District Heating Systems in Russian Federation: Developing New Sources of Finance for Renewable Energy and Energy Efficiency Options



Develop financial mechanism that will allow financing of new district heating plants fueled with sustainable forest biomass in Irkutsk Oblast and Khabarovsk Krai to replace existing coal/heavy oil-fired plants. Replacement of coal with sustainable biomass fuels will produce marketable carbon credits that can help to secure/leverage new sources of conventional finance, while providing benefits to remote populations in improved energy security, energy efficiency and air quality.

Main Activities

  • Meet with potential purchasers of carbon credits on project structure, contracting issues etc. Initial discussions have taken place with the Governments of Canada, the Netherlands, and other banks and investors with socially responsible funds.
  • Work with Russian partner banks Vneshtorgbank and Sberbank to orient them in clean energy financing and develop financing instruments for funding projects.
  • Build capacity of local partners (cities/communities and forest products companies) on project finance, fuel supply and technology/infrastructure requirements.
  • Develop measurement, monitoring and verification protocols to quantify net carbon benefits of the switch from coal to biomass district heating.
  • Seek to establish new sources of finance available for investment in biomass district heating in Russia.
  • Review and complete designs for a portfolio of 10 projects ready for due diligence.
  • Design of investment funds to provide financing for biomass-fuelled district heating plants in Irkutsk Oblast and Khabarovsk Krai
  • Portfolio of 10 candidate biomass-fuelled district heating projects.
  • Quantification of projected carbon benefits for portfolio of projects identified.

Expected Impact

  • Installation and operation of multiple new efficient biomass-fired district heating plants
  • Enhanced capacity on the part of Russian partners in technical, economic and financial issues related to biomass heat and power supply
  • New sources of finance available for coal-to-biomass, oil-to-biomass or diesel-to-biomass conversions
  • Improved biomass energy system designs available in the region from Russian manufacturers
  • New sources of capital to finance more efficient energy supply infrastructure
  • Emissions of greenhouse gases to the atmosphere reduced over baseline levels
  • Improved air quality in partner communities
Programme sector: 

Renewable Energy (RE) (Business&Finance)

Stage of project: 





2005 - 2006


€ 109,928 including co-funding from USAID Russia

Implementing agency: 

Winrock International

REEEP grant funded by:

United Kingdom