Despite all the difficulties caused by the aggravation of geopolitical situation – refusal to export components from the Western side partners, difficulty in renewing use licenses for software and technology, suspension of service contracts, interruptions in logistics and reduction in investments in the development of the industry from foreign partners, – renewable energy segment (RES) in Russia continues its sustainable development.
The industry was heading for this state for many years – from the mid-2010s, and to the beginning of the crisis in 2022 it has already been formed, with its legislative framework and supply and demand markets regulation processes, key players and supply chains of resources generated from renewable sources. The annually volume of renewable energy capacity put into service increased, and since 2020 it increased by at least 1 GW every 12 months. At the same time, the demand for renewable energy is growing as Russian companies continue implementing their ESG strategies and want to remain competitive on markets of countries that pay attention to the environmental agenda and decarbonization of business.
Of course, the unexpected termination of partnership with foreign companies in terms of the development of renewable energy sources and the introduction of new capacities has become another challenge for the industry, however, despite the sanctions, the principles of work in this segment did not change. Both legislation and regulation in renewable energy, as well as the level of economic effect from invested funds remained at the same level. Western vendors leaved the market not because of economic difficulties, but for political reasons, which allows this industry remain flexible – that is, seeking new suppliers and partners in friendly countries.
The fact that the Russian segment of renewable energy did not suspend development, is proved by regular reduction in the cost of the resource, which makes an alternative energy increasingly attractive to the end consumer. For example, in 2021, at the competitive selection of PDM RES 2, one of the industry players proposed record low price for power generated from renewable sources – 1.72 thousand rubles per 1 MW * h. At that time, the average cost of the renewable energy market was 5 thousand rubles per 1 MW * h, while the price of the resource produced at the new CCGT was approximately 3.7 thousand rubles per 1 MW * h, at the new coal-fired PSU it was 6.3 thousand rubles per 1 MW * h, at the new nuclear power plant – 5 thousand rubles for 1 MW * h.
Now the cost of alternative energy produced on wind power plant (WPP) is within 4 rubles per kW, at solar power plant (SPP) it starts from 4.67 rubles per kW in regions of Russia with the best weather conditions for their work, up to 6.2 rubles in those regions where the possibility of their use is at lower level. For example, in the Leningrad region. In addition, the WPP is more effective than SPP due to high load factor – 30-38% vs 16-18% respectively. This is because solar panels are ineffective, for example, in the dark, the wind does not depend on this indicator.
As of January 2023, 98 RES generation facilities were commissioned in Russia with a total capacity of 4,002 megawatts within the framework of DPM RES 1.0, of which 1,788 MW accounted for SPPs, 2,168 MW – for WPPs.
If we talk only about wind power, the exit of foreign vendors from Russia did not affect greatly the development plans of this segment.
Essentially, the partnership is suspended by a sole company, which was going to work in the Russian market “in the long term” – Vestas. At the same time, all capacities created with its help remained in the country and are now being bought out by local players.
Refocus on finding technology partners from friendly countries and import substitution strategy are initiatives of the government of the Russian Federation, which allowed to support wind power, and now domestic companies are actively conducting their own projects to increase power generation volumes based on wind. Great potential, for example, is noted for locations along the Northern Sea Route, where it is impossible to rely on centralized energy supply due to weather conditions and features of the landscape.
By Oleg Shevtsov, General Director of Transenercom JSC