Denmark contributes to the modernisation of the DH network in Ukraine

Date: 25/02/2021

Kremenchuk to modernise part of its district heating network.

The first grant agreement provided by the Danida Sustainable Infrastructure Finance Programme in Ukraine has been signed with the city of Kremenchuk to modernise part of its district heating network.

The modernisation of the district heating in the city of Kremenchuk will improve the current district heating infrastructure and result in a sustainable, energy-efficient and reliable system. The project will provide heating to some 25,000 inhabitants in the Rakivka district, which accounts for ten per cent of the city’s district heating customers.The Danida Sustainable Infrastructure Finance (DSIF) Programme, financed by the Ministry of Foreign Affairs of Denmark and managed by IFU, finances non-commercial sustainable infrastructure projects in selected countries. This district heating project is the first DSIF investment to be granted to a Ukrainian city.

“This is a great day for Nordic-Ukrainian cooperation and for the citizens of Kremenchuck. But first and foremost it is a great day for climate action. It is a very practical step towards a sustainable and energy-efficient district heating system. It will also demonstrate the potential that Ukraine’s extensive network of district heating systems has as a crucial part of Ukraine’s future energy system. Denmark is ready to work with Ukraine in that process as part of the Ukrainian-Danish energy partnership,” Ole Egberg Mikkelsen, Ambassador of Denmark in Ukraine.

Nefco is administering the grant through a trust fund agreement with DSIF. In addition to the grant from DSIF, the project in Kremenchuk is financed through a loan from Nefco. The city of Kremenchuk and Nefco have cooperated since 2015 regarding energy-efficiency modernisation of the street lighting network in the city. Nefco has helped the city to develop this investment project based on a DSIF-funded feasibility study.

The total investment for the project is EUR 12.7 million. The DSIF investment grant is EUR 4.45 million, the Nefco loan is EUR 6 million and the city’s own contribution is approx. EUR 2.25 million. In addition, DSIF will contribute EUR 350,000 for technical assistance during the project implementation. The grant financing will be paid directly to the awarded contractor, which is selected according to the general Nefco Procurement Policy and Procedures.

“We are very grateful to receive the first Ukrainian DSIF grant as well as loan financing from Nefco to be able to improve our district heating network with energy-efficient technology and sustainable heat sources. But, above all, we are very content that we will be able to ensure the heating supply to our citizens in the Rakivka district once the project has been implemented.” Vitaliy Maletskyi, Mayor of the city of Kremenchuk.

Among the many systemic improvements, a 4 MW biomass boiler will be installed utilising the local biomas resources available. It is expected that the planned measures and improvements of about 44 MW district heating capacity will have a significant positive climate impact, resulting in reduced gas consumption and consequently a decrease of about 10,500 tonnes CO2.

“We are happy to be able to facilitate the first of several DSIF grants in Ukraine. This success was made possible by a strong and long-term commitment and engagement by specialists from the city of Kremenchuk and DSIF. Nefco is especially looking forward to seeing the project in operation, which will eventually result in improved financial and environmental performance of the district heating system in Kremenchuk.” Bo Nyhus, Investment Director at Nefco.