The Russian energy sector: The way for future development
©2015
Textbook
121 Pages
Summary
The Climate and Environmental Change, Political and Economical issues nowadays are forcing many countries to reconsider their way of energy production and consumption. Thus, the Russian Federation recently (2011) has completed major reconfiguration of the sector. This book is giving a comprehensive overview of the sector after the decade of restructuring. It determines political and economical development of the sector identifies technical capabilities, current and future energy matrix. <br>Taking into the account, that the country has high amount of conventional resources, the author reviews energy efficiency potential and programs, capacities for penetration of innovative smart technologies and for expansion of environmentally friendly solutions for energy production and consumption. She also analyzes and concludes the range of technical and economical potential for renewable energy boost at the main land as well as at remote areas. <br>As presented in the book, the result of the research gives a broad notion of possible directions of the Russian electricity sector development for the next 20 years.
Excerpt
Table Of Contents
v
Table 30: Technical parameters of new conventional PPs construction in South IES for the
period 2011-2017 ... 101
Table 31: Replacement of new conventional PPs by RE technologies in South IES ... 101
Table 32: Investment cost for RE technologies construction in South IES ... 102
Table 33: Technical parameters of new conventional PPs construction in Ural IES for the
period 2011-2017 ... 102
Table 34: Replacement of new conventional PPs by RE technologies in Ural IES ... 103
Table 35: Investment cost for RE technologies construction in Ural IES... 103
Table 36: Technical parameters of new conventional PPs construction in Siberia IES for the
period 2011-2017 ... 104
Table 37: Replacement of new conventional PPs by RE technologies in Siberia IES ... 104
Table 38: Investment cost for RE technologies construction in Siberia IES ... 105
Table 39: Technical parameters of new conventional PPs construction in Far East IES for the
period 2011-2017 ... 105
Table 40: Replacement of new conventional PPs by RE technologies in Far East IES...106
Table 41: Investment cost for RE technologies construction in Far East IES ... 106
LIST OF FIGURES
Figure 1: Total Primary energy supply, 1990-2009 ... 2
Figure 2: Electricity generation by fuel, 1990-2009 ... 2
Figure 3: Russian energy sector after restructuring ... 7
Figure 4: Electricity market structure ... 7
Figure 5: Tariff system in the Russian energy sector ... 15
Figure 6: Forecast of CO
2
emission ... 20
Figure 7: Share in overall production of FER ... 21
Figure 8: Power Plants installed capacities ... 22
Figure 9: Renewable Energy Development ... 23
Figure 10: Necessary investment in the Energy Sector of Russia ... 23
Figure 11: Current and future electricity demand ... 26
Figure 12: Power demand for a period 2011-2017 ... 27
Figure 13: Decommissioning of generating facilities ... 28
Figure 14: Capacity change of existing power plants ... 29
vi
Figure 15: Total new capacities with consideration of capacities with high capabilities of
realization ... 30
Figure 16: Commissioning capacities for the period 2011-2017 ... 30
Figure 17: Framework of installed capacities for the period 2011-2017 ... 31
Figure 18: Russian Wind resources ... 32
Figure 19: Solar Resources in Russia ... 33
Figure 20: Wood Industry Location and Wood Flow Patterns of Russia ... 34
Figure 21: Geothermal resources in Russia ... 35
Figure 22: Hydro resources in Russia ... 36
Figure 23: "Rushydro" JSC share distribution. ... 42
Figure 24: "FGC of IES" JSC share distribution. ... 44
Figure 25: Distribution of "Energy systems of East" JSC share. ... 45
Figure 26: Operation area of "Inter RAO UES" CJSC ... 47
Figure 27: Distribution of "Inter RAO UES" CJSC share. ... 47
Figure 28: Distribution of "Holding IDGC" JSC shares. ... 48
Figure 29: Estimated new capacities in the sector for the period 2011-2017 ... 56
Figure 30: Replacement of conventional PP by RE technologies in the North-West, Central,
Volga and South federal regions ... 58
Figure 31: Replacement of conventional PP by RE technologies in the Ural, Siberia and Far
East federal regions ... 59
Figure 32: Proposed renewable energy projects for implementation. ... 62
Figure 33: Placement of Energy Strategy for the period up to 2030 in Russian strategic
programs ... 73
vii
LIST OF ABBREVIATIONS
APS Agreement of power supply
ATS "Administrator of Trading System" JSC
BM Balancing Market
CHP Combine heat and power
CPP Condensation power plant
CPSM Competitive power selection model
DAM Day ahead Market
EBRD "European Bank for Reconstruction and Development"
EE Energy efficiency
EIA "International Energy Agency"
EIB "The European Investment Bank"
ES The Energy Strategy of Russia for the period up to 2030
ESE "Energy systems of East" JSC
ETSAP
Energy Technology Systems Analysis Program
FER Fuel and energy resources
FGC Federal grid company "Federal grid company of Integrated Energy Systems" JSC
FGEF "The French Government Environmental Fund"
FNPP Floating Nuclear power plant
FTS Federal Tariff Service
GDP Gross domestic product
GHG Greenhouse gasses
HVDC High voltage direct current
HPP Hydro power plant
IDGC "Holding of inter-regional distribution grid companies" JSC
IES Integrated energy systems
Inter RAO "Inter RAO UES" CJSC
JSC Joint stock company
LTPM Long-term power market
MC Commercial operator "Market Council"
PG Power Grids
PE Power and energy
PP Power plant
viii
PV Photovoltaic
RA Regulated agreements
RE Renewable energy
RES Renewable energy sources
RM Retail market
SO System Operator "System Operator of Integrated energy system" JSC
TGC Territorial generation companies
TP Technological platform
UNFCCC United Nation Framework Convention and Climate Change
VEB State Corporation "Bank for Development and Foreign Economic Affairs
(Vnesheconombank)"
WB The World Bank
WGC Wholesale generation companies
WSM Whole sale market
WWF Worldwide Fund for Nature
ZFF Zones of free flow
ix
LIST OF UNITS
/kW euro per kilowatt
/kW/year euro per kilowatt per year
/kWh euro per kilowatt-hour
°C Degree Celsius
Bn Billion
GCal/h Gigacalorie per hour
GW Gigawatt-hour
GWh Gigawatt-hour
Km Kilometer
kV Kilovolt
kW Kilowatt
kWh Kilowatt- hour
kWh/m
2
Kilowatt-hour per square meter
kWh/GCal Kilowatt-hour per gigacalorie
m
3
Cubic meter
m Million
MPa Mega Pascal
Mtoe Million ton of oil equivalent
MVA Mega volt ampere
MW Megawatt
m/s Meter per second
Pcs Pieces
PWh Peta-watt-hour
Rub/y Rubble per year
Toe Ton of oil equivalent
Mtoe/y Million ton of oil equivalent per year
TWh Terawatt- hour
TWh/y Terawatt-hour per year
USD United States dollar
W Watt
x
ACKNOWLEDGEMENT
I wish to express my sincere gratitude to my husband, to my mother and to my family for their
assistance, love and support. I am also thankful for the support from organizations and
institutions, such as the Katholischer Akademischer Ausländer Dienst (KAAD), the KfW
Development Bank and the University of Flensburg, for providing a stable basis to fulfill and
conclude the research, which now is being published in the shape of this book.
xi
EXECUTIVE SUMMARY
For several years now, renewable energy technologies have been recognized as among the
efficient sources for electricity production, playing an important part in the development of
energy infrastructure in many countries without harming the environment. In addition, energy
efficiency measures are becoming more highly prioritised in the renovation and sustainable
development of the energy sector in most countries, due to the increasing amount of pollution
from energy consumption and production.
This book represents an assessment of the current situation in the Russian electricity sector
and the market potential for renewable energy and energy efficiency.
Over the past ten years, the Russian energy sector has changed significantly, following the
restructuring of the largest energy holding, "RAO UES of Russia", which formerly comprised
all parts of the energy sector. Today it is a big wholesale and retail market that provides a
competitive environment, in which bidding for electricity and power contracts can take place,
but still with high influence of governmental regulation and the tariff system.
One of the key objectives of this study is to analyse the following aspects: the institutional
and legislative framework after the reconfiguration, the tariff system, the composition of the
current energy matrix, the assessment of future electricity consumption and production, key
government strategies and potential for renewable energy and energy efficiency development.
The analysis gives an overview of the current situation of the sector, technical and economic
potential of renewable energy development, and energy efficiency measures promoted by the
government.
The second objective of the study is the analysis of the main entities of the market, the
international institutions providing investment to the public sector of the market and potential
areas of the market to promote renewable energy and energy efficiency, in order to provide
the initial insight for possible investment into environmentally friendly projects.
The third objective of the study is to determine existing constraints preventing renewable
energy and energy efficiency development, and measures to overcome these constraints for
further sustainable development of the sector.
The institutional and legislative framework analysis showed that the government created a
broad legislative framework for the sector reconfiguration and formation of an electricity
market, still maintaining a high level of governmental control. Thus, after reconfiguration, the
infrastructure sector, the electricity production by nuclear and hydro power plants, and the
xii
isolated sector from integrated energy systems (IES) of the country remain under government
control. Although the main purpose of the reconfiguration was the creation of a competitive
electricity market, the government still controls big parts of the tariff formation through the
current legislative framework.
The renewable energy (RE) promotion was supported by the Federal Electricity Law (2003)
with the introduction of a number of executive Acts. The Law and Acts established the first
basis for RE development, but some very important additional executive Acts, such as
premium price calculation, rules of costs calculation, grid connection subsidizing, etc. which
were supposed to be adopted in 2010, have not yet been approved. This creates major barriers
to RE facilities' entrance to the market and as a consequence for overall development of RE
generation facilities.
The further development of RE facilities also highly depends on government energy
strategies. The main strategy that determines RE and overall sector development is the
"Energy strategy of Russia for the period up to 2030". The main emphasis of this strategy is
on the development of CHP and condensate power plants, but slow development for RE
facilities (4.5%).
The energy efficiency measures are also considered in the strategy. It is one of the key points
for further promotion and development of the energy sector. The strategy aims at an overall
reduction of energy consumption of 45%, where electricity sector consumption has to
decrease by 30% by 2030. These measures predetermine values of the government program
"Energy savings and energy efficiency improvement for the period till 2020". The public and
private companies used this program as the basis for the development of their innovative and
investment programs.
The comparison of the available RE economic potential in the sector and projected new
supply in the sector showed that the country has enough RE resources to produce the required
energy, but an analysis of the sector entities of the program showed that only public
companies have a number of RE technologies to be developed in the near future, and this
amount corresponds to a projected 4.5% by the government.
An analysis of the energy efficiency sector showed that it has huge potential for energy
efficiency technologies in all spheres of electricity supply: generation, transmission and
consumption. The private and government entities of the market are focused on conventional
and innovative development of their assets. For instance, the main focus of the engineering
xiii
industry is on highly efficient conventional technologies with low negative environmental
impact, and with very low RE technology production.
The comparison of the necessary number of conventional power plants to be reconstructed
and installed, with consideration of the possibility of installing a new generation of
technologies, shows that the generation sector has high potential for significant improvement
and with low negative environmental impact.
An analysis of the transmission sector showed that the main transmission company of the
country "Federal grid company of Integrated Energy Systems" JSC implements governmental
targets for further broad transmission system development and moreover is focused on Smart
and Super grid implementation. It promises good potential for further efficient development
of the transmission system.
The energy efficiency program in the consumption sector is under strong supervision by the
government through a Technological Platform created by the Ministry of Energy. It is too
early to investigate results of the energy efficiency program in the consumption sector, but
after completion of the first phase of the program in 2015, the analysis of the results can be
provided.
Investigation of existing constraints for RE and energy efficiency development showed that
the highest constraint in the sector is the lack of a legislative framework. For renewable
energy technologies, one of the important constraints is low engineering industry
development in terms of renewable energy technology production, and the lack of additional
support from the government budget.
One of the important measures, which have to be put into practice by the government, is the
implementation of financial incentives for broad renewable energy development on a regional
level.
In summary, according to all government programs, institutional and legislative frameworks,
Russia has high potential for broad conventional energy efficiency development. This
potential is supported by all entities of the market. The result of the country's chosen pathway
will be seen at the end of 2030. But still, the country has areas where renewable energy
solutions can be a more appropriate way for further development, and this sector has to be
improved by the Russian government.
1
1
INTRODUCTION
Russia is the biggest country in the world by area, with a total of
17,075,200 km
2
. It is
situated in North Asia, bordering the Arctic Ocean, extending from Europe (the portion west
of the Urals) to the North Pacific Ocean (CIA, 2012).
The population of the country is 138,082,178 people (July 2012 est.) with the growth rate in
2012 0.48%. Russia is a fast growing economy, with an annual GDP growth rate of 4.30%
and a GDP per capita (PPP) of $16700 (CIA, 2012).
Russia is known as a country rich in natural resources, including major deposits of oil,
natural gas, coal, and many strategic minerals; the energy sector in Russia is mainly based
on conventional energy resources.
The composition of a Russian energy matrix is mostly represented by fossil fuels. According
to the International Energy Agency in 2009, the highest primary energy supply was Natural
Gas 54%, in second place was Crude Oil with a contribution of 21%, in third place was
Coal and Peat 15%, and the consumption of Nuclear was 7%. Renewable energy resources
including Hydro and Bio fuels were less than 5%. (IEA, 2011).
However, the share of fuel type for electricity production is different from primary energy
supply. Power plants consume much less crude oil for electricity generation and more coal
and peat. Nuclear consumption is much higher than in primary energy supply, as well as
hydro resources. RE resources have a very small share in electricity generation.
Figures 1 and 2 represent the energy matrix in terms of primary energy supply and
electricity generation by fuels.
The Russian energy sector is still going through big changes and improvement programs.
The Russian public corporation of energy and electricity "Unified Energy System of Russia"
the RPC "UES of Russia" was the main energy company in the Russian Federation
before restructuring. It owned about 70% of Russia's installed electric capacity, 96% of its
high-voltage grid and over 70% of its transmission lines. The reconstruction program started
in 1998 and went through several stages during its implementation. The main target of
reconstruction was the creation of competitive energy markets. This target was more or less
reached in the middle of 2011, as planned (UES, RAO UES of Russia, 2005).
2
Figure 1: Total Primary energy supply, 1990-2009 (IEA, 2011)
Figure 2: Electricity generation by fuel, 1990-2009 (IEA, 2011)
The Russian Federation is a party to the following international agreements (CIA, 2012):
x Air Pollution,
x Air Pollution-Nitrogen Oxides,
x Air Pollution-Sulfur 85,
x Biodiversity,
x Climate Change,
x Climate Change-Kyoto Protocol,
x Desertification,
3
x Environmental Modification,
x Hazardous Wastes,
x Ozone Layer Protection
x Etc.
Problem Statement
Considering the significant changes in the energy sector of the country, the high energy
intensity and commitments of the country according to international agreements, it is
relevant to investigate the energy sector of the country, to assess the current situation and to
search for possibilities for renewable energy development.
Taking into account the abundance of conventional natural resources in the country, it is
important to investigate and analyze energy efficiency programs as well as penetration of
innovative smart technologies, in order to find a rational and environmentally friendly
means of energy production and consumption.
Main objective
The main objective of this research is to analyze the Russian Energy Sector and to determine
opportunities for renewable energy technologies and energy efficiency in electricity
generation and transmission.
The specific objectives are:
1.
To identify the government strategies for the energy sector;
2.
To identify the legislative framework and tariff system;
3.
To determine the composition of the energy matrix;
4.
To assess installed and available capacities;
5.
To identify main players in the Russian energy market (public and private entities);
6.
To assess current and future energy demand and supply in the country;
7.
To analyze the renewable energy potential in Russia;
8.
To analyze the potential of energy efficiency measures in electricity generation and
transmission;
9.
To determine means of broader renewable energies development in the sector
4
10.
To determine means of broader energy efficiency measures development in the
sector.
Research Questions
The study will attempt to answer the following questions in detail:
1.
What is the existing situation in the Russian energy sector?
2.
What are the existing policies for renewable energy penetration?
3.
What is the market potential for renewable energy development?
4.
What is the market potential for energy efficiency generation, transmission and
consumption?
5.
Which market constraints prevent renewable energy and energy efficiency
development?
6.
How can existing constraints be eliminated, for broader renewable energy and energy
efficiency development?
7.
What policies would be required for further renewable energy and energy efficiency
development?
Research methodology
The research perspective of the study is going to be a combination of quantitative and
qualitative perspectives. The qualitative perspective will dominate during the research in
order to best understand the legal, regulatory and institutional framework, and to estimate
the dependence of the energy sector entities on the constructed framework and policy
system. The quantitative approach will be used to collect and analyze data of energy demand
and supply in the sector, existence and amount of conventional and renewable energy
resources, to estimate energy efficiency measures and calculate replacement of conventional
technologies by renewable, and to estimate potential for energy efficiency.
Regarding the research type, this study has descriptive, evaluative, constructive and
prescriptive components, based on desk study.
The research objective will be approached by the following research process:
1.
A collection of data to assess the current situation in the sector and estimate
potential for renewable energy and energy efficiency development.
5
2.
Identification of the present situation in the sector, renewable energy potential and
potential of energy efficiency.
3.
Evaluation of the possibility to exchange conventional energy resources with
renewable energy sources.
4.
Estimation of possibilities of energy efficiency implementation and comparison with
projected implementation.
5.
Evaluation of impact of governmental policy on renewable energy penetration.
6.
Assessment of government and private entities feedback on existing policies.
7.
Analysis, presentation and recommendations of further sector development.
Scope and limitations of the study
This study assesses the existing situation in the electricity sector of Russia, in order to
estimate results of the completed restructuring program of the sector which was completed
in 2011, to estimate the established situation for renewable energy technology penetration in
the sector and possibilities for energy efficiency measure implementation.
The study first evaluates the new institutional framework of the system, legislative
framework of the sector and tariff system, governmental strategies and programs, formation
of electricity demand and supply. Then it describes the renewable energy potential in the
country and energy efficiency measures, and contrasts proposed renewable energy
penetration and energy efficiency measures by the government with available resources in
the market for penetration. The study ends by identifying existing constraints in the sector
for renewable energy penetration and energy efficiency measures and how identified
constraints could be eliminated.
The study is limited by the electricity part of the market and does not include the heat part of
the market. The research embraces the whole country, but does not consider regions and
separate territories in detail. All financial figures in the study, which were found in Roubles
and needed to be transferred in Euro, were calculated according to the currency rate on
01.10.2010: 1 Euro = 39.6028 Roubles (ProFinance, 2012).
The research is also limited in terms of environmental impact calculations, due to the lack of
data. It suggests further investigation to address some of the issues that were not within the
scope of this book.
6
2
OVERVIEW OF THE RUSSIAN ENERGY SECTOR
The second chapter of the book includes an analysis of the framework of the energy sector,
assessment of electricity demand and supply, and renewable energy and energy efficiency
potential.
2.1
Framework of the energy sector
Analysis of the framework of the energy sector embraces assessment of the institutional and
legislative framework, tariff system and overview of government strategies of energy sector
development, where the legislative framework and tariff system includes assessment of
renewable energy legislation; assessment of government strategies is mainly focused on the
main strategy of the sector and energy efficiency program.
Institutional framework of the sector
The Russian energy sector has significantly changed during the past 10 years, due to a
reconfiguration program of the energy sector initiated by the Russian Government. The
reconfiguration program which deals with transforming the energy sector of the Russian
Federation under Government Resolution No. 526 began on 11
th
of July 2003 and was
completed in the beginning of 2011.
The main reason for restructuring the energy sector was to create a competitive market in the
sector and attract new investment. Based on this goal the sector is divided into three parts,
where the government has 75%, 50% and less than 50 % of the share in the different areas
of the competitive sphere. Among the three sectors; generation, transmission and
distribution, the generation sector is the most competitive sphere while the government is
more involved in transmission and distribution.
The reconfiguration resulted in a general framework of the energy sector as represented in
figure 3.
And as can be seen in figure 4, the market is represented by two layers (wholesale and retail
market) and operated by market infrastructure.
7
Government
More than 75% share
More than 50% share
Less than 50% share
System Operator (SO)
"System Operator of
Integrated energy system"
JSC ("SO of IES" JSC)
Holding of inter-regional
distribution companies
"Holding IRDC" JSC.
6 Heat Wholesale generation
companies (WGC),
14 Territorial generation
companies (TGC)
Federal grid company
"Federal grid company of
Integrated Energy Systems"
JSC ("FGC of IES" JSC)
Hydro Wholesale Generation
Companies (WGC)
"RusHydro" JSC
Commercial operator
"Market Council"
Nuclear power stations
"Rosenergoatom"
Fareast energy company
"Energy systems of East"
RAO
Distribution companies,
Service and repairing
companies
Figure 3: Russian energy sector after restructuring
1
A set of additional laws and regulations were issued since 2011 and the market has the
following structure:
Figure 4: Electricity market structure
2
1
Derived by the author, based on consolidated information from
www.np-sr.ru
,
www.rao-ees.ru
2
Derived by the author, based on consolidated information from
www.np-sr.ru
,
www.atsenergo.ru
· Generation companies
· Distribution companies
· Export/Import operators
· Transmission company
· Big Consumers
Wholesale
market
· System operator
· Transmission and
Distribution companies
· Commercial operator
Infrastructure
· Electricity consumers
· Ensuring companies
· Generation companies
· etc.
Retail market
8
The wholesale market is an energy and power market, where the market players include
generation companies, with an installed capacity equal to or more than 25 MW; electricity
export/import operators; distribution companies; large-scale consumers and transmission
companies (in terms of buying electricity to cover losses during transmission) (Council,
2011)
Most of the country's generation assets are owned by one of the following companies
(Council, 2011):
x 6 Heat wholesale generation companies
x Hydro generation company "Rushydro" JSC
x 14 territorial generation companies
x State Concern "Rosenergoatom"
x Far East energy company "Energy systems of East" RAO
x "Inter RAO UES" JSC
The main players of the retail market are electricity consumers; generation companies, with
installed capacity of less than 25 MW; ensuring companies (distribution companies, which
are obliged to supply electricity to any applied entity); companies of municipal service,
which consume electricity to provide their services; system operator and other entities of
dispatch management in isolated systems (Council, 2011).
Market Infrastructure is one of the important facilities of the market. It is divided into two
parts: transmission and commercial infrastructure.
The transmission infrastructure is represented by transmission companies, which provide
two main services (Council, 2011):
x Electricity transmission
x Technological connection between generation companies and power
receiving consumers
These services are a natural monopoly and are controlled by the government.
There are three main companies of transmission infrastructure (Council, 2011):
x System Operator (SO) "System Operator of Integrated energy system" JSC
("SO of IES" JSC)
x Holding of inter-regional distribution companies "Holding IRDC" JSC
x Federal grid company "Federal grid company of Integrated Energy Systems"
JSC. ("FGC of IES" JSC)
9
The most important player is the System Operator (SO), entitled to provide dispatch
management and it has rights to give commands to any entity of the market, if it is necessary
to maintain system stability and security (Council, 2011).
The commercial infrastructure is represented by the commercial operator a non-
commercial partnership "Market Council". The Market Council (MC) provides management
of the wholesale and retail market through affiliated companies: "Administrator of Trading
System" JSC and "Centre of Financial Transactions" JSC. The main functions of the Market
Council are to ensure the operation of the market, to maintain a registry of the market and to
develop and sign contracts of accession to the trading system of the wholesale market
(Council, 2011).
Legislative framework and tariff system
To establish a competitive market in the sector, the government formulated a wide
legislative framework for market regulation, which is represented as follows:
1.
Federal law 35- FZ "Electricity law" from 26.03.2003
2.
Regulation of Russian Federation Government 643 from 24.10.2003 "Working
rules of wholesale energy and power market"
3.
Federal law 36- FZ "About the work features of the energy sector during the
transition period"
4.
Regulation of Russian Federation Government 530 from 31.08.2006 "Approval of
the rules of retail electricity markets in the transition period of reforming the energy
sector"
5.
Federal law 41- FZ "About governmental regulation of electricity and heat tariffs
in Russian Federation" from 14.04.1995
6.
Regulation of Russian Federation Government 576 from 14.07.2011 "About
changes in paragraph 7 of rules of governmental regulations and utilization of tariffs
for electricity and heat power in the Russian Federation"
7.
Regulation of Russian Federation Government 1172 from 27.12.2010 "About
approval rules of the wholesale market of energy and power and about changes in
some statements of Russian Federation Government in the questions of the work of
the wholesale market of energy and power"
10
8.
Regulation of Russian Federation Government 813 from 06.10.2011 "About
changes in the rules of the wholesale market of energy and power"
9.
Regulation of Russian Federation Government 238 from 13.04.2010 "Rules of
determination of power prices on the wholesale electricity market"
10.
Regulation of Russian Federation Government 89 from 24.02.2010 "Rules of the
wholesale market for the long-term power market"
11.
Regulation of Russian Federation Government 1178 from 29.12.2011 "About
price formation in the area of regulated prices in the energy sector"
12.
Regulation of Russian Federation Government 1179 from 29.12.2011 "About
identification and application by ensured suppliers' prices for electricity (power)"
13.
Federal law 401- FZ from 28.12.2010, Federal law 33- FZ from 08.03.2011,
Federal law 394- FZ from 06.12.2011 "About changes in Federal Law Electricity
law"
14.
Decree of Federal Tariff Service 228-e from 30.03.2012 "About approval of
guidelines of tariff regulation with application of the return of investment method"
15.
Decree of Federal Tariff Service 302-e/3 from 29.11.2011 "About the approval
tariff for services of the commercial operator, which provides by ATS Ltd"
It is based on this framework that the wholesale and the retail market function and the tariff
system is worked out.
Thus, two price zones and one non-price zone were determined in the markets (Council,
2011):
¾ The first price zone includes a territory of the European part of Russia and Ural
¾ The second price zone includes a territory of Siberia
¾ The non-price zone includes the Arkhangelsk and Kaliningrad region, the Komi
Republic and regions of the Far East. The existence of the non-price zone can be
explained by the technological limitations of the sector; in general because the
zone is not included within the integrated energy system of the country.
The tariff features of the non-price zone and price zone are described below.
11
To determine formation of the market prices it is necessary to consider the structure of each
market.
The Wholesale market is characterized by the electricity and power market.
The electricity market is comprised of different regulated agreements in the "day ahead"
market (DAM) and balancing market (BM):
The sector of regulated agreements (RA) from 2011 functions only in the sector of price
zones. These agreements are signed up only for selling electricity to private households or
to those consumers who can be determined as "private households" and for inter-regional
transmission companies of North Caucasus. (Council, 2011)
The amount of electricity (power) and prices for RA are formulated according to Regulation
1178 from 29.12.2011. By this Regulation the Federal Tariff Service (FTS) prepares a
consolidated forecast balance, where every producer of electricity supplies not more than
35% of its overall amount of electricity (power) to the market (Council, 2011).
The amount of electricity (power), which is not supplied by RA, is supplied by agreements
in the "day ahead" market and balancing market (Council, 2011).
The MC is responsible for DAM. It collects price bids from sellers and buyers the day
before real supply of electricity, and makes competitive selection, by choosing margin price.
Those who apply with the lower price are chosen first to supply the demand. (Council, 2011)
The RA and DAM are compensated by BM. Three hours before real supply, the System
Operator forms the final balance of demand and supply to secure the stable operation of the
system and to compensate a lack of supply or oversupply. The penalty or premium for all
parties of the market is calculated according to the lack of supply or oversupply or the exact
fulfilment of obligations. (Council, 2011)
The power market
The main purpose of the power market is not only to supply the required power, but also to
collect funds for the further development of the energy sector.
From 1
st
June 2008 there is a functioning competitive power selection model (CPSM). The
principle of CPSM is the same as DAM. Within this model there are two types of
agreements: Long-term power market and the Agreement of power supply (Council, 2011):
12
9 Long-term power market. Under Regulation 89 from 24.02.2010 the power
market from 2010 operates by a new model the Long-term power market (LTPM),
whereby the RA since 2011 supplies only the population and consumers who can
be determined as the population. LTPM is functioning by CPSM, and this selection
is provided for 4 years.
Power price in this type is formed according to zones of free flow (ZFF)
3
or to the
zone of limited competition, as it is determined by the Federal Antimonopoly
Service. Russian Federation Government determines price limits for ZFF. Only 3 ZFF
from 27 are not limited by the Government ZFF Centre, Ural, and Siberia. There
are functioning market selection according to Regulation 813 from 06.10.2011.
9 Agreement of power supply. Generation companies can supply power by signing
"Agreement of power supply" (APS). By this agreement heat power plants get
guaranteed payment for 10 years, nuclear and hydro power plants get guaranteed
payment for 15 years. Rules for the calculation of the power prices according to
APS are determined by the Regulation 238 from 13.04.2010
Generation Companies have the right to choose the type of agreement by which to sell the
power to the market (Council, 2011).
The Retail Market is the market of electricity and power that has been bought in the
wholesale market, and also electricity from generation companies with an installed capacity
of less than 25 MW. The entities of the retail market were considered in the chapter
Institutional framework of the sector.
Price formation in the retail market, as in the wholesale market is determined according to
price zones, non-price zone and consumers who are determined as private households.
Domestic customers and entities which form the market from non-price zones are
reimbursed for electricity and power by regulated prices. (Council, 2011)
Regulated prices for domestic customers are established yearly by FTS, according to the
Regulation of the Russian Federation Government 1178 from 29.12.2011. FTS
3
"Zone of free flow - part of the Integrated electricity system , where electricity (power) produced or planned
to be supplied by generation equipment can be exchanged by electricity (power) produced or planned to be
supplied by other generation equipment, which has the same technical characteristics in the zone of free flow."
- "Market Council", Glossary, http://www.np-sr.ru/presscenter/glossary/SR_0V005278
13
establishes maximum and minimum limited prices for each region of the Russian
Federation, as stated in the forecast of consolidated balance (Council, 2011).
According to the prices regulated by FTS the Regional Tariff Services establish regulated
tariffs for consumers (Council, 2011).
Regulated prices for other consumers in a non-price zone are calculated in two parts
(Council, 2011):
1.
Shifting price on the wholesale market up to final consumers: it is a sum of the
payments, that include shifted price after the bids on the wholesale market and
reimbursement of the difference in consumption (over or under consumption) paid by
the retail consumer.
The difference in the consumption can be provided by retail consumers only if the
consumer's connected capacity is more than 750 kVA. Such consumers have to plan
their own consumption on an hourly basis. Those consumers who have a capacity of
less than 750 kVA are under the control of the infrastructure operators.
2.
Payment for the electricity transmission: this payment is composed of the
infrastructure service reimbursement and the distribution price of the ensured
supplier.
Non-regulated prices are implemented on the retail market in the price zones of the
wholesale market. In general, the range of non-regulated prices in the retail market is
composed of the following parts (Council, 2011):
Average non-regulated price of electricity (power) on wholesale market
(determined by "ATS" Ltd.)
+
Infrastructure service reimbursement + distribution price of ensured supplier
+
Reimbursement of commercial operators
The distribution price for ensured suppliers is calculated and published by the Regional
Tariff Services in each Region of the Russian Federation.
14
The next step is to consider the components of the tariff for electricity transmission.
The players in the market infrastructure for transmitting electricity were considered
above. The tariff system of the market infrastructure is composed of two components: the
tariff for transmission infrastructure and the tariff for commercial infrastructure (Council,
2011):
1.
The final consumer pays the following tariff for "transmission operators":
a. Cascade principle. Required gross income of high voltage transmission
companies + required gross income of middle voltage transmission companies +
required gross income of low voltage transmission companies = Transmission
(distribution) tariff
b. The principle of uniform tariffs. Tariff in one voltage class in one region is
equal for all consumers of this region, even where different grid companies
operate.
The Federal Tariff Service by the decree of FTS 228-e from 30.03.2012
establishes the value of required gross income, by description of methods of
required gross income calculation, with the consideration of return of investment.
2.
Commercial operator reimbursement according to established tariff by FTS. The
value of the commercial operator tariff is published on the official web-page of FTS
by the decree of FTS 302-/3 from 29.11.2011.
In summary, the Energy sector tariff system is represented by the figure 5.
The tariff values, which are calculated by the Regulations of the Government of the Russian
Federation and Decrees of the Federal Tariff Service, include the amount of income, which
is necessary to return invested capital. The FTS ensures that the considered amount is
enough for new investment of the companies. (Service, 2012, p. 3) The federal grid
company confirms affirmations of FTS, at the same time the Far East energy company
complains about insufficient income. (FGC, 2012, p. 2) (ESE, 2009, p. 4)
15
Figure 5: Tariff system in the Russian energy sector
4
4
Derived by the author, based on consolidated information from
www.np-sr.ru
,
www.atsenergo.ru
,
http://www.fstrf.ru/
Wholesale Market
(WSM)
Electricity
Power
- Regulated Agreements
(RA) (35%)
- Day Ahead Market
- Balancing Market
- Long term power market
(LTPM)
- Agreement of power supply
(APS)
Competitive Power Selection
Retail Market
Regulated price
Non-regulated
price
Regulated Agreements:
Private consumer
+
Infrastructure tariff
Non-price zone:
Basic tariff from WSM
+
payment for difference
Average WSM tariff
+
Distribution price of
ensured supplier
+
Infrastructure tariff
16
Renewable Energy legislation framework and tariff system
The Federal law 35- FZ "Electricity law" from 26.03.2003 (with amendments 250 FZ
from 4.11.2007, 401 FZ from 28.12.2010) establishes the main principles of Renewable
Energy (RE) development in the market.
As stated in the Federal Law the following executive acts were introduced:
1.
Regulation of the RF Government 426 from 03.06.2008 "On the qualification of a
renewable energy generating facility". According to that regulation, the RE
generating facility has to be qualified by the following criteria:
x Generation is based on renewable energy resources or a combination of RE
sources and other sources
x Generator has to be in service (being in service, not in a repairing regime, or
out of service)
x Generator is connected to the grid system and equipped by metering devices.
There are no special rules for isolated systems. These will probably be classified as
the conventional isolated system.
2.
Regulation of the RF Government 850 from 20.10.2010 "Criteria of subsidizing
grid connection of renewable energy generating facilities less than 25MW from
federal budget".
When the generator is approved by the required criteria, it can be subsidized for the
connection to the grid.
3.
Decree of RF Government 1-p from 08.01.2009 "Main directions of government
policy in the sphere of energy efficiency on the basis of RE sources utilization up to
2020"
The decree considers the main rates of RE development (besides hydro power plants
more than 25 MW)
x 2010 1.5%
x 2015 2.5%
x 2020 4.5%
The same rates are considered in the government strategy "Energy Strategy of Russia
for the period up to 2030".
4.
Decree of Ministry of Energy RF 187 "This regulation deals with the procedure of
maintaining the registry of issuance and redemption of certificates, confirming
Details
- Pages
- Type of Edition
- Erstausgabe
- Year
- 2015
- ISBN (eBook)
- 9783954899401
- ISBN (Softcover)
- 9783954894406
- File size
- 2.2 MB
- Language
- English
- Publication date
- 2015 (June)
- Keywords
- russian
