PNNL

Abstract

Energy efficiency is a critical element of solutions to Ukraine’s political, social and economic challenges. Given that Ukraine’s energy intensity is three times higher than that of Organization of Economic Co-operation and Development (OECD) countries, many opportunities exist to improve energy efficiency in the country. As Ukraine faces shortages of energy supply, policymakers should view energy efficiency as a resource in itself. This has been the approach in most OECD countries but is a new concept in Ukraine. Residential buildings account for the largest share of total final consumption in Ukraine (34%). Combined with commercial and public services (8%), buildings in Ukraine consumed 42% of energy supplied in 2013. For this reason, this report focuses on energy efficiency measures in buildings, facilities and utilities. The report reviews best practices and offers recommendations on raising consumer awareness of energy consumption, regulating energy efficiency of buildings and improving energy efficiency of utilities, in particular district heating. A key challenge for Ukraine’s energy sector and economy more broadly, is non-cost-reflective energy prices, with government subsidizing consumption of industry and households. Absence of utility metering in the majority of buildings and few installed heating controls exacerbate the problem by providing no incentives for consumers to save energy. Policymakers in Ukraine should build on best practices in OECD and other Eastern European countries and introduce regulation that better reflects costs and incentivizes consumer saving. Government programs and incentives can encourage consumers analyze and improve their home’s energy efficiency, particularly focusing on protecting vulnerable consumers, while capacity building and awareness programs can help further drive energy efficiency improvements. Energy efficiency of new buildings will improve with introduction of more stringent building energy codes that should cover not only thermal insulation but also lighting and air conditioning efficiency. A system for effective code enforcement during construction is an investment in improving building’s energy efficiency in the decades to come. Given the global trend of increasing importance of appliances, policymakers should also focus on appliance labeling and mandate procurement of energy efficiency appliances in government agencies. Retrofit programs and financial incentives are key to improving efficiency of existing buildings, which represent the majority of the stock and energy consumption. Addressing inefficiency of utilities is critical. Demand-side management and integrated resource planning have helped successfully improve efficiency and reduce costs of providing energy in many countries. Other successful measures include mandates and targets to improve energy efficiency, such as Energy Efficiency Resource Standards and White Certificates. Best practices in planning and regulation of district heating involve structuring heat tariffs in such a way that incentivized utility saving, in contrast to the tradition cost-plus approach. A key challenge for district heating systems is balancing supply and demand: planning should consider the effect of energy efficiency programs on demand but also improve services and customer satisfaction to retain consumers. Upgrades of boilers or their components, installation of heat sub-stations and switching to using waste heat, where possible, will further improve efficiency of this important sector.