The European Bank for Reconstruction and Development (EBRD) said on Thursday that it will lend €22.3 million euros ($26m) to Ukrainian energy company Power One for a project to develop decentralized generation.
Power One, a company in the Dragon Capital group, also received €3 million ($3.5m) in grant financing from the EBRD Crisis Response Special Fund, which is supported by the Norwegian government.
The EBRD cash will finance the construction and operation of advanced gas-piston power plants with a capacity of 36.8 megawatts (MW) and battery energy storage systems (BESS) with a total capacity of 31.5MW at multiple sites in Zakarpattia in western Ukraine.
It will be the first large-scale facility in Ukraine to combine these two types of generation into a single system in order to aid grid stability and flexibility, Dragon Capital said.
The decentralized generation will span several sites holding capacities of up to 10MW each in order to reduce risk and will be capable of providing rapid support to the grid in times of peak demand or when emergencies occur.
The lender said in a statement that the money would help support Ukraine amid Russia’s campaign of destruction on its energy facilities, adding that distributed flexible power generation and BESS are “urgently needed to preserve the power system and ensure Ukrainians have electricity and heating during the coldest months of the year.”
“The combination of gas engine units and energy storage systems lays the foundation for a new architecture of the Ukrainian energy system – decentralized, flexible, and resilient,” said Tomas Fiala, the Dragon Capital Founder.
“This is an important step toward regional energy security and Ukraine’s integration into the European ENTSO-E network,” Fiala continued.
The EBRD added that the infrastructure would act in the long term as balancing capacity for renewable energy.
The new loan makes up a portion of overall lending of roughly one billion dollars in 2025 to help Ukraine rebuild its power sector and improve energy resilience as it works to decentralize its power capacity with the help of more solar, wind and small modular gas turbines.
The EBRD estimates that Ukraine lost around 9,000 megawatts of generation capacity and 90% of its available flexible generation since the start of the full-scale invasion, causing regular rolling blackouts and worsening economic headwinds.
Energy financing is the major focus of the EBRD in its pursuit to address vulnerabilities exposed last year by Russia’s attacks on energy transmission.
In October, Kyiv Post reported that the EBRD was preparing a new €500 million ($585 million) financing package for Naftogaz to fund urgent gas imports amid Russian attacks on Ukrainian energy infrastructure.