EDITOR: | January 18th, 2013

Russia plans to invest $23 billion in development of renewables by 2020

| January 18, 2013 | No Comments

Green energyRussia plans to start active development of renewables in the coming years in an attempt to reduce dependence on oil and gas. This is expected to take place as part of the recently approved state program “Energy Efficiency and Energy Development in Russia” for the period of 2013-2020 years.

So far, Russia has significantly lagged behind other emerging nations, in terms of the use of renewable energy sources. According to the Ministry of Energy, in 2008 the share of green energy in the country’s total energy balance was only 0.9%. According to initial state plans, by 2010 these figures should be increased up to 1.5%, while by 2015 up to 2.5%.

However these plans were never implemented. In 2011, according to data of the Ministry of Energy, only 8.5 billion kWh of energy (or less than 1% of Russia’s total electricity output) was produced from renewables. This is not surprising, given that the investment attractiveness of the industry has always been extremely low.

Among the other problems, which prevented the development of the industry are imperfect local legislation in the field of renewable energy, lack of experience for production of equipment for renewable plans, as well as the high cost of electricity.

At the same time it is no secret that Russia has excellent climatic conditions for the development of wind power, taking into account that two-thirds of the territory, with the population of about 20 million people, currently experience a lack of regular energy supply and have the highest prices for fuel and energy. Moreover, more than 50% of Russian regions are not gasified.

However there is a possibility that much can change in the future, as, according to state plans, by 2020 the share of renewables in the country’s total energy balance will increase from the current 1% to at least 4.5%, with total installed capacities of renewables are expected to reach 25 GW. And this will be not enough, by 2030 these figures should rise to 10%, or 100 GWh.

Total volume of investments in the implementation of these plans is estimated at RUB 690 billion (USD$23 billion), of which RUB 680 billion will be provided from extra-budgetary sources.

As part of these plans by 2020 the installed capacities of wind power plants may increase from the current 50 MW to 300 MW,  geothermal power plants – from 70MW to 200 MW, small hydro power plants – from 10 MW to 200 MW, while solar power plants from 10 MW to 300 MW.

The government plans active attraction of private investors for the implementation of these plans, through the signing of agreements with them, that will guarantee a return of their investments for each of renewables, including wind, solar, biomass, biogas and water.

There are also plans to oblige local distribution company to buy renewable energy at regulated tariffs. In fact, the government plans to stimulate the development of renewables at the expense of other consumers. This model is widely practiced in Europe and if these measures are implemented, the producers of renewables in Russia will receive tariffs, which will be at least two times higher than the current rates for electricity (about $0,1/ per KWh).

According to experts, the development of renewable energy is especially important for some remote regions of the country and in particular Far North and Far East where it could be considered as a cheaper alternative to expensive fuel, in particular diesel.

At the same time, many Russian analysts and officials have opposed these state plans to provide such volumes of investments and subsidies to renewables. According to Dmitry Govorov, head of Community energy consumers, Russia’s public association in the field of energy, it will unacceptable to subsidize renewables at the expense of other consumers.

To date, the implementation of several large projects in the field of renewables have already been launched in Russia.

For example, RusHydro, the world’s second-largest hydroelectric power producer, has already started construction of hydropower plants in small and medium-sized rivers of the Caucasus, as well as geothermal power plants in the Far East. In addition, the company builds a plant for the production hydropower equipment in Ufa, in cooperation with French Alstom.

Some large projects have also been implemented in the field of solar energy, in particular by local Hevel company, a joint venture of Russian nano-giant Rusnano and local financial conglomerate Renova, which actively builds solar plants in different parts of Russia.

Finally, Russia’s first commercial biogas plant, which will produce 19.6 million kWh of electricity and 18,200 Gcal of heat, was opened in September 2012 in the Belgorod region by a local energy company Altenergo.

The company wants to build 100 biogas plants with capacity 230 MW with total volume of investments $2 billion.



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