Russia has reduced electricity supplies abroad by 21%

At the end of 2023, the Russian Federation reduced electricity exports by 21%, to 10.7 billion kWh. This happened mainly due to a complete stop in supplies to the EU, which were going on before the outbreak of hostilities in Ukraine. Now the main export direction is Asian countries, but for its development Russia needs to invest in the development of generation. Thus, Inter RAO had to reduce exports to China by a third due to a lack of capacity in the Far East. In 2024, the company hopes to stop the fall in supplies abroad by stabilizing exports.

At the end of 2023, Russia exported 10.7 billion kWh, representative of Inter RAO (operator of electricity exports from the Russian Federation) Alexandra Panina told reporters on the sidelines of Energy Day at VDNKh. She noted that last year Russia supplied a record amount of electricity to Kazakhstan (4.7 billion kWh) and Mongolia (0.9 billion kWh). The volume of supplies to China, as Kommersant expected, amounted to 3.1 billion kWh (see Kommersant on January 15). Ms. Panina noted that she hopes to maintain exports at the same levels in 2024.

A noticeable decrease in the total annual supply of electricity, amounting to about 21% year-on-year, is primarily due to the complete stop in exports to the EU. Russia supplied electricity to Lithuania, Latvia, Estonia and Finland until May 2022. According to Kommersant’s estimates, in January-May 2022 Russia managed to sell up to 5 billion kWh to the EU.

The EU has historically been the largest and most profitable direction for Inter RAO. Ms. Panina noted that Inter RAO received a “decent profit” from exports in 2023: “At the level of what it was before 2018.” At the same time, the volume of electricity exports at the end of 2023 was lower than the pandemic level of 2020, when the Russian Federation exported about 11.7 billion kWh.

The main limiting factor in supplies for Inter RAO in 2023 is the lack of energy capacity in the Far East, where exports to China come from. Since August, Inter RAO began to reduce exports to China due to increased domestic consumption, accident rates at thermal power plants and low water availability. Since December, we had to limit supplies: exports are still carried out only through two power lines of 110 and 220 kV. As a result, supplies to China fell by almost a third compared to the record volume for 2023.

In addition, Inter RAO failed to increase exports in the southern direction. The potential supply from the Southern grid is 1 GW, including Turkey, Georgia and Azerbaijan. However, supplies at some hours dropped to zero due to repairs, heat and energy flows to new constituent entities of the Russian Federation (see “Kommersant” dated September 28, 2023).

The growth of electricity exports to Asia looks quite logical, says Sergei Rozhenko from Kept, expecting this trend to continue in 2024. Factors in the growth of exports to Kazakhstan are the structural deficit of generation in the republic, the analyst notes.

There are two reasons for the lack of energy capacity in the country itself, Mr. Rozhenko clarifies. The first is an increase in demand for electricity, which has already exceeded the highs of the USSR, taking into account the continuing growth of the country’s economy and population. The second is the lack of investment in generation in past years, in particular in coal-fired thermal power plants, including against the backdrop of the green agenda. As a result, Kazakhstan missed out on a 20-year investment cycle in coal assets, making it difficult for the energy system to withstand growing loads, especially in winter. Since there are no quick solutions to the shortage problem, electricity exports from the Russian Federation will continue, Sergei Rozhenko is sure.

“With China, the situation is exactly the opposite: the Far East has the highest dynamics of growth in demand for electricity in Russia, but there, as in Kazakhstan, an important period of the investment cycle in generation has been missed,” Mr. Rozhenko believes. “The Far East now simply does not have available reserves to meet growing Chinese demand.”

Polina Smertina