A report on the deal from the London-based development bank has stressed how Ukraine is “famous for the profligacy of its electricity and gas consumption and poor energy efficiency”, noting how it “relies heavily on imported fuel and its own energy-generating capacities are ageing and highly polluting”.
But Ukraine also has a significant meat and feed grain sector, and this produces waste that can yield a lot of biogas, which if harnessed, can generate electricity. In a groundbreaking project, the bank is helping finance the construction of a 1.5MW biogas plant, to be operated by agri-business player EcoProd AT, based in Volnovakha, in the Donbass mining region, in eastern Ukraine. The company has 5,000 head of cattle and 25,000 hectares of farmland.
The plant will produce 5.8 million cubic metres of biogas annually, able to generate 9,900MW of electricity. Some will be sold to the Ukraine national grid, with the project helping the bank lobby the Ukraine government to agree last November a special feed in tariff for electricity generated from biogas.
An EBRD environmental assessment concluded the biogas plant “should bring significant environmental benefits through utilising manure and waste biomass…” It would also encourage other Ukraine meat and livestock businesses to follow suit and “serve as an important benchmark for the entire Donbass region”.
EcoProd owner Ivan Melnik approached the European Union-backed EBRD for financing (its brief is developing eastern Europe and central Asia) and asked for financing to help EcoProd “utilise its cattle manure, silage and other agricultural waste”, said the EBRD report.
Melnik also persuaded the international Washington DC-based Clean Technology Fund (CTF) to back the biogas plant with a €1.1m loan.
EcoProd produces and exports agricultural commodities, sources chemicals and agricultural equipment for Ukraine meat and other food businesses and stores grain, working with international players such as with Danone and Cargill. It also agreed to implement international financial reporting standards for its accounting and book-keeping as a condition of securing the EBRD loan.