EBRD to fund Ukrainian electricity transmission network upgrade

WCN Editorial Team 31 Jul 2019 EUROPE ENERGY & UTILITIES

The European Bank for Reconstruction and Development (EBRD) has agreed to provide €149m (£122m) to Ukrainian utility Ukrenergo to support the country in upgrading its power transmission network.

Ukrenergo will use the EBRD funding to upgrade its key transmission and infrastructure needed to synchronise with the European electricity networks.

It will also support the country to align its legal framework and operational practices with the EU 3rd Energy Package, a legislative package for gas and electricity markets within Europe. The package was adopted by member countries in September 2009, but has not been implemented in all the member states.

Ukrenergo will receive a 15-year sovereign-guaranteed loan, which will be used to acquire up to 26 new transformers, carry out the automation, and upgrade 12 high-voltage substations in key locations of the Ukrainian transmission network. The upgrade will result in an annual reduction of CO2 emissions by 20,500 tonnes.

The investment is also expected to strengthen the Ukrainian utility’s capacity to bring more renewables such as wind and solar to the country’s grid.

The financing will also help in promoting commercialisation and institutional development in the company by implementing a comprehensive Corporate Governance Action Plan and robust procurement standards.

In January 2019, EBRD agreed to arrange €150m (£123m) loan for the construction of a 250MW wind farm in the Kherson region of southern Ukraine for local developer SyvashEnergoProm, which is co-owned by Total Eren of France and NBT of Norway.

In the first phase, 133MW will be built and it is expected to begin generation by the end of 2019.

The loan package consisted of €75m (£62m) EBRD A-loan and a B-Loan of up to €75m (£62m) from the Green for Growth Fund (GGF) and the Netherlands Development Finance Company (FMO). A parallel loan of €5m (£4.1m) was also provided by the Nordic Environment Finance Corporation (NEFCO).

Once commissioned, the wind farm will generate more than 850,000MWh of renewable energy, while avoiding 470,000 tonnes of CO2 emissions annually. The electricity generated will be enough to power 100,000 Ukrainian households.

Investment for the wind farm was approved last July under the €250m (£205m) Ukraine Sustainable Energy Lending Facility III (USELF III) framework.

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Image: Ukrenergo is the state-owned operator of the Ukrainian transmission network. Photo: Courtesy of EBRD.

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