Donetsk Region’s First ESCO Contracts Signed in Bakhmut

Bakhmut Municipality has signed energy service contracts with DTEK ESCO for energy-efficiency upgrades of the School No. 24 and the Kindergarten No. 52 which would allow to improve comfort and save 25% of heat used for heating. Bakhmut becomes the first city of the Donetsk Region to sign such contracts.

According to the contracts, the ESCO (energy company) is to fund and perform a number of energy-saving measures allowing to cut heat consumption, ensure compliance with sanitary requirements for children premises and help the Municipality to save heating costs. The Municipality will be paying for the work done exclusively from the savings achieved. An ESCO investor has been selected from bidding procedure on ProZorro system.

The contractor has already commenced works on the sites. “At the school and kindergarten, DTEK ESCO is to deploy and commission an individual heating installation and weather-dependent automatic controls by the heating season beginning, as well as to replace and insulate the pipework. During the entire validity terms of the contracts the contractor is to ensure normal operation and maintenance of the new equipment, compliance of conditions in the premises with sanitary requirements for temperature, and perform thermal energy saving monitoring,” said Tetiana Tatarinova, Head of the Energy Management and Environment Department of the Office for Economic Development of Bakhmut City Council.

“We are happy to start this partnership with Bakhmut. We hope that other cities and towns of the Donetsk Region will start adopting this experience and jump at the opportunities of energy-efficiency overhauls of urban infrastructure funded by energy service companies,” noted Yevhen Bushma, Director of DTEK ESCO.

It should be recalled that the energy service mechanism was introduced to Ukraine’s public sector in 2016 and assumes that energy service payments are to be made by customers exclusively from their resource savings guaranteed or achieved from implementation of energy-saving measures by such companies. After an energy service contract expires, an ESCO investor hands over the entire equipment package to its client, and all future savings from then on belong to the municipality.

By investing its own funds, an ESCO bears financial risks, assumes complete responsibility for the work quality and is committed to achieve maximum possible saving of utility payments. The mechanism described allows to cut consumption of energy resources by governmental entities with no additional budget costs incurred.

According to the State Agency on Energy Efficiency and Energy Saving of Ukraine, there are already 148 ESCO contracts signed in 17 municipalities as of today totaling 123 million hryvnias.