A London-based bank is providing a loan worth €20 million (£16.6m) to improve the efficiency of district heating systems in Ukraine.
The upgrades are expected to reduce carbon emissions, cut operating costs and reduce gas and electricity usage.
District heating systems currently account for 20% of Ukraine’s carbon emissions and use almost 44% of its resources for heat energy.
The cash will be used to install 300 individual heating substations, decommission out of date boilers and replace them. Almost a quarter of a million householders are expected to benefit from the project in the city of Luhansk in southeastern Ukraine.
The European Bank for Reconstruction and Development (EBRD) has invested more than €8.7 billion (£7.2bn) through 318 projects in the country.
A district heating network that uses household waste to generate energy was launched in London last month.