ENERGO: Russia's TGK1 closes green energy supplies contract with Teplocom

Russian generating company TGK1 (TGC1) announced it has signed a contract with an engineering company Teplocom for green energy supplies under I-REC certificates, with Teplocom moving to consume green energy only. 

Although the outlook on the Russian utility sector is below the market in the beginning of 2022, TKG1 is one of the utility names favoured by the analysts.

bne IntelliNews continues to monitor closely the booming demand for green energy in Russia, with the largest industrial majors closing bilateral green energy contracts with players such as TGK1, while the policy framework for CO2 trading is catching up. 

"TGK1 has been actively signing bilateral contracts and selling I-RECs from 2021, with the counterparties being AB InBev Efes, Beko, PhosAgro, Polyus, Sberbank, Shekinoazot, Sibur, STX commodities for foreign companies," VTB Capital (VTBC) reminds on January 31. 

The hydropower plants (HPPs) operated by TGK1 allow green energy to be supplied to interested consumers and in 2021 hydro power accounted for 44% of the total electricity generation of the company. 

"At this stage, the premium for the green energy is minimal, but we believe this is set to evolve and allow for higher profits for gencos [generating companies]," VTBC believes, as industrial consumers continue to increase demand for green energy, especially exporters.

Although Scope 2 emissions are not yet part of EU CBAM, they could be included, though, but Russia would need to finalise its green certificates legislation (as I-RECs and non-physical bilateral contracts would not be accounted for, as per current talks) and get this approved by EU for companies to be able to account for it in EU CBAM if Scope 2 is included, the analysts warn.