Energy conservation--Ukraine--$100 million budgeted for 2006

Ukraine has budgeted $100 million for energy conservation measures this year. Two projects are highlighted in the article.

Maxim Burtovy, director of an energy savings company called Energy Alliance, is trying to put together a project to capture more waste heat from an electricity-generating station and pump it into the city's heating system. He estimates that doing so could cut gas consumption by 500 million cubic meters a year, worth about $47.5 million at the price Ukraine currently pays for gas from Gazprom, and twice that on world gas markets.

If all former Soviet-bloc nations used such heat-and-power "cogeneration" to the extent that Western Europe does, says the International Energy Agency, 80 billion cubic meters of gas a year could be saved. That would be equal to the entire annual gas usage of Germany, the world's third-largest economy.

Soviet authorities actually had the same plan for this city -- in 1986. The coal-fired power plant bought two turbines, and authorities designed a new Dnieper River bridge with built-in pipes that would carry hot water from the power plant to the city center. But before it could be built, the Soviet Union fell. Then there was no money for the pipes, and the bridge was built without them. So now, while one turbine does pump hot water from the power plant to 250,000 people on the plant side of the river, the other turbine sits in storage.

Mr. Burtovy wants to raise money to install the second turbine, a boiler and hot-water pipes along the bridge, at a cost of $20 million to $50 million, depending on the scope of the project. Up to 500,000 more people then would get their heat from the electricity plant, allowing some gas-fired boilers to be switched off. Energy Alliance would be paid with part of the energy savings. The firm is looking for more such projects in Ukraine.

The power plant's managers are enthusiastic, as are local authorities. An energy-conservation plan they drew up endorses tapping the power station for more heat as one of its major projects. "Since the gas crisis, they got serious," says the plant's director, Andrei Krepak.

Across the river, a Swedish engineering company, Alfa Laval AB, is working on another part of the city heating system. The firm is close to finishing installation of about 250 heating substations to regulate the temperature and flow of hot water moving to apartment blocks. Doing so could cut the city's gas consumption for heating by 10% to 15%, according to Alfa Laval's Ukraine director, Gennadiy Rudenko. There were plans for energy efficiency before, he says, "but the time for investment recovery was so long they didn't make sense. That's changing."

These are the kinds of projects that are possible. But there are many others that are needed here. That means a lot of opportunities for firms specializing in conservation.