Kilowatts poured over the Amur – Newspaper Kommersant No. 226 (7427) of 12/06/2022

The export of electricity from Russia to China has grown by 23% since the beginning of the year, said Russian Energy Minister Nikolai Shulginov. In physical terms, the volume of supply, according to Kommersant’s information, could reach a record figure of 4.2 billion kWh. However, the Chinese direction still does not allow the Russian Federation to replace the EU market lost due to hostilities: this year, the total export of electricity may decrease by a third compared to the previous one.

“Electricity exports to China increased by 23% over the course of 11 months,” Russian Energy Minister Nikolai Shulginov told reporters on Monday, December 5. Total exports in physical terms, according to Kommersant’s information, amounted to about 4.2 billion kWh – a record value in the entire history of observations. For comparison: in 2021, Inter RAO (a monopoly exporter of electricity) for the first time increased exports to China by 30% year-on-year, to 3.97 billion kWh, against the backdrop of an energy shortage in China.

In 2021, Inter RAO sold a record amount of electricity abroad — 21.8 billion kWh. The volume of supplies to Finland increased to 8.17 billion kWh, to Latvia, Lithuania and Estonia – 4.7 billion kWh on the back of high prices. Deliveries to Kazakhstan amounted to 1.8 billion kWh, to Georgia — 1.7 billion kWh, to Mongolia — 0.49 billion kWh.

Inter RAO did not comment on Kommersant’s data on the volume of deliveries to China. Chairman of the Board of Directors of Inter RAO Igor Sechin said at the end of November that against the backdrop of heat and energy shortages, the company, at the request of the PRC, in January-October increased supplies to China by 33%, to about 4 billion kWh. Statistics on the export of electricity after the outbreak of hostilities in Ukraine is closed, Inter RAO also stopped publishing data, and the Market Council (energy market regulator) stopped publishing it since July.

Electricity supplies to China come from the Amur Region under a 25-year take-or-pay contract signed in 2012. Inter RAO buys energy from power plants in the Far East (mainly from RusHydro), and then resells it to China, paying extra for transmission services. The profitability of supplies to China was estimated at 30%, but the regulator limits the company’s profit at 5% per year, the rest of the revenue is distributed to market participants in the Far East. The technical capabilities of power transmission lines allow Russia to transmit to China up to 6-7 billion kWh, according to Regina Lyanzberg from Kept. Delivery in the amount of 7 billion kWh is possible only with an increase in the installed power capacity in the Far East, she notes.

The largest and most profitable direction for Inter RAO has historically been Finland, Latvia and Lithuania, where 60% of exports went. However, in May, deliveries there stopped due to problems with the calculations. Russia managed to sell to the EU, according to Kommersant’s information, about 4-5 billion kWh against the backdrop of high prices.

To replace the European route, Inter RAO is increasing supplies to Kazakhstan, Mongolia, Azerbaijan, Kazakhstan and Georgia. Kazakhstan is still the main buyer: deliveries there, according to Kommersant’s information, may amount to about 5 billion kWh. Inter RAO refuted Kommersant’s data on the level of deliveries to Kazakhstan, refusing to give actual figures.

The remaining export destinations for Inter RAO are unlikely to be able to replace closed deliveries to the EU. So, in October, Andrey Logatkin, Director of the Department of International Cooperation at Rosseti, said that electricity exports from Russia by the end of 2022 could fall to 13.5 billion kWh, which is 38% lower than last year’s figures.

Among the new promising areas is Azerbaijan, Regina Lyanzberg believes. Long-term plans include the construction of a second 330 kV Derbent-Khachmaz line, as well as the parallel operation of the power systems of Russia, Azerbaijan and Iran, which can probably increase supplies to Azerbaijan. However, such plans are most likely to be implemented already beyond the horizon of 2023, Ms. Lanzberg suggests.

Polina Smertina