This evaluation assesses the overall achievements of the District Heating Rehabilitation Project in Estonia, supported by a US$38.4 million loan from the World Bank. The projec's objectives were to: reduce fuel costs and import requirements; bring about energy efficiency and economy in major district heating (DH) systems; improve environmental conditions in affected areas; and support the strengthening and restructuring of DH institutions and development of the energy sector.
In terms of implementation, the project included support for:
- conversion and replacement of small boilers to use local fuels;
- rehabilitation of DH systems in Tallinn, Tartu and Parnu;
- improvement of Iru (CHP, Tallinn) Power Plant; and
- institutional support program for project agencies to support project management and implementation, for restructuring energy agencies and for further development of the energy sector.
According to this report, the projects' overall performance was judged satisfactory; it showed a strong level of ownership by the Borrower and project beneficiaries.
Lessons learned included:
- The demand forecasts of the project were overly-optimistic.
- Appropriate tariff policies play an important role in maintaining DH consumers and thus the viability of DH systems.
- It is highly important to properly assess risks associated with the potential for competition from gas, or other alternatives to DH.