1. Justification
To demonstrate the most feasible solution for the reconstruction of the DH-systems in residential sector of Armenia, the implementation of pilot projects is required. The experience gained by pilot projects will test the possible measures, institutional arrangements and legal framework as well as will reduce risks for future full size projects.

2. Overall objectives
The overall objective of pilot projects is to find technically and organisationally/institutionally the most feasible solutions for the reconstruction of municipal heating system, applying simple technical solutions and least cost options to test the possibility of billing by metering and payment collection by collective responsibility contracts through condominiums.
Currently the heat consumption is not metered in the buildings in Armenia. The objective is: to evaluate the actual consumption figures, to check the affordability of that service in case of giving possibility to customers to regulate their heat consumption and so to influence the total consumption in order to achieve energy savings.
In the pilot projects condominiums are envisaged to be intermediate legal entities between heat supply organisation and individual customers. Besides, the pilot project will provide the opportunity to test measures to overcome all legal and institutional barriers for introducing new billing system according to the consumed quantity of heat and feasibility of increasing the rate of payment collection through introducing more efficient consumption control mechanisms.
The solutions to be introduced in pilot projects are suitable for all types of district heating systems and they can be disseminated all over in Armenia.
The pilot projects will consist of technical, organisational, social and legal components.
An important part of pilots is the training of engineers, designers, constructors, heat producers and end users to utilise the results of the pilot projects.

3. Pilot Sites Selection Requirements
· The pilot sites must be selected out of four cites which are included in project "Heat Strategy Preparation for Armenia". They are: Yerevan and Gumri.
· The selected buildings must be connected to the district heating systems, which are in operation and have to be supplied with heat during last years.
· Internal heat networks in the buildings must be in good technical conditions.
· The building must be involved in condominiums or other associations.
· The buildings must have easy access to the heat entrance for installation of heat metering equipment.
· The buildings must be typical for the city and not big (>40 apartments).
· The quantity of "closed doors" must be minimal.
· The house owners and condominiums must confirm their interest to collaborate with the project and make all necessary arrangements for signing contract with heat supplying company (paying the last season heat debts at least 70% and making prepayment for new heating season, the amount of which must be agreed with heat supply company).

4. Technical Arrangements
In selected buildings reconstruction activities must be conducted. They will include: a) installation of heat metering equipment on the heat entrance pipe and return pipe to meter the illegal water discharge; b) automatic regulating unit for heat flow; c) installation of valves for hydraulic regulation of flow in the risers; d) necessary repairs of heat insulation of main supplying pipes; e) lock and door for securing the accesses to installed heat metering equipment; f) repair of internal network including reconstruction of heat batteries, by-pass or switching off batteries by the requirement of house owners (considering individual affordability); g) installation of thermostatic valves and allocators on all batteries; h) insulation of general species in the building (entrance door, windows).
For implementation of these works the activities must scheduled in the following order:
· Final selection of the building.
· Finalisation of technical order.
· Revision of the building heat network.
· Preparation of necessary technical documentation with the equipment and labour specification.
· Preparation of preliminary budget for each site.
· Elaboration of timetable.
· Tender must be announced detailed with all necessary specifications for equipment purchase and installation works.
During the whole heating season monitoring and evaluation of applied technical measures must be organised.

5. Necessary Arrangements
The pilot project sites and budget must be agreed between co-financing organizations. The pilot project sites must be agreed with municipalities and heat supplying companies, communities and condominiums.
The important condition is that the heat provision is to be secured. The contract conditions between supplying companies and condominiums must be agreed with Energy Regulating Company.
The house owners must be informed about the objective and content of pilot project. The reconstruction works can be initiated only after signing contracts between condominiums and heat supply companies and between condominiums and house owners based on principle of billing by Gcal of consumed heat.

6. Organizational and Legal Arrangements
The main obstacle for reorganising the heat supply system in Armenia is the absence of appropriate institutional organisation between consumers and heat producing companies. Pilot project is aimed to elaborate legal and institutional frameworks for establishing relations between heat suppliers, condominiums and house owners.
The condominium according to its chart is legal entity and can be responsible for collective contracts with heat supplying company based on quantity of consumed heat of the building according the heat metering records (tariff - Gcal/dram ) and for contracts with house owners which will regulate distribution of joint bill between all households.
The pilot project will provide possibility to study all legal, psychological and social aspects, which will be useful for institutional strengthening of condominiums as an institution for provision public utility services. For implementation of these works the activities must scheduled in the following order:
· Meetings with selected condominiums and house owners to introduce goals, benefits and expected outcomes of the pilot projects.
· Elaborate the contract form to be signed between condominium and financing institution.
· Elaborate with the supplying company and co-ordinate with Energy Regulating Commission the contract conditions (heat tariff by Gcal and certification of heat meters), considering all current legal constrains.
· Elaborate and co-ordinate contracts between condominiums and house owners i) order and timetable of reconstruction and rehabilitation works, ii) payment for heat by new system (according to the distribution of joint bill based on the data of allocators).
· Signing the contracts.

7. Financing
Pilot projects will be financed in the frames of UNDP/GEF/ARM/98/G41/A/1G/99 "Removing Barriers to Energy Efficiency in Municipal Heat and Hot Water Supply" project and "Heat Strategy Preparation for Armenia" project financed by WB. The funds will be used for procurement and installation of the equipment and for necessary reconstruction works in the buildings. The funds can be used only according to the procedures of donor organizations.
The data collection, organization of reconstruction works in the buildings, monitoring of heat consumption figures during the heating season can be accomplished by condominium under the supervision of project experts.

Pilot Projects Realisation

Gyumri

Yerevan

 

Pilot Projects Results (in Armenian PDF format)