Renewable Energy Sources in Russia: From the Wholesale Market to Supplying Energy to Isolated Regions

KEY CONCLUSIONS

Renewable energy sources are gaining popularity in Russia

“Russia has something to boast about in the renewable energy sector today [...] Solar energy is becoming so popular that [...] there have been cases of solar modules being stolen”, Russian Solar Energy Association Director Anton Usachev said.

“Starting from 2006, we have built all the local systems [...] In some places [...] we have micro hydroelectric power plants, in some places [...] we have sun and diesel, and in some places, we have wind and diesel [...] We are able to meet our needs at peak times and during the daytime”, First Deputy Chairman of the Government of the Altai Republic Robert Paltaller said.

RES generation will help solve the problem of energy supply to isolated and rural areas

“Altai [...], the Far East, Siberia, Buryatia, Kalmykia, the Transbaikal, Kamchatka, Sakhalin, Primorye, Chukotka – almost all these areas have isolated territories without a constant source of electricity [...] Twenty million people are located beyond systemic power generation [...] Roughly RUB 100–150 billion are spent annually on deliveries to the north [...] and expenses on supplying fuel and electricity to these areas”, Hevel Group General Director Igor Shakhray said.

“Small [wind power plants] are capable of conserving diesel fuel, and today throughout Russia [...] we have 50,000 diesel systems [...] whose consumption could be [...] replaced by a renewable source at a rate up to 50% [...] Such installations exist”, Russian Association of Wind Power Industry Chairman Igor Bryzgunov said.

“In the Republic of Buryatia, there is a farmer to whom we supplied a hybrid unit. He has been using solar modules, a battery, and diesel there [...] for 6 months [...] With the support of the regional authorities, we can implement this system and resolve the [...] issue for agriculture in all regions that have a distributed network of farmers”, Shakhray said.

PROBLEMS

Shortcomings in regulation

“In terms of distributed generation [...] we do not have an understanding of how this will be regulated. And until we have this understanding, we won’t likely be able to provide lending for it over a long period so that it is commensurate with the project’s payback period”, Gazprombank  Vice President for Energy and Utilities Vadim Dormidontov said.

“Mechanisms have been launched and broken in on the wholesale market [...] We need to start promoting [...] RES in other segments [...] For most renewable energy facilities, the stringent requirements for the design and construction of major generating facilities [...] are superfluous”, Deputy Head of the Department of Electric Power Development at the Russian Ministry of Energy Andrey Maximov said.

Lack of building materials and infrastructure in remote territories

“We need solutions that will reduce the cost and time of delivery and, most importantly, installation [...] We understand that there are no inert materials [...] for the installation of [...] wind turbines in [remote] territories based on the existing requirements. We have to deliver sand, crushed gravel, [...] and cement from the mainland. This all has a major impact on the cost of these projects [...] Perhaps some modular decisions can be made”, Peredvizhnaya Energetika (Mobile Energy) Director General Yuriy Mirchevskiy said.

SOLUTIONS

Improving the regulatory framework for the development of distributed generation and RES

“There is one segment that could provide [...] an incentive – retail microgeneration. Given that we have 140 million [people] living in our country, each of them is a potential consumer for solar modules, wind turbines, small hydroelectric power plants, etc. This audience [...] is keeping a close eye on developments and waiting for a law to be adopted that allows for the installation of small units [with capacity of] up to 15 kW”, Usachev said.

“Such a draft law [allowing to install small units] exists. It has almost undergone all the endorsements [...] and has been submitted to the State Duma for the fall session [...] In principle, there are no disagreements on it. It provides for a number of innovations. The actual concepts of microgeneration are defined [...] It states that units with capacity not exceeding 15 kW do not need to be certified. There is no procedure to confirm that it is a renewable energy unit, which exists in the wholesale market [...] So we assume that the procedure will be very simple. The law also requires guaranteed suppliers to purchase this electricity if the owner’s output exceeds [...] the level of consumption. This will make it possible for people to not only install these units to cover their own consumption, but also to sell this electricity, thereby increasing its payback level and reducing it in terms of time periods”, Maximov said.

“We are resolving the issue of the lack of stable electricity in [...] [isolated] areas [...] To solve this issue systematically, we need an adjustment to Government Resolution No. 1178 [...] which [...] regulates work on this market [...] The first adjustment [...] is that compensation from the conservation of diesel fuel should provide an investor with the opportunity to recoup investments [...] so that this compensation is not immediately taken by the government. Then there will be numerous investors in these territories [...] The second adjustment [...] is to extend the feasibility of returning investment during the payback period [...] This also applies to wind power and solar”, Shakhray said.

“Two mechanisms that we are also planning and developing are the theme of concessions [...] which allow us to take diesel and transfer it at least for the payback period to an entity [...] that comes in with a wind turbine, solar, etc. The second issue [...], which has already been implemented, is the theme of the return. Regulatory acts have already been issued. They allow for providing investors with a return more than 12–14% in isolated areas [...] if this ultimately leads to a reduction in tariffs for consumers”, Maximov said.

“The Federal Antimonopoly Service has already prepared a resolution on long-term tariffs [as regards distributed generation] [...] [They] will be valid and in isolated territories [...] the tariff will be fixed for each year ahead”, Head of the Electrical Energy System Regulation Division at the Russian Federal Antimonopoly Service Dmitry Vasilyev said.

Use of storage devices

“The issue of night-time needs to be resolved and [...] the solution is quite close – solar energy storage devices. If we start putting them up, then [...] we could have a pilot version of such a stable power supply system for consumers in the Altai Republic”, Paltaller said.

“Total has a full cycle all the way up to the distribution of electricity to consumers. We produce electricity and other forms of energy. And in this regard, we need a company that works in energy storage. This is important for this chain. The degree of network stability is increasing, and as a result, the risk of network losses is increasing. Storage systems and energy storage devices help to avoid such situations and blackouts. They enable you to complement your macro or regional network. You can switch between sources of energy”, Executive Vice President for Transportation, Telecom and Grid within the Saft Groupe of the Total Groupe Herve Amosse said.

Concluding contracts on a ‘green tariff’ basis

“The international network holdings that work in the Russian Federation [...] are interested in [...] the consumption of a ‘green tariff’ [the cost of a kilowatt of electricity generated using RES] [...] A contract for the sale of electricity can be signed directly with a company that produces solar- or wind-based electricity”, Shakhray said