«In the pre-war energy balance of Ukraine, there was a certain parity: the building sector accounted for 40% of final energy consumption, industry – 40%. However, the situation has changed a lot. At the moment and, unfortunately, after the war, industry and business will probably be much smaller in percentage and absolute terms, for reasons that are clear to us. Regarding the impact of the war, the total volume of direct losses of housing and social infrastructure as of 07/01/2022 was USD 43 billion out of 100 billion total losses»,- noted Vadym Matkovsky, Energy Efficiency Coordinator of the Reform Support Team at the Ministry of Regional Development during the EUEA expert discussion on energy efficiency.
«Increasing the energy efficiency of buildings has been and will remain an important element in improving Ukraine’s energy security in the future. The Ministry of Regions, as the responsible body for the energy efficiency policy of buildings formation, is working on the creation of a comprehensive, coordinated system for the introduction of large-scale thermal modernization of the multi-apartment buildings and individual residential buildings, as well as public buildings (schools, kindergartens, hospitals, etc.)”.
What was proposed in Lugano regarding energy efficiency and decarbonisation in communities?
«Three stages are considered:
- «Wartime economy» (until the end of the war in 2022, 2023): maximally carry out low-cost and quick-accumulating measures in buildings: mass insulation of pipelines in the basements of more than 60,000 residential and 30,000 public buildings, adjustment of autonomous gas boilers for heating public institutions, the establishment of individual heating points, for which there is a need for approximately EUR 500 million.
- «Post-war recovery» (until 2025): initiate the first impulse for large-scale thermal modernization, rebuild completely destroyed schools and kindergartens according to the NZEB principle, and gradual abandonment of natural gas consumption due to the transition to RES.
- «Structural modernization of the country» (until 2032): large-scale thermal modernization of buildings, which, according to preliminary estimates of the working group, will require approximately EUR 60 billion, and will cover a third of the building stock in the country, complete rejection of imported gas consumption, transition to NZEB construction»,- said Mr Matkovsky.
Regarding the Energy Efficiency Fund
«As to talk about financing tools, official representatives of the European Commission constantly monitor the activities of the Energy Efficiency Fund and evaluate it as a successful, reliable and systematic tool. Currently, together with international partners, a decision is being worked out on how to finance the restoration of the country, including through the funds of Ukrainian partners and russian reparations. The Energy Efficiency Fund is at least considered one option for such a focal financing instrument. It is quite likely that part of the funds from the EU budget for the restoration and thermal modernization of buildings will be directed through the Energy Efficiency Fund.
Regarding Law № 6485 adopted in July 2022, which concerns not only energy management systems and energy certification, but is more aimed at creating conditions for large-scale thermal modernization of buildings in Ukraine. In agreement with the EU Representation in Ukraine, one of the elements of this law is that the Energy Efficiency Fund, for a certain period determined by the Cabinet of Ministers, can provide grants not only for energy efficiency measures but also for the restoration of buildings from the energy efficiency viewpoint(replacement of broken windows and doors with highly energy-efficient ones, restoration of damaged thermal insulation on the walls). This will be a kind of approval of the Fund regarding the wider activity of restoring damaged buildings.
In addition, the law stipulates three more important things regarding the financing by the Fund:
- Now the Fund can legally shape its program in such a way as to provide co-owners with grants in advance (before the start of thermal modernization), and not after the fact. This is very important, given the current low ability of co-owners to attract commercial loans at high-interest rates.
- The Fund will be able to provide support for preparatory repairs, which will remove part of the financial burden from co-owners and positively affect the quality and durability of thermal modernization. Co-owners will be able to receive up to 10% of the total cost of thermal modernization of their building for repairs.
- Also, the Fund possibilities regarding the co-owners staged reimbursement for the thermo-modernization cost were regulated by law.
The Law “On Energy Efficiency”, which was adopted in 2021, provides for the creation of a state target program for thermal modernization of buildings. This program is intended not to contradict, but to synergistically complement other financing instruments for the thermal modernization of buildings, such as the Energy Efficiency Fund for multi-apartment buildings and the programs of international financial organizations for public buildings.
The draft of the State Target Program until 2030 provides for incentives and support for thermal modernization of residential and public buildings, but primarily for individual houses. The program can be conventionally called a kind of 10-year financing plan for the general strategy of thermal modernization until 2050. In addition, the draft program envisages the creation of favorable market conditions, namely an increase in the volume of the national production of energy-saving building materials and energy-efficient equipment. An important component of the state program is the development of competences and qualifications of specialists in the field of energy efficiency increasing of buildings.
In addition, the Ministry of Regions is preparing for public discussion the draft Thermalmodernization Strategy until 2050. This is a large and complex document, the development of which is a requirement of EU directives and is part of the measures of the government plan for European integration.
The strategy aims to consolidate the necessary state policies and efforts of all stakeholders (government, business, municipalities, and the public) to create a long-term systematic approach and favorable conditions for large-scale thermal modernization. The strategy is divided into three stages:
- by 2030 – launch and increase the pace of thermal modernization throughout the territory of Ukraine;
- by 2040 – increase the depth of thermal modernization to the level of NZEB;
- by 2050 – achieve decarbonization of the national building fund by reducing the energy consumption of buildings by at least 3 times as a result of insulation and completely abandon natural gas, replacing the remaining needs with local RES.
The future Thermomodernization Strategy contains seven strategic goals, the achievement of which will contribute to a significant strengthening of Ukraine’s energy independence.”
More details in the presentation: ЄУЕА-ЕЕ будівель and video recording of the discussion: https://cutt.ly/bZgD9YR [00:49:00-: 01:09:00]