The World Bank's Board of Executive Directors approved today a $212 million financing package, including a $177 million International Bank of Reconstruction and Development (IBRD) loan, a $34 million Clean Technology Fund (CTF) concessional loan, and a $1 million CTF grant for a new project in Ukraine - Improving Power System Resilience for European Power Grid Integration (Installation of Hybrid Systems for Electricity Production in Ukrhydroenergo). The project will enhance the flexibility of the Ukrainian power system to help synchronize it with the European electricity grid and decarbonize the power sector.
The Ukrainian Private Joint Stock Company Ukrhydroenergo (UHE) is the borrower and implementing agency of the project. The project provides financing for the installation of 197-megawatt short-duration battery energy storage systems combined with solar power plants within four hydropower plant sites (Kyiv, Kaniv, Kremenchuk and Seredniodniprovska) to further allow for ancillary services to the national power grid. Also, a long-duration battery with a solar power plant will be installed within Dniester Hydro Power Plant.
The World Bank's financing will help mitigate technical risks associated with synchronizing Ukraine's power grid with the European electricity grid and will help decarbonize it by facilitating greater integration of renewable energy. Power grid synchronization is a national strategic objective that will result in the creation of competitive and transparent electricity markets aligned with EU regulations and market practices. It is a key milestone on the journey to closer integration with European markets, and will bring tangible benefits for Ukraine, including enhanced reliability and security of electricity supply through diversification of energy sources, and access to the EU's market. The project will also help enhance private sector engagement in electricity storage.
"This is one of the most innovative projects that the World Bank is launching in the Europe and Central Asia region. It will help Ukraine integrate its power system with the European power grid, reduce the influence of vested interests, and contribute to the achievement of a more energy independent Ukraine. I am pleased that the project also helps Ukraine align with the European Green Deal," said Arup Banerji, World Bank Regional Country Director for Eastern Europe.
The World Bank has already been working to prepare Ukraine's power infrastructure for synchronization with the EU power grid under the ongoing Second Power Transmission Project (PTP2). This project supports Ukraine in the introduction of smart grid technologies and wholesale electricity markets.
The World Bank's current investment project portfolio in Ukraine amounts to about $3.4 billion, in 11 ongoing investment projects and one Program for Results operation. The investments support improvements in basic public services that directly benefit ordinary people in areas such as water supply, sanitation, heating, power, energy efficiency, roads, social protection, education and healthcare, as well as private sector development. Since Ukraine joined the World Bank in 1992, the Bank's commitments to the country have totaled more than $13 billion in about 80 projects and programs.
