The project supports the use of energy saving and environmentally sustainable systems as public services in the boundary municipalities in the framework of joint service centre, profiled energy classes and co-operation activites. It includes upgrading streetlighting system, as substantial source for savings, using efficient lighting technology, and reconstruction of windowsystem of schoolhouse to achieve direct environmental and economic impact. Project will change the policy agenda of Latvian and Estonian municipalities towards energy efficiency, elaborate and promote sustainable energy use for the rural areas of Southern Estonia-Northern Latvia. The project will strengthen Estonian and Latvian partnership in the energy demand side to follow the EU strategic agenda for environment and energy. The demonstration of installed, working and monitored energy efficient systems will represent technological change from conventional solutions to state-of-art, innovative and economic systems. The main activities consist of engineering and installation of streelighting and windowsystems, the practical demonstration of systems, know-how transfer of energy saving schemes in municipalities, in particular at schoolhouses including training and communication on different levels. The key deliverables: A. The energy efficient systems of streetlighting in boundary areas and energy saving schemes at public buildings for professional and public demonstration in operation. B. Promoting sustainable consumption model for border areas, improving access to information on engineering solutions of municipal services by providing the solutions centre, the training, setting up curriculum at the primary school C. Replication of the know-how and finding opportunities for co-operation between municipalities in energy sector. D. Strong socio-economic impact of energy saving measures and improving life quality via improvement of public services in remote areas. The project will improve the cross border communication between the Latvian and Estonian partners facilitating concept and synergy that link economical, environmentally and social impact of energy savings. It increases transfer of experience between the partner countries and turns partners together for EU agenda on energy and buildings. The project will have a direct positive impact on environment by reducing the negative impacts of energy systems and demonstrates positive effect of investments into energy systems. Achievements: Progress reportProject team have had regular meetings with project partners. In meetings partners and project team discussed several project problems. Project assistant made every week analysis about project implementation and progress, if there are any problems then project team made corrective in action. Project steering committee met in Veclaicene on 10th of november. In Steering Committee meeting, project team introduced project activities so far, project deliverables and procedure of the final report. Rõuge Municipality put together second midterm report and sent it to auditor. Auditor made some corrections in report and claimed it. Lead partner collected reports and auditors decisions from partners and put together overall midterm report and sent it to the auditor. Auditor claimed it and the report was sent to secretariat. Project manager, assistant and accountant drafting final report. Project team upgraded regulary project homepage www.rauge.ee/energiapark/energysaving). The energy day for the students and teachers in Veclaicene was arranged at 9th of november, 2006. The energy class workbook in Latvian was drafted and prepared. 5 non-technological tests for energy class were launched in the energy day. Streetlightning information board was ordered from Ants Helinurme Taatuba. Project team published booklet about energy energy efficiency schemes for local municipalities. Translation, designing and printing was ordered from separate firms, because it came cheaper than ordering all things from one firm. 6500 copies promotion materials was made in Estonian, Latvian and English. Project final seminar was organized on 12th of december. Al project partners was participated in seminar.