Consumption-based billing should become obligatory in Ukraine. Such is the World Bank (WB) analysts’ recommendation in their just published study “Modernization of the District Heating Systems in Ukraine: Heat Metering and Consumption-Based Billing.” “We believe that individual heat substations and heat meters could be installed in all Ukrainian buildings connected to the district heating system within five years,” said Laszlo Lovei, World Bank Director for Sustainable Development in the Europe and Central Asia region. “The potential savings would be significant for consumers and the economy in general.”
According to the WB’s conclusions, current tariffs for district heating are significantly below cost and the existing subsidy system is not balanced. District heating tariffs should cover the full cost of gas as well as the cost of necessary investments to modernize the system, analysts emphasize. Of course, the lack of political will for reform in the tariff setting has meant that this move can be quite painful for many Ukrainians, the WB agrees. In order to ensure the affordability of district heating services for household sector, they recommend reducing heat consumption by about 50 percent through investments in energy efficiency to compensate for the required price increases. In addition, the World Bank recognizes that targeted social assistance is necessary to help low income households to cope with the needed tariff increases for energy services. “Recognizing the need for heating tariff increases because of higher fuel costs, we focused our analysis on mitigating measures that can limit the impact of tariff increases on households, particularly by providing targeted subsidies to poor consumers, introducing consumption-based billing, and decreasing heat losses in buildings,” stressed Qimiao Fan, World Bank Country Director for Ukraine, Belarus, and Moldova.
The WB’s new report outlines a multi-step transition process for Ukraine to consider. In the short term, the necessary step in improving efficiency of heat consumption is the introduction of heat metering with temperature controls. Building-level heat meters should be installed in all Ukrainian buildings that use district heat together with temperature controls at individual heat substations, the researchers emphasize. “Based on the World Bank’s experience in neighboring countries, installing individual heat substations with temperature controls would reduce final heat consumption by 15-25 percent,” said Yadviga Semikolenova, World Bank Energy Economist and the lead author of the study. According to the WB, insulating roofs and basements as well as replacing windows and outside doors could further decrease heat consumption by 35-40 percent. The World Bank believes these energy efficiency measures in Ukrainian buildings could be achieved within ten years, provided the political will is found.
