Western NIS Enterprise Fund (WNISEF) Introduces Energy Efficient Technologies to Ukrainian Industry
WNISEF’s investment in Energy Alliance has made it possible for Ukrainian enterprises to access energy efficiency solutions which considerably reduce their energy costs and thus make Ukrainian products more competitive on both domestic and export markets. Moreover, Energy Alliance’s tailor-made solutions will assist Ukraine in reducing its overall energy consumption and related reliance on imported fuel sources.
The energy consumption rate of Ukrainian industrial companies is one of the highest in the world. Indeed, energy consumption at Ukrainian companies is more than 11 times higher than in the United States of America and twenty six times higher than in Japan. Even when compared to the transitional economies of the New Independent States, Ukrainian energy consumption is twice as high as that of any of its fellow transition economies, including Russia. Unfortunately, Ukrainian companies are still almost entirely reliant on an outdated energy infrastructure that cannot provide a cost efficient, reliable and steady energy supply.
Ukrainian companies therefore face a tremendous challenge in optimizing their energy consumption. To improve energy efficiency Ukrainian industry require new technologies and alternatives to the current energy infrastructure. However, most Ukrainian companies have limited resources to allocate to energy improvement projects and therefore cannot afford to purchase independent and cost-saving energy generating capacities.
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| Maxym Burtovy, Energy Alliance’s Chief of Executive Officer, demonstrates the equipment’s capabilities at the Hostomet Glass Plant, the largest glassware manufacturer in Ukraine. |
Western NIS Enterprise Fund (WNISEF), the region’s leading private equity fund capitalized with $150 million by the U.S. Agency for International Development (USAID), identified this as an area where a market solution could be provided. Together with its Ukrainian partners, Western NIS Enterprise Fund established the Energy Alliance to assist Ukrainian companies in reducing their energy costs by designing, installing and financing energy saving technologies. The Energy Alliance is the first private company in Ukraine that offers cogeneration turnkey solutions for Ukrainian medium-size companies for whom energy is a major cost component. The Energy Alliance constructs mini plants on a customer’s site and uses the plant’s thermal waste to produce heat, steam, electricity, and even cooling.
Recently, the Energy Alliance completed a pilot project at the Hostomel Glass Plant (HGP), the largest glass container manufacturer in Ukraine, where energy costs made up some 15 percent of the total cost of goods sold. The Energy Alliance installed and financed a natural gas-fired cogeneration mini-power station at the factory premises that produces energy three times less expensively than the energy provided by the state energy company. For comparison, the Hostomel Glass Plan used to buy a kilowatt-hour for $0.047, while one kilowatt-hour produced at its cogeneration plant costs approximately $0.015. Having installed the station at its site, HGP reduced its total energy costs by 10 percent. Such substantial cost savings resulted from the use of more efficient equipment and elimination of transmission losses associated with transporting the energy over large distances. Moreover, the Energy Alliance’s financing mechanism enables it to share the energy savings generated by its customized energy efficiency solution with its client. Hostomel Glass Plan obtained considerable improvement of the quality and cost of its energy supply without allocating valuable human resources and major capital expenditures to undertake this project.
“This is a highly cost-effective solution for an energy-intensive enterprise such as Hostomel Glass Plant,” said Chairman of HGP’s Supervisory Council Dmytro Olijnyk. “Through the use of this power station we will be able to meet approximately 57 percent of our overall energy needs while significantly reducing our energy costs, making our product even more competitive. At the same time, heat generated by the cogeneration unit will be supplied to residents of adjacent buildings.”
The Energy Alliance was well capitalized by Western NIS Enterprise Fund and its partners. However, even more importantly, it has attracted additional debt resources from the European Bank for Reconstruction and Development (EBRD) due to its high quality management, strong technical abilities and the attractiveness of the market for its services. Shortly after establishment, the European Bank for Reconstruction and Development provided $10 million in debt to the Energy Alliance, assuring the companies’ further success and expansion of its services throughout Ukraine. This Western NIS Enterprise Fund investment not only assisted in the development of a new private sector market solution to Ukraine’s energy intensiveness, but also attracted additional capital to ensure a broad application of this new and highly successful solution throughout the region.
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