UKRAINE DISTRICT HEATING UKREXIMBANK

Promoter – Financial Intermediary

THE STATE EXPORT-IMPORT BANK OF UKRAINE JSC

Location

• Ukraine

Description

Financing district heating and energy efficiency investments through eligible financial intermediaries in Ukraine and in particular through Ukreximbank.

Additionality and Impact

The sub-operation will allow deployment of financial and non-financial support to Ukreximbank, including long tenor and long grace periods, technical assistance and investment grants. Such support will in turn enable the provision of sustainable financing to Ukrainian communities, municipalities, and communal enterprises. Limited access to finance for public actors reinforces the case for EIB intervention and support to Ukrainians during ongoing recovery.

Despite the extremely difficult circumstances, the sub-operation is expected to be delivered and disbursed in a fast time frame as Ukreximbank has significant experience in the municipal communal enterprise sector targeted by the EIB Loan.

The sub-operation will contribute to Ukraine's efforts to re-establish and ensure safe and resilient operation of the district heating network, and improve energy efficiency in the country. The sub-operation would thereby contribute to the provision of heat and power to Ukraine inhabitants and business in the next winter seasons, allowing to reduce further displacement of affected population across the country and abroad.

The sub-operation is fully aligned with the EU assistance to Ukraine within the context of war and will address the issue of security of supply. The sub-operation is strongly aligned with the MIP 2021-2027 for Ukraine's Priority area 1: A resilient, sustainable and integrated economy and its specific objectives 1 and 2 as the proposed operation is expected to:

• Improve energy infrastructure and efficiency with a focus on sustainable energy provision and contribute to the green transition of the economy (specific objective 1)
• Enable a positive business environment and competitive markets and supporting value-adding and job creating sectors of the economy (specific objective 2)

The sub-operation builds on the needs defined in Ukraine's 2024 Rapid Damage and Needs Assessment, and the needs increased after 2024 air strikes, estimating the amount of damaged district heating assets at USD 2.1 Bn. The total cost for reconstruction and recovery over the next 10 years (2024?2033) is estimated at USD 4.7 Bn. The sub-operation supports activities in priority areas of the Ukraine Plan prepared with the support of the European Commission in view of the EU Ukraine Facility. The sub-operation will also benefit from the emergency support measures included in EIB's Ukraine Energy Rescue Plan.

In October 2024, Ukraine adopted a new climate policy law, aligning national targets with EU targets, including a revised net zero target from 2060 to 2050. This legally binding commitment will ensure that local authorities will align the generation mix in district heating with the national climate targets. 

Objectives

The Ukraine District Hearting Ukreximbank 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 for ensuring 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.

Sector(s)

• Energy - Electricity, gas, steam and air conditioning supply

Proposed EIB finance (Approximate amount)

EUR 100 million

Total cost (Approximate amount)

not applicable

Environmental aspects

Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.

Procurement

Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.

Status

Signed - 9/04/2025