EIFO Green Accelerator Project in Ukraine – Rebuilding Ukraine in a sustainable way

The project aimed to identify a Ukrainian city with strong potential for district heating (DH) modernization, and Rivne was selected. Together with the local DH utility, Rivneteploenergo, the consortium carried out a technical assessment and developed a roadmap for implementation.

These two deliverables have become a foundation for future modernization measures, including the replacement of interconnection pipelines, the installation of new pumping equipment, and the potential introduction of biomass boilers.

An important achievement was the facilitation of structured dialogue between Rivne’s utility, the City Council, and six International Financial Institutions (IFIs). This created a shared understanding of governance and financing challenges, as well as future opportunities for co-financing and guarantees. A nationwide webinar gathered 290 participants from Ukrainian DH utilities and municipalities, providing broad exposure for Danish solutions.

Participants and their contributions

• Desmi brought forward high-efficiency pumping solutions tailored to the needs of Rivne’s DH system. Their proposal demonstrated that replacing outdated pumps with modern, energy-saving units could significantly reduce electricity consumption – with a payback period of just two years.
• Linka Energy contributed expertise in biomass boiler technology, offering a renewable alternative to natural gas. While no immediate orders were placed, the project helped Linka identify concrete opportunities and better understand how Ukrainian utilities and contractors approach biomass-based district heating solutions.
• Logstor introduced advanced pre-insulated pipe systems designed to reduce heat losses in the distribution network. The company used the project to build direct connections with Ukrainian utilities and city councils, resulting in promising leads in Rivne and several other cities.

Lessons learned

The Rivne project generated a number of valuable insights for Danish companies aiming to work in the Ukrainian DH sector:

• Governance and decision-making: One of the strongest lessons was the importance of identifying the true decision-makers early. In Ukraine, the utility director does not necessarily have full authority over procurement or financing. Municipal councils, concession owners, and sometimes state institutions hold the power to approve loans, sign guarantees, and validate co-financing. In Rivne, questions of ownership and concession rights repeatedly surfaced during IFI discussions — making it clear that a detailed understanding of both formal and informal governance is essential.
• Financing realities: Private operators of DH infrastructure are often at a structural disadvantage when it comes to IFI funding. Most IFIs, as well as EIFO’s own grant instruments, prioritize municipal or state-owned borrowers. This creates a barrier for private utilities, which may lack the balance sheets or concession arrangements required to qualify for concessional loans. The clear implication is that municipalities must be engaged from day one, ideally through a formal MoU or Letter of Interest, to unlock financing windows.
• The impact of tariffs and subsidies: The Ukrainian heat market is highly influenced by fixed, subsidized gas tariffs under the wartime Public Service Obligation (PSO). While technologies such as biomass boilers may offer long-term savings and lower emissions, utilities lack short-term incentives to invest when gas remains artificially cheap. Unless the tariff framework changes — or additional grant funding is introduced — renewables may be delayed despite their clear lifecycle benefits.
• Implementation and procurement: Early alignment with IFI procurement rules is not just a formality but a prerequisite for success. International suppliers need to be prepared with CE certifications, feasibility studies, bank guarantees, and insurance packages. At the same time, cooperation with experienced local contractors familiar with ProZorro (Ukraine’s procurement system) greatly increases credibility and project viability.
• Pilot projects as stepping stones: Small, tangible pilots — such as a pump retrofit, a biomass boiler installation, or a short pipe replacement — can create valuable references and demonstrate success in the Ukrainian context. These pilots help utilities, municipalities, and IFIs build confidence before scaling to larger investments.
• Operational risks under war conditions: Weak utility liquidity, capped tariffs, logistical challenges, and war-related insurance risks all need to be factored into contracts. Staged payments, strong bank instruments, and training for local staff in operation and maintenance were highlighted as crucial risk-mitigation measures.

Overall, the Rivne case underlined that entering the Ukrainian DH market requires much more than technical proposals. Success depends on governance awareness, financing structures, risk planning, and building trust through practical solutions.

The project demonstrated that securing export opportunities in Ukraine’s DH sector requires more than technical offers: it depends on strong partnerships, trust, and a deep understanding of local realities.