Two projects selected to pilot new de-risking mechanism for Ukraine's decentralised power sector 
 

Rengy Starokostiantyniv LLC and Acumen LLC have been selected to engage further in the pilot phase for a new de-risking mechanism under the Ukraine Energy Support Fund, administered by the Energy Community Secretariat. The pilot, funded by Norway with EUR 2 million, mitigates two investment risks: the difficulty of securing commercial loans in a high-risk environment, and the threat of war damage to new power plants.

The de-risking mechanism is designed to support private investment into decentralised electricity generation capacities by allowing the Fund’s resources to unlock much larger volumes of private capital.

"Together with our donors, we built something new: a mechanism that partially mitigates the uncontrollable war risk for private energy sector investors and mobilises private capital, even under attack," said Artur Lorkowski, Director of the Energy Community Secretariat. "Through this de-risking mechanism, we turn donor funds into support for private capital which Ukraine needs to build a decentralised power sector."

The pilot mechanism combines two elements. First, it provides financing relief to project owners based on a partial guarantee for commercial bank loans. Second, it funds physical protection measures that reduce the risk of war damage to new generation facilities. After the successful pilot phase, the Secretariat – subject to donor funding -  will evaluate the derisking framework and the opportunity to scale the mechanism to flexible generation projects or other applications.

The Secretariat selected the two pilot projects based on a publicly announced call for expressions of interest in September. Selection criteria included the winning of long-term special auctions for ancillary services conducted by NPC Ukrenergo, Ukraine's electricity transmission system operator, as well as: approved loan financing; the project capacity (based on available donor funds); the project’s operational readiness for ancillary services; and a pipeline of new distributed energy projects.