Ukraine - Increasing the stability of the energy system for the European integration of the energy grid (Installation of hybrid systems for the production of electricity in PrJSC "Ukrhydroenergo"

The project "Ukraine - Increasing the stability of the energy system for the European integration of the energy grid (Installation of hybrid systems for the production of electricity in PrJSC "Ukrhydroenergo") aims to (a) increase the flexibility of the Ukrainian electricity grid due to investments in storage devices and expanding the market to support synchronization with the European electricity grid and decarbonization of the energy sector; and (b) ensuring an immediate and effective response to the relevant emergency. The Borrower and Executor of the Project is the Private Joint Stock Company "Ukrhydroenergo" (hereinafter – UGE). Estimated time frame for the implementation of the Project – from June 2021 to December 2026. On May 22, 2022, the Verkhovna Rada of Ukraine adopted the Law of Ukraine. ; No. 2278-ХХ "On the ratification of the Guarantee Agreement (Project "Ukraine" to increase the stability of the energy system for the European integration of the energy grid (Installation of hybrid systems for the production of electricity in PrJSC "Ukrhydroenergo") between Ukraine and the International Bank for Reconstruction and Development and the Guarantee Agreement (Project "Ukraine – Increasing the stability of the energy system for the European integration of the energy grid (Installation of hybrid systems for power generation in PrJSC "Ukrhydroenergo") between Ukraine and the International Bank for Reconstruction and Development, acting as an executor on behalf of the Clean Technologies Fund".10 On June 2022, a letter was received from the IBRD regarding the entry into force of the IBRD and FCH loan agreements. On June 28, 2022, the IBRD letter also determined that the guarantee agreements between Ukraine and the IBRD and the FCH came into force on June 10, 2022 the same date as the Agreements on the loans of the International Bank for Reconstruction and Development and the Federal Capital Territory of Ukraine and the Federal Capital Territory of Ukraine grant. On January 13, 2023, letters were signed on the First Amendment to:- Loan agreements between MBRD and UGE; - Agreements on the loan between the FCT and UGE; Agreements on the grant between the FCT and UGE; on June 11, 2024, letters were signed on the Second Addendum to: ;  Loan agreements between MBRD and UGE; - Agreements on the loan between the FCT and UGE; Grant agreements between FCHT and UGE. The goals of the Project are to: (a) increase the flexibility of the Ukrainian power grid through investment in storage and market expansion to support synchronization with the European power grid and decarbonization of the energy sector; and (b) to ensure an immediate and effective response to the relevant emergency The project consists of three parts: Installation of a battery energy storage system ("BESS") with solar photovoltaic installations ("PV plant"), creation of an energy management system Within Part 1 of the Project it is planned to install up to 197 MW of BESS for the provision of auxiliary services, which due to the combined (hybrid) mode of operation with hydro units of PrJSC "Ukrhydroenergo" will provide highly efficient and fast-acting auxiliary services, up to 35.9 MW of SES, energy management systems (EMS) at four facilities operated by PrJSC "Ukrhydroenergo" Technical assistance Under this part, technical assistance will be provided for UGE in the following aspects: (i ) development of technical procedures for decommissioning and recycling of accumulator batteries; (ii) conducting a gender assessment of the Borrower's HR policies and practices aimed at identifying factors that affect gender diversity and inclusion, including specific recommendations; (iii) implementing, overseeing, and monitoring environmental and social management tasks, including, among other things, establishing and maintaining a grievance mechanism and citizen engagement activities; and (iv) building the Borrower's capacity for best practices in operation and maintenance, safety measures, and battery recycling through trainings, seminars, and study tours. Response to Unforeseen Emergencies (CERC) In connection with the armed aggression of the Russian Federation against of Ukraine, taking into account the unpredictability of the situation in Ukraine during martial law and with  in order to prevent an emergency situation or overcome the consequences of an emergency situation within the Project, "Part 3. Responding to unforeseen emergency situations" was implemented. In order to meet the need for financing the activities of "Part 3. Responding to unforeseen emergency situations", which is estimated at 148 .4 million  USD, including USD 123.4 million in funding from the International Bank for Reconstruction and Development and USD 25 million co-financed by Ukrhydroenergo PJSC, the budget for Part 1 was adjusted and a funding shortfall was identified. On June 25, 2024, the CTF Trust Fund Committee approved the Government's request for additional funding of USD 70 million from the CTF GESP window for the implementation of the Project. Currently, measures are being taken to prepare and initiate additional financing in accordance with the Cabinet of Ministers of Ukraine Resolution No. 70 dated January 27, 2016