Analytical Center for the Government of the Russian Federation

Rossiyskaya Gazeta
Irina Pominova

Renewable generation no rival to traditional facilities in Russia

Rossiyskaya Gazeta has reminded its readers that the microgeneration law or, to be more precise, amendments to the Federal Law on Power Generation pertaining to microgeneration, took effect late last year. The journalists asked experts about their outlook for this sector of the fuel-and-energy complex. "There is no doubt that the law will have a certain motivational effect on the Russian microgeneration sector, including renewable microgeneration," Analytical Center expert Irina Pominova said.

"First of all, the law formalizes the notion of a microgeneration facility and its criteria and thereby lays a legal foundation for the development of this sector. Secondly, it allows selling excess energy and thus reduces the period of payoff of microgeneration facilities and increases their appeal to investors," Pominova said, Besides, there will be no tax on the revenue of individuals selling electric power until 2029, since relevant amendments have been made to the Tax Code. True, there is still some uncertainty about parameters of the connection of microgeneration facilities to the grid and their metering devices, but the Russian Energy Ministry has promised to liberalize them, she said.

However, one should not be expecting the emergence of multiple microgeneration facilities in Russia, which is happening in some Western countries, although renewable generation, primarily wind and solar energy, has become competitive with traditional generation facilities. "As a result of technological development and growing competition, the average global levelized cost of energy (LCOE) of windfarms reduced 35% from 2010 till 2018 and made them competitive in most parts of the planet," Pominova said. "Some believe that renewable generation may become a rival of traditional facilities in Russia (without receiving additional support) by 2030-2035," she said. For now, the sector is heavily dependent on subsidies. Investments to be made in course of the first support program (renewable power delivery contract program No. 1 due in 2013-2024) will total 700 billion rubles, while investments drawn under the second support program (renewable power delivery contract program No. 2 due in 2025-2035) will amount to 400 billion rubles at the expense of wholesale power consumers.