Bahmut HOA CEAC took place on September 20, 2017. The opening was followed by the seminar for local HOAs. The seminar agenda consisted of the following topics: (1) What is an HOA CEAC and what are its goal and tasks; (2) Models of contractual relationships at the housing and communal services market and an HOA as an actor in the market; (3) joint decision making at an HOA; (4) transparent communication in an HOA as a precondition of financial stability; (5) legal aspects of work with irresponsible co-owners; (6) fees/contributions collection at an HOA; and (7) technical aspects of thermal modernization of a residential building with an HOA. Severodonetsk The opening of the HOA CEAC took place on September 28, 2017.46 The opening was followed by the seminar for local HOAs to provide the HOA with basic knowledge on joint decisions by co-owners (decision-making and formalization of decisions taken) of multiapartment buildings with and without HOAs and on fee collection practices and experiences. The seminar also focused on increasing EE of residential building, housing management, and collection of management fees. Odesa Oblast Energy Planning During the reporting period, the Project finalized SECAPs preparation for partner cities (Reni, Balta, Yuzhne, Chornomorsk, and Bolhrad) in Odesa Oblast. These SECAPs are expected to be approved in Q17 of the Project.
46 This was the 4th center opened in Donetsk and Luhansk oblasts and the 17th HOA CEAC supported by the Project.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 41 Energy Audits and Specific Project Support During the reporting period, the Project supported cities in identifying EE/CE measures and projects, including the following: The Project finalized an energy audit of the DH system of Odesa; For the City of Yuzhne the project finalized and presented: – Proposals for energy-efficient modernization of the system of thermal energy transportation; – Prefeasibility study on the modernization of water supply and sanitation stations; and – Proposals for the modernization of outdoor lighting systems. The Project finalized assessment of solar energy potential in Odesa Oblast. The results of the assessment will be used to support a regional sustainable energy planning process. The Project initiated development of a solid waste management program for Odesa Oblast. Among other measures, the program will identify projects related to landfill gas utilization (for significant CO2 emissions reduction) and will provide information necessary for preparation of a regional sustainable energy plan (RSEP) for Odesa Oblast. The Project continued work on a CHP production plant (working on husk pellets) in Teplodar City of Odesa Oblast. The cooperation between the Project and the city has already resulted in identification of the private partner, which is prepared to construct a new heat generation facility to replace the existing inefficient heating system. The Project finalized energy audits of public and residential buildings for partner cities located in Odesa Oblast. These audits will form a basis for thermomodernization and will enable municipalities to bring IFIs and private and public sector funding for the implementation of EE measures. A summary of energy audit results is presented in Table 11.
Table 11. Energy Audits of Public and Residential Buildings in Odesa Oblast
Number of Buildings Estimated Value of City Proposed EE Public Residential Total Measures, USD million
Yuzhne 7 7 14 1.68
Bolhrad 9 3 12 2.48
Bilhorod-Dnistrovskyi 10 5 15 3.35
Balta 8 5 13 2.32
Chornomorsk 11 5 16 1.69
Reni 3 14 17 2.76
Izmail 7 5 12 4.22
42 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Table 11. Energy Audits of Public and Residential Buildings in Odesa Oblast
Number of Buildings Estimated Value of City Proposed EE Public Residential Total Measures, USD million
Total 55 44 99 18.5
Regional Energy Planning (REP) Development of the Regional Energy Plan of Odessa Region During the reporting period, the Project continued collection of information necessary for the development of the REP of Odesa Oblast, and developed a REP concept and action plan on REP development in line with REP development methodology provided by EnEffect. The Project also determined the timeframe and key stakeholders of the Odesa REP. Establishment and Meetings of the Advisory Committee47 The first meeting of the Advisory Committee took place on July 28, 2017. The Project presented REP development methodology, concept of the transport chapter of REP, and proposals on the investment strategy of REP. The issues discussed at the meeting included: structure of Odesa Region REP overall, and technical, financial, and sociological information/data needed for REP development. The second meeting was organized on August 18, 2017. The meeting participants discussed progress regarding collection of data and REP development methodology. At the meeting, the Project presented the first draft of the baseline scenario on consumption of energy and energy resources in the Odesa region, and organized a brainstorming discussion on SWOT-PEST for Odesa REP. Energy Management and Capacity Building In July 2017, the Project conducted the final session of the three-phase training for energy auditors, Energy Audit in Buildings. The final training involved theory and practical cases that were applied in real buildings using ENSI EAB software. About 32 participants successfully passed the final test and obtained Certificates on Energy Audit in Buildings. The trained energy auditors will become players in the energy audit market in Ukraine. In September 2017, the Project finalized the EM concept for the City of Odesa. The document will be officially presented and discussed with the city in Q17 of the Project. Demonstration Projects During the reporting period, the Project started to develop design and cost documentation for demonstration projects to be implemented in Odesa Oblast and Eastern Ukraine. The Project developed three ERCs for demo projects to be implemented in Odesa region: “Modernization of Teremok Kindergarten Building in Izmail, Odessa oblast” (approved by USAID)
47 As of September 2017, the Advisory Committee has ten members representing relevant departments of Odesa Oblast State Administration.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 43 “Modernization of T.P. Bondar Secondary School Building in Bendzary village, Balta, Odesa oblast” (submitted to USAID) “Modernization of Zhyravlyk Kindergarten Building in Bolhrad, Odesa oblast” To support implementation of demonstration projects with Eastern Ukrainian National University, (located in Severodonetsk and Rubizhne, Luhansk Oblast), the Project conducted energy audits of nine university buildings. The next step will be development of design and cost documentation for priority EE measures and buildings. B.4.3 ACTIVITY 3: CAPACITY BUILDING AND DISSEMINATION All tasks under this activity 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 Action Plan During the reporting period, MERP continued its support to MinEcology on implementing the State Climate Policy Concept implementation through developing supporting documents, including draft Political Note, draft comments and suggestions Comparison Table, and other supporting documents needed for GOU approval of the draft Climate Policy Concept Action Plan. This draft action plan outlines specific activities, policies, and measures to be implemented by GOU agencies and ministries and local authorities to achieve LED and to implement Paris Agreement provisions. MERP continued supporting MinEcology in the governmental discussion and concurrence process through participating in the ministry’s coordination meetings on draft Climate Policy Concept Action Plan with MinJustice, MinEconomy, and MinEnergy. Paris Agreement Implementation: LEDS Policy Document During the reporting period, MERP finalized the LEDS Action Plan Process and presented a draft national LEDS Policy Document during the Third Low Emission Development Strategy (LEDS) Conference on September 26, 2017, organized by MERP together with MinEcology and Natural Resources of Ukraine. This third LEDS conference is an important milestone of the transparent and inclusive Ukrainian National LEDS Process, for which a draft framework policy document, Low Emission Development Strategy, was presented. Development and implementation of a LEDS is a core provision of the Paris Agreement. USAID is supporting Ukraine on this cross-sectoral, inclusive, economy-wide, transparent and complex process that lasted over 20 months, included over 600 stakeholders, and resulted in a national LED policy document. During the conference, the Minister of Ecology and Natural Resources of Ukraine, Mr. Ostap Semerak, member of the Parliament, Secretary of Environmental Committees Mr. Ostap Yednak, Director of Office of Economic Growth at USAID Mr. Farhad Ghaussy, and President of the US-based Center for Climate Strategies Inc., Mr. Tomas Peterson, welcomed over 110 participants of the conference representing ministries, state agencies, state banks, civil and scientific societies, NGOs, and donors organizations. At the conference, the Ministry of Energy and Coal Industry (MinEnergy) presented the recently adopted Energy Strategy, the Ministry of Infrastructure presented the draft Transport Strategy, and MinEcology presented the draft Waste Management Strategy as documents that are input into the umbrella LEDS document. Participants also discussed and provided feedback on the potential format of Ukrainian LEDS, and financial mechanisms available and applicable for implementation of low emission policies and measures.
44 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Implementation of Paris Agreement Provisions: National GHG Inventory Enhancement During the reporting period, MERP finalized its support to the partner cities and MinEcology on monitoring, reporting, and verification (MRV) of GHG emissions, and developed the Analytical Report on Lessons Learned during MRV Trainings Courses. This report analyzed feedback, lessons learned, and results of MRV training courses in the selected partner-cities, Ternopil, Vinnytsia, Odesa, Izmail and the Odessa region. During the MRV training courses, MERP presented the basics of the MRV process for municipalities and municipal energy and heating companies, and presented and collected feedback on the Fuel Combustion Methodology and Template CO2 Emission Monitoring Plan developed by MERP. The analytical report outlines lessons learned and provides recommendation to MinEcology and public and private companies on how to proceed with the next steps on establishing a comprehensive, efficient, and up-to- date national MRV system in Ukraine to enhance GHG emission MRV at the installation level. The Project continued its support to SAEE on the implementation of EU Directive 2009/28/EC. The Project conducted consultations with key stakeholders, including profile technical committees. During Project Q17, MERP will work on finalizing 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 Anticorruption During the reporting period, the Project engaged civil society and the public sector in the fight against corruption in the energy sector. The Project supported and coordinated a network of organizations capable of identifying corruption in the energy sector and demanding transparency. The network includes civil society groups, anticorruption “watchdog” organizations, and investigative journalists. Specific activities included the following: Conducting research and preparing analytical materials focusing on anticorruption issues in the energy and housing and communal services sectors. Informing the public about the mechanisms of consumer protection in communal services. Developing informational materials and distributing information on the “ZHYTLO” webpage (https://zhytlo.in.ua) about potential corruption and/or abuse. Moderating the “ANTILAPA” open group in Facebook (https://www.facebook.com/groups/750680041724827). 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 1,813 participants, including well-known journalists, civil society activists, and officials. During the reporting period,
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 45 active contributors left 107 posts devoted to corruption in energy and utilities, or corruption as a phenomenon. Ensuring regular communication and the exchange of information with leading anticorruption and journalism organizations and advocating for transparency in the energy sector. These activities included participation in several public and media events, 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. During the reporting period, 47 participants of the Anticorruption Network received five anticorruption digests (59 informational materials) in the following areas: housing and communal services, procurement, tariffs, subsidies, condominiums, investment programs, gas, energy, and budget funds. Gender and Inclusive Development The Project conducted Gender Impact Assessment Training for its staff and main counterparts based on results of the Gender Impact Assessment finalized in Q15 of the Project. During the training, 17 participants, both USAID Project team and representatives of main counterparts, were acquainted with the purpose of the Gender Impact Assessment of technical assistance projects, gender equality issues in Ukraine, normative and legal acts regulating gender equality in Ukraine, gender equality issues in the energy sector of Ukraine, and gender-sensitive performance indicators. Participants discussed the summary and recommendations of the Gender Impact Assessment and their possible implementation in energy sector development projects. In addition, participants became familiar with the inclusive development concept and new USAID Gender Integration Toolkit. 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 crosscutting 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 at both national and local levels: 707 persons took part in MERP events, including 450 women (64 percent) and 257 men (36 percent). MERP works with a wide range of people, ensuring 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.
46 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT
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USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 47 C. DELIVERABLES
MERP’s Sixteenth Quarter (Q16) deliverables and reports are as follows: MERP Fifteenth Quarterly Report, April 1 – June 30, 2017 MERP Work Plan for Year 5 (6-month period through March 31, 2018) 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 Q16 of the Project is presented in Table 12.
Table 12. Most Important Documents and Materials Produced under MERP during Q16 of the Project # Activity Task/Subtask Month Document Title Language Draft law and draft resolution of the CMU on 1 Activity 1 Task 1.1 August Criteria of Sustainability for Liquid Biofuels and Ukrainian Transport Biogas Letter to Mr. Kruglyak, of August 9, 2017, on providing assistance to MinRegion to develop 2 Activity 1 Task 1.1 August Ukrainian secondary draft legislation after the Law on Commercial Metering Presentation of Experience of EU states in 3 Activity 1 Task 1.1 Sept English organizing solid biomass markets Letter to Mr. Savchuk of SAEE of September 26, 2017, on submitting the analytical report Best 4 Activity 1 Task 1.1 Sept Ukrainian International Practices to Organize Market of Solid Biofuels in Europe Analytical report Best International Practices to 5 Activity 1 Task 1.1 Sept Ukrainian Organize Market of Solid Biofuels in Europe Letter to Mr. Savchuk of SAEE of September 26, 2017, on submitting analytical report Legal 6 Activity 1 Task 1.1 Sept Ukrainian Barriers Preventing Development of Market for Solid Biofuels in Ukraine Analytical report Legal Barriers Preventing 7 Activity 1 Task 1.1 Sept Development of Market for Solid Biofuels in Ukrainian Ukraine
Letter to Mr Vovk, of July 05, 2019, on providing Task 1.2 comments to the draft package of NEURC 8 Activity 1 July Ukrainian (Subtask 1.2.3.) resolutions on district heating incentive based 9tariff regulation
Task 1.2 Letter to Mr Mashlikiivskiy of 20 July , 2017, on 9 Activity 1 July Ukrainian (Subtask 1.2.3.) refusal to provide assistance to NEURC in development reporting forms for entities engaged
48 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Table 12. Most Important Documents and Materials Produced under MERP during Q16 of the Project # Activity Task/Subtask Month Document Title Language in household waste processing
Letter to Mr Vovk of 08 August, 2017, on Task 1.2 submission the draft package of NEURC 10 Activity 1 August Ukrainian (Subtask 1.2.3.) resolutions on incentive based tariff regulation for entities engaged in water and wastewater
Draft Procedure on Tariff Formation under Task 1.2 11 Activity 1 August Incentive-based Regulation for Centralized water Ukrainian (Subtask 1.2.3.) and wastewater entities
Draft Procedure for Determining the Regulatory Asset Base of Subjects of Natural Monopolies Task 1.2 12 Activity 1 August Carrying out (or Intending to Carry out) Economic Ukrainian (Subtask 1.2.3.) Activities on Centralized Water Supply and Sewage
Draft Procedure on Setting the Regulatory Rate of Return for Subjects Carrying out (Intending to Carry out) Thermal Energy Transportation by Task 1.2 13 Activity 1 August Main and Local (Distribution) Heating Networks Ukrainian (Subtask 1.2.3.) and Centralized Water Supply and Sewage (without stating the size numeric value of the rate of return
Task 1.2 Draft Procedure for Setting of Incentive-based 14 Activity 1 August Ukrainian (Subtask 1.2.3.) Tariffs (Centralized Water Supply and Sewage)
Letter to Mr Mashlikiivskiy of 28 August, 2017, on Task 1.2 submission the Recommendations on 15 Activity 1 August Ukrainian (Subtask 1.2.3.) establishment service quality indicators for district heating
Task 1.2 Recommendations on establishment a set of 16 Activity 1 August Ukrainian (Subtask 1.2.3.) service quality indicators for district heating
Letter to Mr Vovk of 11 September, 2017, on submission of Comments to draft NEURC resolution on Procedure for Approval by the National Commission, which carries out state regulation in the areas of energy and utilities, the borrowings, aimed to implement investment projects, provided by international financial Task 1.2 Septemb 17 Activity 1 institutions to economic entities engaged in Ukrainian (Subtask 1.2.3.) er production of thermal energy (except production at thermal power plants, nuclear power plants and cogeneration units, and installations using non- traditional or renewable energy sources), in transportation of thermal energy by main and local (distribution and other) networks, and in thermal heat supply
Task 1.2 Septemb Comments to draft NEURC resolution on 18 Activity 1 Ukrainian (Subtask 1.2.3.) er Procedure for Approval by the National Commission, which carries out state regulation in
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 49 Table 12. Most Important Documents and Materials Produced under MERP during Q16 of the Project # Activity Task/Subtask Month Document Title Language the areas of energy and utilities, the borrowings, aimed to implement investment projects, provided by international financial institutions to economic entities engaged in production of thermal energy (except production at thermal power plants, nuclear power plants and cogeneration units, and installations using non-traditional or renewable energy sources), in transportation of thermal energy by main and local (distribution and other) networks, and in thermal heat supply
Letter to Mr Vovk of 08 September, 2017, on submission of Recommendations on Task 1.2 Septemb 19 Activity 1 establishment of key performance indicators in Ukrainian (Subtask 1.2.4.) er heating sector and on the initial data for assessing the value of indicators
Recommendations on establishment of key Task 1.2 Septemb performance indicators in heating sector and on 20 Activity 1 Ukrainian (Subtask 1.2.4.) er the initial data for assessing the value of indicators
Letter to Mr. Reva of 31 August, 2017, on 21 Activity 1 Task 1.3 August submission the Concept Paper for Transition to Ukrainian Monetized Social Assistance
The Concept Paper for Transition to Monetized 22 Activity 1 Task 1.3 August Ukrainian Social Assistance
23 Activi ty 2 Task 2.3 August Sustainable Energy Action Plan for Bolhrad City Ukrainian Sustainable Energy Action Plan until 2020 for 24 Activity 2 Task 2.3 Sept Chornomorsk City with 3 Annexes (in pdf and doc Ukrainian formats) Sustainable energy action plan and climate of 25 Activity 2 Task 2.3 Sept Yuzhne City till 2030 with Annexes (26 Ukrainian documents) Sustainable energy action plan of united territorial 26 Activity 2 Task 2.3 Sept community of Balta until 2030 with Annexes (11 Ukrainian documents) Prefeasibility study on degasification of solid 27 Activity 2 Task 2.7 July Ukrainian wastes landfill in Lysychansk City Energy scanning of generating capacities and 28 Activity 2 Task 2.7 July distribution networks of Bakhmut-Energiya LLC. Ukrainian Phase 2 (in pdf and doc formats) Reports on energy audit of 15 public and 5 29 Activity 2 Task 2.7 July residential buildings for the City of Kharkiv (49 Ukrainian documents) Reports on energy audit of 7 public and 5 30 Activity 2 Task 2.7 July residential buildings for the City of Pokrovsk (12 Ukrainian documents) Energy audit of DH system in Rubizhne City 31 Activity 2 Task 2.7 July Ukrainian (Revision 4)
50 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Table 12. Most Important Documents and Materials Produced under MERP during Q16 of the Project # Activity Task/Subtask Month Document Title Language Prefeasibility study on the project ,Improving the 32 Activity 2 Task 2.7 July Energy Efficiency of Buildings in the Budget Ukrainian Sphere of Mariupol City, with Annex (1 document) Prefeasibility study on the project, Improving the Energy Efficiency of Water Supply and Sewage 33 Activity 2 Task 2.7 July Ukrainian Systems Communal Entity "Mariupol VU VKG" for the City of Mariupol. Materials, "Basic training on energy management for city, district and oblast administrations of 34 Activity 2 Task 2.7 July Ukrainian Donetsk, Lugansk and Odessa oblasts" (4 documents) Energy audit of DH system of City of Odesa 35 Activity 2 Task 2.7 July Ukrainian (Revision 6) Proposals for energy-efficient modernization of 36 Activity 2 Task 2.7 July the system of thermal energy transportation in the Ukrainian City of Yuzhne. Preliminary feasibility study on the modernization 37 Activity 2 Task 2.7 July of the Yuzhne City water supply and sanitation Ukrainian stations Suggestions for the modernization of outdoor 38 Activity 2 Task 2.7 July Ukrainian lighting in the City of Yuzhne Presentation ‘Implementation of the municipal 39 Activity 2 Task 2.7 July Ukrainian energy management system’ Supporting materials for prefeasibility study on 40 Activity 2 Task 2.7 August Ukrainian utilization of solid wastes in Lugansk Oblast Report, Concept of Creation of a System of 41 Activity 2 Task 2.7 August Ukrainian Energy Management in Odessa Concept of the Solid Waste Management 42 Activity 2 Task 2.7 August Ukrainian Program in Odessa Oblast for 2018–2023 Methodical tutorial on development of Regional 43 Activity 2 Task 2.7 August energy plan of Odessa Oblast with Annexes (7 Ukrainian documents). Memorandum of understanding between MERP Ukrainian, 44 Activity 2 Task 2.7 August and Kirovohrad city council English Integration of heating networks. Methodical 45 Activity 2 Task 2.7 August materials. A general approach to the assessment Ukrainian of the efficiency of thermal district integration Estimation of resource potential of solar energy in 46 Activity 2 Task 2.7 Sept Ukrainian Odesa Oblast (7 documents) Reports on Energy Audit of 9 buildings of East 47 Activity 2 Task 2.7 Sept Ukrainian Volodymyr Dahl National University (9 Ukrainian documents) Preliminary feasibility study, "Installation of Individual Heating stations in the Buildings of the 48 Activity 2 Task 2.7 Sept Aleksandrovsky, Voznesensky, Dniprovsky and Ukrainian Komunarivsky Districts of the City of Zaporizhzhia"
49 Activity 2 Task 2.7 Sept Report on internal audit of energy management Ukrainian system according to ISO-50001:2014 standard of
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 51 Table 12. Most Important Documents and Materials Produced under MERP during Q16 of the Project # Activity Task/Subtask Month Document Title Language Department of Education and Science of the city council of Sumy City Estimation of the resource potential of biomass for the production of biofuels in the territories of 50 Activity 2 Task 2.7 Sept Ukrainian Lugansk and Donetsk regions under the control of the Government of Ukraine Evaluation of biomass resource potential in 51 Activity 2 Task 2.7 Sept Ukrainian Izmail, Bolgrad, Reni regions of Odesa Oblast Prefeasibility study, "Improving the Energy 52 Activity 2 Task 2.7 Sept Efficiency of Buildings of the Budget Sphere of Ukrainian Kryvyi Rih" with Annexes (9 documents). Evaluation of biomass resource potential in 53 Activity 2 Task 2.7 Sept Bilgorod-Dnistrovsky, Ovidipolskiy, Lymanskiy, Ukrainian and Balta regions of Odesa Oblast. 54 Activity 2 Task 2.7 Sept Biomass potential for energy use in Odesa Oblast Ukrainian Concept for improving the efficiency of public 55 Activity 2 Task 2.7 Sept Ukrainian transport in the City of Kramatorsk Concept of the program of transfer for all year individual hot water supply of budgetary 56 Activity 2 Task 2.7 Sept Ukrainian institutions of the Department of Education with the use of solar energy in Odesa City Integration of heating networks of Zaporizhzhia 57 Activity 2 Task 2.7 Sept Ukrainian City (supporting materials) Integration of heating networks of Vinnitsa City 58 Activity 2 Task 2.7 Sept Ukrainian (supporting materials) Supporting materials for the target program, 59 Activity 2 Task 2.7 Sept Household Solid Waste Management in Lugansk Ukrainian Oblast for 2017–2021 Report, Roadmap for the Creation of Energy 60 Activity 2 Task 2.7 Sept Ukrainian Management System in Odesa City Supporting materials to the concept of 61 Activity 2 Task 2.7 Sept modernization of centralized water supply and Ukrainian sewage systems of settlements in Odesa Oblast Prefeasibility study for the construction of CHP 62 Activity 2 Task 2.7 Sept production plant working on the husk pellets in Ukrainian Teplodar City of Odesa Oblast Presentation, LEDS and NDC Implementation 63 Activity 4 Task 4.1 Sept English Experience in Other Countries Presentation, Business Models for Implementation: Financial mechanisms 64 Activity 4 Task 4.1 Sept recommended and available for implementation of English LEDS, including climate finance structures, IFI, multilateral banks, green banks and bonds Presentation, Results of the Development of LED Strategy: Forecasts and estimates of 65 Activity 4 Task 4.1 Sept Ukrainian implementation of LED strategy policies and activities Strategy of Low Emission Development of 66 Activity 4 Task 4.1 Sept Ukrainian Ukraine until 2050
52 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Table 12. Most Important Documents and Materials Produced under MERP during Q16 of the Project # Activity Task/Subtask Month Document Title Language Presentation, Structure and Content of the 67 Activity 4 Task 4.1 Sept National Strategy for Low Emission Development Ukrainian of Ukraine until 2050 Presentation, Sector of Land Use and Forestry in 68 Activity 4 Task 4.1 Sept the Context of Low Emission Development of Ukrainian Ukraine’ Presentation, Status of National Strategy for Low 69 Activity 4 Task 4.1 Sept Ukrainian Emission Development: Next steps Presentation, The Status of the Process of developing a National Strategy for Low Emission 70 Activity 4 Task 4.1 Sept Ukrainian Development in Ukraine and Existing Global Policies for Low Carbon Emission Development’ Action Plan for the Execution of the Concept of 71 Activity 4 Task 4.1 Sept the State Policy on Climate Change for the Period Ukrainian until 2030 Protocol of coordination of positions on the draft order of the CMU of Ukraine on Action Plan for 72 Activity 4 Task 4.1 Sept Ukrainian the Execution of the Concept of the State Policy on Climate Change for the Period until 2030 Protocol of coordination of positions on the draft order of the CMU of Ukraine on Action Plan for 73 Activity 4 Task 4.1 Sept Ukrainian the Execution of the Concept of the State Policy on Climate Change from MinJustice Plan for coordination of activities between the projects of World Bank and the Swedish Cross- Donor 74 July International Development Cooperation Agency Ukrainian cutting coordination (SIDA) District Heating Regulatory Reform Support Program and USAID MERP
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 53
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54 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT D. MILESTONES
The list of milestones for Q16 of the Project and completion status are presented in Table 13, Table 14, and Table 15. Table 13. Q16 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. Law on Housing and Communal Sept 30, Not
Services adopted by VR 2017 completed Task 1.2. Assistance to National Energy and Utility Regulatory Commission (NEURC) Subtask 1.2.2. Capacity Building M 1.2.2.1. Capacity of the National Energy Sept 30, In accordance with approved Year and Communal Services Regulatory Completed 2017 5 Work Plan Commission (NECSRC) improved Subtask 1.2.3. Improving Heat Tariff
Setting
New deadline is Dec 31, 2017. M 1.2.3.2 Methodological recommendations (Manual) for M 1.2.3.3. Manuals are developed, agreed July 29, Not licensees on the long-term with NECSRC, and published on website 2017 completed Business Plans (investment programs) development, in area of water & wastewater, agreed with NEURC and published on website.
New deadline is Dec 31, 2017. M 1.2.3.7. Quality of Services assurance July 29, Not M 1.2.3.4 Quality of Services mechanisms enacted by NECSRC 2017 completed assurance mechanisms prepared and presented to NEURC. Subtask 1.2.4. Developing Utility
Benchmarking New deadline is Oct 31, 2017. M 1.2.4.1 Rules on accounting by M 1.2.4.1 Rules on accounting by licensed licensed type of activity in DH type of activity in DH sector enacted by Feb 28, sector published and adopted by NECSRC. 2017 Not NEURC. M 1.2.4.2. Rules on accounting by licensed July 31, completed M 1.2.4.2 Rules on accounting by type of activity in water & wastewater sector 2017 licensed type of activity in water & enacted by NECSRC wastewater sector published and adopted by NEURC.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 55 Table 13. Q16 Milestones for Activity 1: Improve CE Regulatory and Legislative Enabling Environment Completion Task/Milestone Deadline Comments Status New deadline is Dec 31, 2017. M 1.2.4.3 Report on efficiency of M 1.2.4.3. Efficiency of operations system operations system by by benchmarking mechanisms enacted by benchmarking mechanisms for DH NECSRC in DH sector July 29, Partially sector submitted to NEURC. M 1.2.4.4. Efficiency of operations system 2017 completed M 1.2.4.4 Report on efficiency of by benchmarking mechanisms enacted by operations system by NECSRC in water & wastewater sector benchmarking mechanisms for water & wastewater sector submitted to NEURC.
Task 1.4. Supporting Energy Efficiency Targeted social subsidies
Standards provided to low-income families to mitigate tariff increases. M 1.4.1. Four new energy standards July 31, Partially Development of two standards developed and approved 2017 completed stopped. Task 1.5. Public Information and
Awareness M 1.5.3. National public awareness Sept 30, campaign to promote EE, energy Completed 2017 conservation, and RE implemented
Table 14. Q16 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 Clean Energy Projects
М 2.2.1 SEAPs approved by the city Sept 30, Partially The SEAP for Kyiv is not approved councils 2017 completed by the city council.
М 2.2.2 CE demo projects in residential Sept 30, Partially Design documentation finalized for buildings supported 2017 completed four of five projects.
Task 2.3. Introduction of Energy
Management Systems Cities prepared and approved EM documentation, but did not apply for certification. M 2.3.1. Two cities applied for ISO 50001 Sept 30, Partially
certification 2017 completed Work Plan Year 5 milestone – M 2.3.1 One city prepared for ISO 50001 certification. Task 2.5. Support Mechanisms That
Mobilize Private Sector Investment M 2.5.1. At least one ESCO/energy Sept 30, performance contract (EPC) for municipal Completed 2017 end use EE initiated
56 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Table 14. Q16 Milestones for Activity 2: Promote Investment in CE Technologies and Applications Completion Task/Milestone Deadline Comments Status
The cities of Khmelnytskyi, Ivano- M 2.5.2. At least four PPPs initiated as a Sept 30, Frankivsk, Kamyanets-Podilsky Completed result of U.S. Government assistance 2017 and Teplodar initiated projects on PPP arrangements. Task 2.7. Implementing Sub-Activity 2 Tasks in Odesa Oblast and Ukrainian
Territories Affected by the Conflict with Russia
M 2.7.1 Local capacity built in municipal Sept 30, Completed energy management 2017
Two of seven plans were approved М 2.7.2 Energy plans approved by local Sept 30, Partially and five are awaiting city council communities 2017 completed approvals. М 2.7.3 Regional energy plan developed Sept 30, Not The new deadline (Year 5 Work and discussed 2017 completed Plan) is Dec 31, 2017
M 2.7.4 At least five projects initiated Sept 30, and/or implemented with U.S. Government Completed Six projects initiated 2017 assistance
Table 15. Q16 Milestones for Activity 4: Enhance Capacity for the GOU in LEDS Completion Task/Milestone Deadline Comments Status Task 4.1. Strengthening Institutional
Capacity in Planning LEDS-REDS M 4.1.3. LEDS Action Plan process Sept 30, Partially finalized and LEDS policy document New deadline Dec 31, 2017 2017 completed developed
M 4.1.4. Paris Agreement Analytical July 30, Completed Reports developed 2017
Aug 31, M 4.1.5. MRV Analytical Report developed Completed 2017
M 4.1.6 State Climate Policy Concept Sept 30, Completed Action Plan developed 2017
Task 4.2. Implementing LEDS-REDS through Support in Developing and
Introducing Clean Energy Technologies and Energy Services
M 4.2.1. LEDS-related legislation July 31, Completed proposals developed 2017
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 57 Table 15. Q16 Milestones for Activity 4: Enhance Capacity for the GOU in LEDS Completion Task/Milestone Deadline Comments Status Task 4.3. Developing a Uniform Database on LEDS-REDS and Exchanging Experiences and Best
Practices with Other Countries Participating in EC-LEDS
M 4.3.1. LEDS Database populated and Sept 30, Not New deadline for transfer is Dec 31, operated by partner agency 2017 completed 2017
58 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH 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 EM. The macroeconomic situation (e.g., interest rates) has a considerable effect on commercial and international financial institutions lending and investment. Despite the above factors, the Project continued to make substantial progress in accomplishing the SoW and corresponding Work Plan.
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60 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT F. PLANS
F.1 ACTIVITY 1: PLANNED ACTIVITIES IN QUARTER 17 F.1.1 Task 1.1: Developing Enabling Legislative and Policy Environment Support adoption of the Law on Housing and Communal Services by VR; Support implementation of the Law on Commercial Metering and 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 (modeling) 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; 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 the National Action Plan on RE and/or EE by developing sub-laws, incentive mechanisms, and methodologies. F.1.2 Task 1.2: Assistance to NEURC Subtask 1.2.2. Capacity Building Based on an existing capacity-building plan (CBP), conduct training seminars for 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 cogeneration (production of electric and heat energy), with focus on valuation of assets of entities operating in the centralized water supply and wastewater and DH sectors; Develop methodological recommendations on the long-term business plans (investment programs) for licensees; Improve existing legislation on incentive-based tariff regulation (DH, water and wastewater sectors); Develop and implement the service quality regulation system for centralized heat and water supply and wastewater sectors. Subtask 1.2.4. Developing Utility Benchmarking Develop Rules/Regulations on accounting by licensed type of activity by entities (incentive-based regulation). 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.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 61 F.1.3 Task 1.3: Supporting Improvement of Social Safety Net for Vulnerable Population Develop and discuss with stakeholders a concept paper on the 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 EM (ISO 50001) standards in Ukraine. F.1.5 Task 1.5: Public Information and Awareness Disseminate information related to CE/EE, social safety net, and tariff reform through participation in media events, social media, MERP websites, partners’ websites, and Facebook pages. Develop and disseminate informational materials, outdoor materials, and video PSAs, as well as advertisements for social media on issues related to: – EE; – Investments in EE in the 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 the residential sector; – Benefits of HOA creation; – Other topics as requested by MinRegion, SAEE, MinSocPolicy, and GOU. Support telephone hotline counselling on state/municipal loan compensation programs for EE measures; EE measures implementation, EE saving potential, etc. Produce a third season of the TV program Your Home to highlight results and progress of EE reform in the residential sector due to the work of USAID/MERP, partners, and donors Support expert briefings for media on range of story options, including: benefits of EE in the residential sector, AE resources, benefits of HOAs, and incentive-based tariff reform. Promote topics through social media, MERP websites, partners’ websites, and Facebook pages. Cooperate with local HOA/CE RCs, manufacturers of EE materials and equipment, utility companies, Regional Social Protection Offices, national, regional and local NGOs, and MERP partner cities to enhance the outreach campaign on EE and distribute information materials among residents of municipalities. Support a wide outreach campaign through a range of activities in partner cities, such as Energy Efficiency Days, USAID Field Days, Sustainable Energy Weeks, etc. Conduct study tours for national and regional journalists to the MERP partner city with the best AE/EE results in the residential sector or to other sites where the most innovative projects have been implemented.
62 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT In cooperation with MinRegion, SAEE, partner cities administrations, NGOs, HOAs/CE RCs conduct an EE Marathon aimed at disseminating MERP results; Hold regional workshops to educate journalists and communication departments of MERP partner cities on issues related to CE/EE and incentive-based tariff regulation to involve them in energy education reform and encourage them to work with the public on these issues; Create success stories regarding the most prominent achievements of MERP during its 4-year activities period of reforming the energy sector in Ukraine; Support a series of press briefings with participation of MinRegion, SAEE, and partner cities administrations, to highlight major joint achievements of energy sector reform and behavior change toward an EE lifestyle; demonstrate success stories on video; Create a MERP Best Practices Catalogue for distribution during public and training events. F.2 ACTIVITY 2: PLANNED ACTIVITIES IN QUARTER 17 F.2.1 Task 2.2: Assisting Municipalities with Planning, Preparing, and Financing for CE Projects Provide assistance in adoption of a SEAP for the City of Kyiv; Prepare monitoring reports on status of SEAPs implementation for partner cities; Produce a quarterly digest on investment opportunities and best practices, and distribute the digest among key stakeholders; Conduct trainings for partner banks (Ukrgasbank) on EE measures and EE/RE projects; Prepare investment proposals (prefeasibility studies, business plans, design documentation) for EE and CE projects for 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 EM in accordance with ISO 50001; Disseminate information on the experiences of certified cities to other cities in the region through roundtables, webinars and other dissemination tools. F.2.3 Task 2.4: DCA Loan Guarantee Conduct monitoring of the utilization rate of USAID DCA with Bank Lviv. F.2.4 Task 2.5: Support Mechanisms That Mobilize Private Sector Investment Support development of CE projects based on PPP arrangements. F.2.5 Task 2.7: Implementing Sub-Activity 2 Tasks in Odesa Oblast and Ukrainian Territories Affected by the Conflict with Russia Assist with investment attraction and implementation of municipal EPCs; Assist partner cities in Eastern Ukraine and the Odessa region in preparing EM documentation, procedures, and tools;
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 63 Conduct energy audits for key municipal service areas, key utility companies, and public buildings to identify the most promising long-term investment proposals, GHG emissions baseline, and reduction potential; Conduct public hearings on energy plans (SEAPs/SECAPs) and support approval process for energy plans by cities; Develop RSEP 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 to establish and/or transform Condominium Advisory Centers into CEACs to attract investments in CE projects in residential buildings; Support implementation of demonstration projects promoting CE use and energy conservation. F.3 ACTIVITY 3: PLANNED ACTIVITIES IN QUARTER 17 F.3.1 Cross-Cutting (Anticorruption) Support legislative acts (national and local) designed to fight corruption in municipal energy sector (in coordination with Task 1.1 activities) Support local anticorruption initiatives Support collection, analysis, publication, and distribution of information on anticorruption. Disclose information to public (anticorruption monitoring). Conduct local press conferences, presentations, and discussions to advocate transparency and disclosure in energy sector. Cooperate with NGOs, anticorruption “watchdog” organizations, and investigative journalists or agencies in conducting advocacy campaigns to increase transparency in the municipal energy and communal services sector. F.4 ACTIVITY 4: PLANNED ACTIVITIES IN QUARTER 17 F.4.1 Task 4.1: Strengthening Institutional Capacity in Planning LEDS-REDS Provide technical expert and advisory support to budgetary entity, the National GHG Center of MinEcology during in-country review process of National GHG Inventory Report (NIR) 1990-2015 and follow-up process after the review; Provide technical and expert assistance on 7th National Climate Change Communication Report to MinEcology, namely drafting Section 4 and Section 5 of National Communication; Provide support on adoption process of State Climate Policy Concept Action Plan, including concurrence process, roundtables, and public and expert discussions; Provide assistance to MinEcology on LEDS Action Plan development process, draft LEDS Policy document, conduct broad stakeholders consolidation process, and present the outcomes; Develop and support expert discussion of analytical reports on Paris Agreement provisions conducted in accordance with MinEcology request;
64 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Develop Carbon Sequestration Section of LEDS Policy document and contribute to overall drafting of LEDS Policy document; Support Paris Agreement implementation processes, including Ukrainian NDC development and submission to the United Nations Framework Convention for Climate Change (UNFCCC) upon request of MinEcology and participation in international LEDS initiatives. Task 4.2. Implementing LEDS Through Support in Developing and Introducing Clean Energy Technologies and Energy Services 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 the 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 Populate the UA-LEDS database at www.lowemission.org.ua, and transfer to partner agency. The updated list of milestones for Q17 of the project is presented in Table 16, Table 17, and Table 18.
Table 16. Q17 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 Housing and Communal Services Dec 31, 2017 adopted by VR. M 1.1.2 Laws for DH market operations registered in Dec 31, 2017 VR. M 1.1.3 Draft secondary legislation to support implementation of EU Directive 28/2009/EU submitted Oct 31, 2017 and discussed with key stakeholders. Task 1.2. Assistance to National Energy & Communal Services Regulatory Commission (NEURC)
Subtask 1.2.2. Capacity Building
M 1.2.2.1 Capacity of NEURC improved. Dec 31, 2017
Subtask 1.2.3. Improving Heat Tariff Setting M 1.2.3.1 Suggestions and Recommendations Dec 31, 2017
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 65 Table 16. Q17 Milestones for Activity 1: Improve CE Regulatory and Legislative Enabling Environment Task/Milestone Deadline Comments developed, verified, agreed with NEURC and sent to State Property Fund of Ukraine. M 1.2.3.2 Methodological recommendations (Manual) for licensees on the long-term business plans (investment programs) development, in area of water & Dec 31, 2017 wastewater, agreed with NEURC and published on website. M 1.2.3.3 Test calculations of tariffs for water & wastewater DH (transportation) based on the incentive Dec 31, 2017 based regulation submitted to NEURC. M 1.2.3.4 Quality of Services assurance mechanisms Dec 31, 2017 prepared and presented to NEURC. Subtask 1.2.4. Developing Utility Benchmarking M 1.2.4.1 Rules on accounting by licensed type of activity in DH sector published and adopted by NEURC. Oct 31, 2017 M 1.2.4.2 Rules on accounting by licensed type of activity in water & wastewater sector published and adopted by NEURC. M 1.2.4.3 Report on efficiency of operations system by benchmarking mechanisms for DH sector submitted to NEURC. Dec 31, 2017 M 1.2.4.4 Report on efficiency of operations system by benchmarking mechanisms for water & wastewater sector submitted to NEURC.
Task 1.4. Supporting Energy Efficiency Standards
M 1.4.1 Two new energy standards developed. Dec 31, 2017
Table 17. Q17 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 Kyiv SEAP approved by the city council. Dec 31, 2017
М 2.2.2 CE Demo projects in residential buildings Nov 30, 2017 supported. Task 2.3. Introduction of Energy Management
Systems
M 2.3.1 One city prepared for ISO 50001 certification. Nov 30, 2017
Task 2.5. Support Mechanisms That Mobilize
Private Sector Investment
66 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT Table 17. Q17 Milestones for Activity 2: Promote Investment in CE Technologies and Applications Task/Milestone Deadline Comments
M 2.5.2 At least one PPPs initiated as a result of US Dec 31, 2017 Government assistance. Task 2.7. Implementing Sub-Activity 2 Tasks in Odesa Oblast and Ukrainian Territories Affected by the Conflict with Russia M 2.7.1 At least 10 ESCO/EPCs for municipal end use Dec 31, 2017 EE initiated. М 2.7.2 Energy plans approved by local communities. Oct 31, 2017 М 2.7.3 Regional Energy Plan developed and Dec 31, 2017 discussed. M 2.7.4 At least 5 projects initiated and/or implemented Dec 31, 2017 with US Government assistance.
Table 18. Q17 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 LEDS Action Plan Process finalized and LEDS Dec 31, 2017 policy document developed.
M 4.1.2 Paris Agreement analytical reports developed. Dec 31, 2017
M 4.1.3 State Climate Policy Concept Action Plan Dec 31, 2017 adopted.
M 4.1.4 Section 4 and 5 of Seventh National Dec 31, 2017 Communication on Climate Change 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 legislation proposals developed. Dec 31, 2017
Task 4.3. Developing a uniform database on LEDS- REDS and Exchanging Experiences and Best
Practices with Other Countries Participating in EC- LEDS
M 4.3.1 LEDS Database populated and transferred to Dec 31, 2017 partner agency.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 67
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68 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 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 Annually48 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)49 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 1.15 Sources: GOU (State Statistics Annually n/a n/a n/a n/a n/a indicator) 2011 2012 2013 2014 2015 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.
48 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. 49 First number reflects Energy Imports and the second – Net Energy Imports
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 69 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 23950 580 3,723 400 8,201 1,8 00 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 3 12 1.0.2 conservation officially proposed, Economy; Rada Committees; adopted, or implemented as a Association of Ukrainian Cities; result of USG assistance NECSRC; 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
50 Number of people, in thousands, affected by investments.
70 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH 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
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 23 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; NECSRC; NEURC
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 41 30 support legal and regulatory Ministry of Energy; MinRegion; municipal energy reforms Ministry of Environment; Ministry of Economy; Rada Subcommittee on
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 71 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
Communal Services; Association of Ukrainian Cities; NECSRC 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 4 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 0 200 256 200 532 300 418 300 299 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
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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
Disaggregated: Gender 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; 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: NECSRC, regulated that apply cost-reflective, Annually 0 0 0 0 0 10 n/a 90 100 utilities, 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: NECSRC , 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: NECSRC ; municipal Semi-annually 0 S1/S2 S1/S2 S2/S3 S2 S351 S2 S4 S2 S4 1.3.2.1.1 assistance utilities; implementing partners 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 –
51 USAID cancelled this task.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 73 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
International Best practices transferred and used Justification: Indicator of capacity building for NECSRC; 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: NEURC; municipal Semi-annually 0 S1/S2 S1/S2 S2 S2 S3 S1-S2 S4 S2-S3 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 , 0 0 0 2 , 0 0 0 10,000 3,686,048 20,000 11,826,670 25,000 15,571,900 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 2.0 assistance52 Sources: Implementing partners; Annually 0 0 0 70 150.8 83 199.0 113 464.0 266 GOU entities; municipalities; private
partners; utilities; IFIs; commercial
52 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.
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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
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 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 21 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 21 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 17 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 Labor hours of training completed Unit:: Number of labor-hours in 2.2 in technical energy fields training Annually 0 3 , 6 8 0 7 , 3 2 8 3 , 2 0 0 4 8 , 3 5 0 2,400 2 5 , 6 2 5 1,280 18,553 10,560 supported by USG assistance Sources: Implementing partners;
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 75 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
GOU entities; municipalities; industry professionals and their associations 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 86.9 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 43 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, round tables, 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
76 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH 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
Objective 3.0: More Private Investment in Energy Sector Unit: Millions of US Dollars Amount of investment leveraged Sources: Implementing partners; in US dollars from private and energy companies / utilities; Annually 0 0 0 55 90.5 65 119.4 80 278.4 200 public sources for climate change investors; banks; IFIs; commercial as a result of USG assistance banks 3.0 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 0 132 285.3 157 376.4 214 877.7 503 municipal utilities; municipalities; energy, industry, urban, and or 53 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 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 3.1.1.2 Number of climate change Unit: Number of tools Semi-annually 0 0 0 2 2 4 5 4 2 10
53 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.
USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT 77 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
mitigation tools, technologies and Sources: Ministry of Energy; Min- methodologies developed and Region; Ministry of Environment; adopted as a result of USG Ministry of Economy; municipalities, assistance utilities; SAEE; 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 11 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 number of loans (for all DCA guaranteed portfolio, in percentage Annually 0 5 11.89 10 12.17 20 21.70 20 36.91 55 arrangements) Sources: Implementing partners; 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 2-3 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 3.2.2.2 regulated utility companies that Sources: Implementing partners; Annually 0 0 0 10 186 180 210 233 achieve or pass the break-even ESCOs, private investors,
78 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH 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
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 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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80 USAID MUNICIPAL ENERGY REFORM PROJECT – SIXTEENTH QUARTERLY REPORT
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USAID MUNICIPAL ENERGY REFORM PROJECT – FOURTEENTH QUARTERLY REPORT 1