Energy Service Contract 

The President of Ukraine signed two strategic laws adopted by the Verkhovna Rada of Ukraine on April 9, 2015 regarding energy modernization and energy efficiency of Ukraine, which entered into force on May 9, 2015:

Law No. 327-VIII "On the Introduction of New Investment Opportunities, Guaranteeing the Rights and Legal Interests of Entrepreneurs for Large-Scale Energy Modernization" (hereinafter referred to as "Law No. 327-VIII");

Law No. 328-VIII "On Amendments to the Budget Code of Ukraine (Regarding the Introduction of New Investment Opportunities, Guaranteeing the Rights and Legal Interests of Business Entities for Large-scale Energy Modernization)" (hereinafter referred to as "Law No. 328-VIII").

The above laws envisage the introduction of worldwide experience in energy service contracts in Ukraine, in which private investors can invest their own funds in the energy modernization of state and municipal property, thereby ensuring energy consumption and thus making profits.

The investor receives guarantees of return on investment within 10 years after the introduction of energy saving measures at the expense of saving resources, which they also contributed. The state does not make any budget contributions. On the contrary - up to 10-20% of the savings will go to the budget, while 80-90% - to the investor.

Law No. 327-VIII defines the concept of an energy service contract and establishes its basic conditions, regulates the relationship between the customer and the contractor of energy service services (ESCO), determines the mechanism for setting the cost of energy service contracts, allows budget institutions to conclude energy service contracts for more than 1 year, establishes guarantees for investors in energy modernization regarding the payment of remuneration for the savings achieved under the energy service contract, determines transparent mechanism of the tender for the provision of energy services, says only a monetary form of payment for energy services.

Over the course of a decade, these measures will solve the issue of energy saving in the budget area and cover a larger number of facilities, which will reduce the current expenditures of local budgets for the maintenance of buildings.