Summary sheet
Financing district heating and energy efficiency investments through Oschadbank.
The Ukraine District Hearting Oschadbank aims at financing projects carried out by local authorities, to allow fast restoration and protection of the heat generation capacity destroyed or out of order to ensure the supply of critical services for next winters and improving the energy security of Ukraine. The loan will allow the deployment of: a. small-scale gas fired combined heat and power plants, solar photovoltaics (PV), complemented by batteries and other storage technologies which are crucial to increase the resilience of Ukraine energy supply; b. decentralised heat generation; c. components that will bolster the physical and cyber security of the infrastructure; d. heat pumps, heat storage systems and related networks as well as renewable heat generation; e. energy efficiency in public buildings, which would also be eligible under the facility. The eligibility for financing aligns with the Ukraine Energy Rescue Plan, an emergency measure designed to address Ukraine's critical energy needs and support the resilience and recovery of its energy infrastructure.
Since February 2022, the Russian aggression towards Ukraine has caused devastating effects to the Ukrainian energy sector. Russian military attacks by drones and missiles intensified in spring 2024 and targeted power and heat generation plants across the country. More than half of electricity and district heating assets are destroyed or not useable threatening vital services and impacting the economy. Most of the time the country cannot meet the minimum demand particularly during winter periods. In the next two years, the need for gas fired units for municipalities, half of which cogeneration, ranges between EUR 2 billion and EUR 4 billion. IFIs commitments are not sufficient to cover the gap, thus a significant financing need remains.
The sub-operation will support investments that address major needs in recovery of critical energy infrastructure in Ukraine in affected areas, helping to meet basic needs to ensure decent living conditions. The focus on rehabilitation, reconstruction and securing of energy supply, improving energy efficiency of restored or associated infrastructure and improved district heating infrastructure will generate positive externalities and mitigate existing negative externalities. These externalities include the benefits of avoiding damage to public health and fewer disruptions of economic activities. These benefits would not be realised to the same extent without public intervention. Moreover, limited access to finance for public actors reinforces the case for EIB intervention and support to Ukrainians during ongoing recovery. The suboperation will advance priorities of Ukraine that are also included in the country specific Multiannual Indicative Programme 2021-2027 for Ukraine. The sub-operation is expected to provide substantial financial contribution, via long term maturity and grace periods and by providing an investment grant aiming at reducing the amount to be borrowed by communities located close to the frontline for district heating investments and therefore enabling the access to finance for vulnerable communities.
Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.
Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.