Renovation Investments Research Articles

Peculiarities of the Hospitality Industry Development in Ukraine

Topicality. The hospitality industry plays a significant role in solving the problems of bringing the national economy out of the crisis, contributing to its structural transformation, which is of exceptional importance for Ukraine nowadays. Despite the huge recreational potential, the Ukrainian market of hotel and restaurant services is significantly lower than the world market of the hospitality industry in terms of economic efficiency. The main problems of the hospitality industry development are insufficient amounts of investment in renovation and building of new establishments, an inadequately developed market for the provision of hospitality services, imperfect infrastructure, technological backwardness of the industry, low solvency of the population, and the use of environmentally hazardous raw materials. It is no coincidence that improvement of modern infrastructure and introduction of modern technologies in the field of hospitality is recognized as one of the priority areas of the national economy development. The martial law declaration has negatively affected the activity of hotel and restaurant business establishments in Ukraine. All this determines the indisputable relevance of studying main trends and problems of the development of Ukrainian hospitality industry in today’s conditions. The aim of the article and research methods. The aim of the article is to analyze the current state and peculiarities of the hotel industry development in Ukraine. When conducting the research, general scientific research methods were used: comparison, generalization, analysis, synthesis and systematization, induction and deduction, tabular and graphic method, as well as scientific and theoretical developments of domestic and foreign scientists, informational materials of statistical and reference publications. Results. The article analyzed the current state of the hospitality industry in Ukraine. The practical aspects of hotel and restaurant business functioning were disclosed. It was established that the military aggression of the enemy has a negative effect on the dynamics of the development and functioning of hotel and restaurant enterprises. A significant number of them are functional or have been partially repurposed. The dynamics of temporary accommodation and catering organization enterprises were analyzed as the main criterion for the development of hotel and restaurant services. It was established that a significant decrease of enterprises and a reduction in the number of employed workers in the hospitality industry occured in 2021. It was noted that the consumer price index in 2022 increased significantly due to the raising in production expenses of the hotel and restaurant business from 103.7 to 122.5 %. In 2022, CPI growth was 100.9% in January, and 103.7% in December. So, the main reasons for the increase of CPI are the rapid growth of the dollar currency and consumer prices, as well as the devaluation of the Ukrainian currency. The financial activity of hotel and restaurant business enterprises was characterized. In 2020, temporary accommodation and catering organization establishments suffered a loss of UAH 6.500 million. However, in 2021, a slight increase in profit could be observed, as UAH 7.003 million. Thus, in 2021, a slight increase in profit could be noticed – UAH 7.003 million. The profitability of enterprises in 2021 was 9 %. This indicates the adaptation of the hospitality industry as a promising direction. Conclusions and discussion. So, in the course of the study, it was established that the hospitality industry is currently in unfavorable conditions, which are caused by the military aggression, which negatively affects the dynamics of the hotel and restaurant business development. In 2021, compared to 2020, there was a slight improvement in the financial result of the business, in accordance with the increase in income and profitability of temporary accommodation and catering organization establishments. However, with the aim of effective development and functioning of the hospitality industry, programs and projects of supporting the hotel and restaurant business are being implemented in the country with the assistance of international organizations.

The Net Zero Emissions Decision Model of the Sustainable Path of Chinese Business Parks

Business parks account for 30% of China’s total carbon emissions. Exploring emissions reduction approaches for business parks is crucial to achieve a net-zero emissions target, as well as for achieving a representative example for all types of emissions entities. Business parks mainly adopt two types of emissions reduction approaches: energy-saving renovations and purchasing carbon reduction products. However, there are limited studies focusing on the optimal combinations of the two approaches for reaching net-zero emissions and evaluating the cost effectiveness. To find a feasible and quantified way to build net-zero business park, a comprehensive path decision model is proposed. The problem is broken down into two parts: the optimal carbon reduction portfolio and the optimal electricity saving were researched. For the optimal product portfolio, the Markowitz theory is employed to balance the risk of carbon reduction products with the expected cost. In the part of optimal electricity saving, considering a ten-year life cycle, the total cost includes renovation investment, carbon reduction products cost, and cost saving of electricity consumption reduction. Based on the energy consumption, technical, and price data, the combination of energy-saving renovations and carbon reduction products is optimized. The model suggests a business park can save 24% of energy consumption through renovation investment and purchase CCER as 66% of the carbon reduction product portfolio. Taking only purchasing carbon reduction products as a benchmark to assess economic efficiency, implementing an optimized level of energy-saving renovation is found to save 16% of the comprehensive cost for the life cycle required to achieve zero carbon emissions. This model provides a new comprehensive optimization idea that will help future parks make decisions to achieve zero-carbon emission targets.

Increased rent misspent? How ownership matters for renovation and rent increases in rental housing in Sweden

Renovations of the housing rental stock have become a political concern since they have been claimed to drive gentrification and affect tenants’ everyday lives as well as long-term housing conditions. Furthermore, new actors have entered the market, partly as a result of high supply on the international capital markets creating a flow of capital into market segments. This has led to a critique of private equity in the housing sector, and raised the question of the extent to which ownership of the rental stock matters for housing affordability. Yet there seems to be little systematic research on this topic. This study uses a unique dataset covering the entire rental housing stock in Sweden to address whether there are differences in renovation investments between different ownership groups. The purpose of this article is to increase understanding of how ownership affects renovation processes, and specifically to analyse to what extent, and how, private and public actors differ in renovation and rent setting decisions. Our results demonstrate that public housing companies raised rents less and renovated more, particularly in the lower-income segments of the multi-family building stock between 2014 and 2020.

Estimating the Energy Savings of Energy Efficiency Actions with Ensemble Machine Learning Models

Energy efficiency financing is considered among the top priorities in the energy sector among several stakeholders. In this context, accurately estimating the energy savings achieved by energy efficiency actions before being approved and implemented is of major importance to ensure the optimal allocation of the available financial resources. This study aims to provide a machine-learningbased methodological framework for a priori predicting the energy savings of energy efficiency renovation actions. The proposed solution consists of three tree-based algorithms that exploit bagging and boosting as well as an additional ensembling level that further mitigates prediction uncertainty. The proposed models are empirically evaluated using a database of various, diverse energy efficiency renovation investments. Results indicate that the ensemble model outperforms the three individual models in terms of forecasting accuracy. Also, the generated predictions are relatively accurate for all the examined project categories, a finding that supports the robustness of the proposed approach.

Increasing energy efficiency in Smart Building through Internet of Things retrofitting intervention

Buildings are responsible for 40% of energy consumption in Europe, and 75% of them are energy inefficient. In this context, the opportunities enabled by improved management and conservation of energy in buildings are huge. There is a clear need to accelerate and finance building renovation investments and leverage smart, energy-efficient technologies if the EU wants to reach climate neutrality by 2050. IoT components enable new possibilities for improving efficiency in Smart Buildings, both in commercial and residential spaces. However, the literature misses some contributions aimed at evaluating the investment in IoT technologies used for improving the energy efficiency of a building used for different purposes. Thus, the objective of the present study is to provide an assessment of the main costs and benefits stemming from IoT technologies installation through retrofitting intervention and evaluate the sustainability of the investment. Data to feed the model were retrieved from academic literature and secondary sources. The results show that the investment can be recovered in the medium-short term. In particular, buildings with high consumption rates are the ones that benefit the most from this solution. The present study contributes to the academic literature by providing a model that considers a mixed building and multiple technologies at the same time. It also provides useful insights to whoever is interested in the application of IoT technologies to make a building smart, enabling the comprehension of necessary investment and economic returns.

Dynamics of apartment building renovation investment costs based on Estonian reovation grant scheme

While energy prices have increased substantially recently, we also observe that renovation prices have increased twofold wihtin last decade. This could seriously affect the motivation to invest in building renovations because of negative yield and in turn jeopardise the carbon reduction plans. Therefore, we attempt to show some evidence of renovation cost dynamics based on sample of 112 apartment buildings which received state support for deep energy renovations during 2010 and 2017. We found that investments started out very cautiously in 2010. Eventually renovations were embraced as rational investment and renovations ambitions grow with prices. Construction price index grow during the~study period 20 percent and renovations over two times. We could not confirm the popular hypothesis that demand pressure will also increase prices. However, most significant increase of renovation price was due to the additional construction works and quality improvement. This was especially evident after the redesign of grant rules in 2015 which allowed more indirect construction works to be eligible for the subsidy.

Characteristics of Consumption Changes in Alignment with Renovation Investments of Immovable Cultural Heritage

In our paper we present the impact of final consumption change on a product by applying the meaning of the autonomous consumption multiplier. Similar to Leontief and Kahn we introduced the multiplier of autonomous consumption, and with it the concept of the influence of change in final consumption on production in the order of a series of subsequent periods. In our analysis, the Slovenian economic investments in the renovation of Slovenian cultural heritage buildings affect the revenue of the Slovenian economy by a multiplier of 2,945. The impact on value added is 1,236. With one million investments in the renovation of Slovene cultural heritage buildings, the revenue of the Slovene economy will increase by more than 2.9 million euros and value added by 1.2 million euros after the adjustment period. The analysed investments will enable employments of 32 employees and the utilization of 3 million euros in fixed assets.

The Guidance and Control of Urban Planning for Reuse of Industrial Heritage: A Study of Nanjing

Industrial heritage is among the products of modern urban development, and the influencing factors of its regeneration and development are often complex. Due to different national conditions, the research progress and approaches in industrial heritage reuse in China are different from other countries. While industrial heritage sites in Europe have become part of urban redevelopment in several regions, China still focuses mostly on single objects, lacking systematic analysis, especially at the urban scale. Regarding the city of Nanjing, an operational approach to complex urban dynamics is proposed based on a simplified analysis of official statistics, maps and GIS technology. The influence mechanisms of Nanjing’s urban planning on industrial heritage regeneration and development after 1990 are analyzed. The results show that urban growth boundaries, traffic accessibility, eco-environmental policies, population distribution, industrial renovation investment and natural resource change all have a significant impact on the abandonment and regeneration of Nanjing industrial heritage. This study expands the research perspective of industrial heritage reuse in China and proposes a clearer systematic planning strategy for the future of industrial heritage in cities.

Policy Modelling for Ambitious Energy Efficiency Investment in the EU Residential Buildings

This paper presents the challenges of increasing the energy efficiency investments in European Union (EU) residential buildings in the context of achieving climate neutrality by 2050. The paper presents the results of the PRIMES buildings model in key energy policy applications to support cost-effective and fair policy making in buildings across Europe. The model covers, in detail, the building sector for all the EU Member States (MS), segmenting the buildings into many categories. The approach proposed includes non-market barriers in conventional microeconomic modelling, which combined with idiosyncratic preferences can capture poor energy efficiency choices and still represent rational behaviours. The model includes a detailed portrayal of policies specific to the sector, comprising economic and regulatory policies as well as institutional measures. The results of the model show that the removal of non-market barriers is of great importance in reducing energy consumption and increasing both the pace and the depth of renovation investment. However, the institutional measures alone are not enough to induce energy efficiency improvement to the scale required to achieve the climate neutrality objectives. Economic (i.e., subsidies) or regulatory measures (i.e., energy performance standards) are also required to decrease emissions and energy consumption in buildings and the paper compares different configurations thereof. The optimum policy mix obviously derives from a compromise among various aims including the cost-effectiveness of the policy budget and the distributional impacts across building and consumer types.

A Staged Approach for Energy Retrofitting an Old Service Building: A Cost-Optimal Assessment

Office buildings built before the pre-1960 age constitute a relevant group for analyzing the energy performance of the Portuguese building sector. A dynamic energy simulation was used to assess the energy performance of an existing office building located in the town of Bragança, Portugal. By using a staged renovation approach, two passive technologies applied to the building envelope and an efficient domestic hot water system were selected and a financial evaluation through the net saving (NS) method was undertaken to choose the best efficiency measures/packages for improving the building’s energy performance. Real discount rates of 3% and 1% were used in the financial evaluation. Considering the real discount rate of 3%, the results showed that only two out seven retrofit options had a positive financial return. By using the real discount rate of 1%, all retrofit options were found to be financially efficient. The results of the study corroborated those of earlier works that found that the financial profitability of energy renovation investments is very sensitive to the discount rate used in the analysis. The results of the study also suggested that the staged renovation approach used in the analysis is economically feasible, and that this approach is an alternative to one-step renovation approach to help to achieve the country´s energy and climate targets by 2030. Suggestions for future research conducted for office buildings in the different climate zones and other age groups in Portugal are proposed.

The financial barrier for renovation investments towards a carbon neutral building stock – An assessment for the Flemish region in Belgium

The ability of homeowning households to finance renovation investments is an often overlooked barrier towards achieving the long-term energy and climate goals. Especially a quantitative assessment of this financial barrier has been missing in the literature. A methodology to perform such an assessment is developed and applied to the Flemish region in Belgium, which can be seen as a proxy for similar regions elsewhere in Europe. Two empirical datasets are combined through a process of stochastic sampling, to estimate both the renovation costs (towards a 2050-proof level of energy performance) as well as financing capacities for a representative sample of households. The analysis shows that approximately half of the homeowning households cannot finance the necessary renovations. This finding holds regardless of whether renovations are financed and executed all at once, or spread over multiple years into the future. When the additional investment costs associated with comfort increasing measures that typically coincide with energy renovations are included, the share of households facing a shortage in financing capacity increases by 7 to 9 percentage points. The fact that half of all households can finance comprehensive renovations and yet decides not to do so indicates that new policies are required to activate them in the coming decade.

Social consequences of energetically costly nest construction in a facultatively social bee.

Social groups form when the costs of breeding independently exceed fitness costs imposed by group living. The costs of independent breeding can often be energetic, especially for animals performing expensive behaviours, such as nest construction. To test the hypothesis that nesting costs can drive sociality by disincentivizing independent nest founding, we measured the energetics of nest construction and inheritance in a facultatively social carpenter bee (Xylocopa sonorina Smith), which bores tunnel nests in wood. We measured metabolic rates of bees excavating wood and used computerized tomography images of nesting logs to measure excavation volumes. From these data, we demonstrate costly energetic investments in nest excavation of a minimum 4.3 kJ per offspring provisioned, an expense equivalent to nearly 7 h of flight. This high, potentially prohibitive cost of nest founding may explain why females compete for existing nests rather than constructing new ones, often leading to the formation of social groups. Further, we found that nest inheritors varied considerably in their investment in nest renovation, with costs ranging more than 12-fold (from 7.08 to 89.1 kJ energy), probably reflecting differences in inherited nest quality. On average, renovation costs were lower than estimated new nest construction costs, with some nests providing major savings. These results suggest that females may join social groups to avoid steep energetic costs, but that the benefits of this strategy are not experienced equally.

What happens when Airbnb comes to the neighborhood: The impact of home-sharing on neighborhood investment

Home-sharing increases the potential economic returns to residential properties. We examine how the expansion of Airbnb has stimulated neighborhood investment. Our instrumental variable estimates show that a one-percent increase in Airbnb listings raised the number of residential renovation projects by 0.527 percent and the value of retail renovation investment by 3.691 percent in the following quarter. Meanwhile, the net growth of liquor, retail food, and entertainment business licenses increased by 2.067, 3.933, and 0.755, respectively. The investment effects were driven disproportionately by commercial hosts operating multiple listings and were more prominent in declining neighborhoods.

Maturity Improvements in Flood Protection Asset Management across the North Sea Region

North Sea Region countries depend heavily on flood protection infrastructure, such as dikes, dams, sluices and flood gates. Knowledge on where, when and how much to invest to ensure functioning is of crucial importance for asset owners and operators. This requires asset management approaches that are adaptable, respond to feedback and function within various contexts. The FAIR (Flood defense infrastructure Asset management & Investment in Renovation, adaptation, optimisation and maintenance) project has developed a unique framework to ensure that asset management processes are adaptive, comprehensive and make effective connections across strategic, tactical and operational contexts. The framework has for the first time informed an assessment of maturity of five flood protection asset management organisations in the North Sea Region, using a seven-factor maturity assessment model. This paper describes the self-assessment process and the self-reported maturity changes during the project. Maturity assessments were undertaken on two occasions, at the start of the project, and again toward the end. This has revealed how the baseline level of maturity for each organisation developed over the course of the three-year project. The observed maturity changes indicate that adopting the FAIR framework has added value in improving current approaches to asset management.

INTENSIFICATION OF INVESTMENT IN THE RENOVATION OF RESIDENTIAL REAL ESTATE IN THE CONTEXT OF THE SUSTAINABLE DEVELOPMENT GOALS

The subject of the paper є is to study the mechanisms for investing in residential renovation in the context of the Sustainable Development Goals. At the same time, sustainable development is considered both from the point of view of safety and environmental friendliness of residential buildings, and from the social point of view of providing housing to citizens from strategic perspective. It is shown that the current sustainable development goals, the definition of indicators of their achievement do not cover the problem of housing deterioration, which is one of the most acute for national and social security, as well as the financial stability of the state. Therefore, the achievement of SDG-11 in Ukraine is in a high risk zone given the catastrophic state of housing, the scale of the problem, and the high cost of its renovation for insolvent households; this does not solve the problem only at the expense of homeowners as follows from the essence and functions of property owners. The situation in Ukraine differs from European countries in that the state is impossible to further subsidize the owners on a large scale. This requires a combination of public investment in renovation of residential real estate with property reform, transforming part of the housing stock into social housing. As the implementation of housing projects concerns the local level, the general shortcomings of strategic management are shown, where there is no vision of communities to solve the problem. Methodology. Based on the methodological developments of the authors on the insolvency of homeowners in Ukraine (A. Shcherbyna), criticism of unjustified approaches to co-financing by residents and local authorities of renovation projects in Kyiv (O. Popeko), and the need to justify and evaluate investment projects to achieve sustainable development goals (S. Kovalivska), the article forms a comprehensive approach to solving the problem in terms of all three aspects. Therefore, the purpose of the paper is to deepen the formulation and analysis of methods to achieve Sustainable Development Goal 11 "Make cities and human settlements inclusive, safe, resilient and sustainable" with the help of provisions on sustainable housing for citizens based on a projectoriented approach and mechanisms for financing projects using public-private partnerships of homeowners with local authorities, as well as taking into account sustainable development goals. Practical implications. The main directions of further progress in reforming property relations in the housing sector and creating tools for intensifying partnership mechanisms at the vertical and horizontal levels in the public administration system are identified. Results. The proposed methodology provides for the selection of projects for budget support and development of recommendations for their implementation, taking into account SDG in several stages: preselection based on cost-benefit analysis; assessment of the impact of the project on SDG (determination of the SDG identity of the project based on a quantitative assessment of the impact of its objectives on SDG and vice versa); determination of the volume and type of budget support (rating of projects based on a comprehensive analysis of their commercial, budgetary and social efficiency, adjusted for the level of manufacturability, export orientation, and SDG identity); development of recommendations for project implementation, which take into account the approaches to assessing the impact of the project on SDG and, conversely, the achievement of SDGs or the risks of their failure to achieve project objectives (4). Value. To link SDG with budget planning, it is proposed to introduce an additional classification of budget expenditures on SDG, which will help to reconcile strategic and budget planning with investment in order to achieve SDG, including in the process of ensuring state participation in programs and projects for renovation and construction of housing based on the concept of sustainable development.

How to finance energy renovation of residential buildings: Review of current and emerging financing instruments in the EU

AbstractThe Paris Agreement goals require net‐zero CO2 emissions by mid‐century. The European Commission in its recent proposal for climate and energy strategy for 2050 indicated the need for more intensified actions to substantially improve the energy performances of buildings. With the rate of new construction in Europe, the challenge is to increase both the pace and depth of building energy renovations. Several barriers inhibit the wide uptake of comprehensive energy renovations, including the inability or inertia to finance upfront costs of energy renovations. Despite various policies implemented to address some of these barriers, current investments in buildings remain at suboptimal levels. The paper reviews current financing practices for energy renovations and investigates some innovative instruments with a special focus on their applicability to residential buildings. In addition to “traditional” financial schemes such as subsidies, tax incentives, and loans, the paper assesses innovative financing schemes: On property tax and on‐bill financing, energy efficiency mortgages, and energy efficiency feed‐in tariffs. The paper also investigates the concept of one‐stop shops for building renovations and crowdfunding. The paper offers an assessment of the characteristics, benefits, and challenges of each analyzed financing instrument and provides policy recommendations for their successful implementation. In general, as financing instruments involve different stakeholders and due to complex nature of the sector, there is no single solution to accelerate energy renovation investment in buildings. The emerging financial models offer the potential to address the long‐standing barriers to investment in energy efficiency.This article is categorized under: Energy Efficiency > Economics and Policy Energy Efficiency > Climate and Environment Energy and Climate > Economics and Policy

Technical and Economic Assessment of the Condition of Fixed Assets and the Criterion of the Validity of Recovery Investments

The article analyzes the methodology for calculating depreciation and assessing the condition of fixed assets. The absence of conditionality of the period of use and depreciation allowance of fixed assets due to their physical wear and tear in specific production conditions is revealed. Thus, it is concluded that the theoretical estimates of the condition of fixed assets do not correspond to their actual physical wear and tear. The internal contradictions of the indicator of return on capital are investigated, its inconsistency with the essence of production is revealed. The absence of a criterion for the need for renovation investment is mentioned as one of the negative consequences of the existing methodological approaches to assessing the condition of fixed assets. In order to overcome the shortcomings and negative consequences of the methodology for assessing the condition of fixed assets, the relationship between the depreciation coefficient, the technical accelerator and the integral indicator of physical wear is revealed. To characterize the dependence of the volume of production and operating costs on the physical depreciation of fixed assets, a conversion factor is substantiated and introduced. Formal models of indicators of production and return on capital are presented. They reflect partial and generalizing coefficient of conversion of fixed assets as well as the interest rate and the level of inflation. The moment of zero efficiency of fixed assets is substantiated as a criterion of necessity and timeliness of renovation investments. In addition, the concept of the period of their effective use is introduced.

Evaluating profitability of soil-renovation investments under crop rotation constraints in Finland

Increasing the resource use efficiency of agricultural production is considered as a central element in Sustainable Intensification (SI) of agriculture, which is a promising strategy to satisfy increasing demand for food while reducing negative impacts on farm economy and environment. One challenge for SI is that degradation of agricultural soils and resulting crop yield losses are affecting negatively farmers' incomes and environment. This study analyses economic profitability of soil renovation investments aimed for tackling soil compaction in a regional context of south-west Finland, where some individual land parcels are compacted on many farms, implying crop yield losses, which we assume as −30%. We use a dynamic optimisation farm model with multiple input-use responses on crop yields. Explicit field parcel-specific crop-rotation constraints are accounted for in solving the farmers' decision problem of soil-renovation investments. Our results calculated over a 30 year time period suggest that soil-renovation investments are profitable since they produce a positive net present value (NPV) assuming 2000–2014 average crop prices, at all discount rates up to 10% when 30% yield decrease due to soil compaction is assumed. Higher than average crop prices would increase the value of soil renovation investment significantly while lower than average future crop prices would have a relatively small effect on the profitability of soil-renovation investment. The payback times of soil-renovation investments are approximately 8–11 years, depending on the discount rate, but largely independent on crop prices. Soil renovation increases production of higher valued crops, but the utilisation of the whole production potential of a farm is dependent on crop prices. We found that the full increased production potential may not be utilized after the renovation investment if not utilized already without the investment. It is concluded that one may recommend soil-renovation investments as a profitable long-term investment in a typical case, but one cannot recommend the soil renovation if no significant yield gains are possible, or if only low valued crop are to be produced. Nevertheless the field parcel-specific restrictions to avoid soil compaction after the renovation are important to be accounted for in evaluating the profitability of soil renovation at the farm level, since avoiding soil compaction is one part of more sustainable production strategy.

The investment model of fixed assets renovation in the agricultural industry: case of Ukraine

The present state of the financial market in Ukraine determines a lack of funding for agricultural enterprises. The research aims to find internal sources of funding for the reproduction of fixed assets for agricultural enterprises. The calculation of the depreciation return index is a component of financial analysis of the efficient renovation investment use. It allows controlling its targeting and influence on enterprises in a financial aspect in order to provide a stable position of the enterprise`s investor.Implementation of economic and mathematical modeling using correlation and regression analysis verified a tight correlation between gross profit margins in agriculture and depreciation returns. For this purpose, general indexes were formed that is the primary value of fixed assets at the end of the year; the extent of their depreciation, depreciation and residual value of fixed assets at the end of the year, the average annual value of fixed assets, annual income, investment return and calculated gross profit and depreciation during 2001–2016 were determined. The results of the calculations showed that the funds saved through depreciation (renovation investments), and retained earnings are the financial resources for continuous renovation of fixed assets of agricultural enterprises. Also, attraction to internal reserves should have an impact on the increase of the agricultural enterprises’ profitability and should facilitate the increase of production volumes due to the implementation of innovations.

Energy infrastructure renovation investment as economic growth driver

The article deals with the prospects of energy infrastructure projects investment within current condition of the global economic growth driven by transition economies. Economic growth heavily relies on energy consumption, so under the limits of the sustainable development paradigm, economic development must take into account the consequences of environmental pollution in order to preserve the ecological system. Balancing between economic growth and preservation of ecology is one of the key global problems and technological development, the step of renewable energy projects partially solves this problem, but the question arises about the infrastructure for the new sources of energy generation. New sources require new energy transmission grids and intelligent systems of coordination and control – the so-called smart grid.
 Developed countries are gradually shifting to new energy management systems, but transition economies face the problem of access to capital and scarcity of resources to carry out large-scale projects.
 The paper analyzes technological readiness and economic reason of transition to new generation energy networks for transition economies. The financial expediency of infrastructure projects is a particular problem for the renovation of infrastructure.
 Having considered the international experience and evaluating the factors of productivity growth based on the restored infrastructure, it was concluded that the renovation of energy networks is a sound and reliable driver of economic growth and a prerequisite for ensuring long-term growth of the national economy.