Russia’s cut to renewable energy funding draws flak

23 February 2017, Week 07 Issue 848

Enel Russia chairman Stepan Zvegintsov wrote a letter to Russian Deputy Prime Minister Arkady Dvorkovich earlier this month objecting to the government’s decision to reduce funding for energy generation from renewable resources.

In particular, he was concerned that the move would discourage the development of wind generation, Kommersant reported. Unnamed sources of the newspaper said that Fortum and VetroOGK shared Enel’s concern.

The Russian government has lowered its target for wind generation between 2021 to 2025 by 250 MW to 3.351 GW and has halved its goal for small hydropower plants (HPPs) to 425.4 MW. The target for solar generation is being raised by 240 MW to 1.759 GW. Capacity supply agreements (CSAs) are mainly used to encourage investment in renewable energy generation. Under the agreements, an investment has a guaranteed return from sales at increased wholesale rates.

It turns out, however, that the government is not so much turning its back on renewable energy as changing its approach to it. Last week, Dvorkovich instructed the Energy Ministry, Economic Development Ministry and Federal Antimonopoly Service (FAS) to draft a green energy microgeneration stimulation plan by April 1. Specifically, Dvorkovich has in mind solar or wind generation with capacity up to 15 kW from equipment placed on a roof or in the courtyard of a private home. Electricity distributors will be required to buy excess energy generated that way at the current wholesale rate, and the income from those sales will be exempt from taxation. The owner of the generator will be responsible for buying the two-way meter.

Enel and other corporate power generators are unlikely to take comfort from this development. Successful large-scale production of green energy will require a high level of localisation, Natalia Porokhova of AKRA noted in Kommersant, and the new stimulus will do nothing to encourage that. Enel sees Russia as “one of the priority regions for investment in wind energy,” Zvegintsov wrote. Enel registered a subsidiary, Enel Rus Wind Generation, in 2016, but the company has yet to engage in any renewable activity. In recent years, interest in green energy in Russia has been declining to the point that, last year, only Rosatom subsidiary VetroOGK took part in the competition to sign a CSA for renewable energy.

Igor Bashmakov, director of the Centre for the Efficient Use of Energy and “one of the ideologues of microgeneration development in Russia,” according to Kommersant, told the newspaper that “enthusiasts” were most likely to take up energy microgeneration, as well as those who live in places with an unreliable energy supply. Renewable energy now makes up 1.5% of power generation in Russia.

Joseph Murphy

Edited by

Joseph Murphy

Editor

Any questions? Please get in touch