Russia may need new energy capacities due to mining

In the southeastern part of the unified energy system (IPS) of Siberia, the construction of additional generation is likely to be required, Russian Energy Minister Nikolai Shulginov said in an interview with the Rossiya 24 TV channel. According to him, in regions with low energy tariffs [для населения] there is a significant increase in consumption due to mining. This should be taken into account when considering the energy system development program for the next period, the minister explained.

The growth in electricity consumption by miners in Russia increases the load on the networks, so it is necessary to create conditions for legal mining, Shulginov believes.

“The position of the Ministry of Energy has always been based on the need to create working conditions for mining, we are seeing an increase in consumption by the population in some regions. When the population is engaged in mining, there is an increase in consumption, a load on the network, sometimes the network is damaged, ”said the Minister of Energy (quoted by RIA Novosti).

Now regulated tariffs for electricity in the territories where the wholesale electricity market operates (this is the entire territory of Russia, except for the Far East and some other “non-price” zones) have been introduced only for the population. Low tariffs are traditionally set mainly for those regions of Eastern Siberia where the share of cheap hydro generation is high.

To regulate electricity consumption by miners, the government previously decided to introduce differentiated tariffs depending on the amount of energy consumption, Shulginov recalled. Irkutsk Oblast and Khakassia (Vedomosti wrote about this on August 16) will be the first regions where a differentiated system of payment for electricity for individuals (in everyday life, the scheme was called the “social norm”) under the new methodology of the FAS will be introduced. Tariffs for the population there are the lowest in all of Russia. Payment will be set according to the principle “the more you consume, the more expensive each kilowatt-hour.”

In December 2022, the government gave the regions the right to set differentiated electricity tariffs for the population, depending on consumption volumes. Previously, only Crimea and Sevastopol had such a right. Such amendments were called for by power engineers, who announced the development of cryptocurrency mining in the residential sector.

Back in October 2021, the governor of the Irkutsk region, Igor Kobzev, said that the region was experiencing “an avalanche-like increase in energy consumption from underground cryptocurrency mining at tariffs for the population.” Then the head of the region raised this problem at a meeting on energy with President Vladimir Putin and wrote about the problem to Deputy Prime Minister Alexander Novak, who oversees the fuel and energy complex (Vedomosti reported this on October 13, 2021)

In 2022, the Russian authorities decided to legally regulate mining activities: such a bill was submitted to the State Duma on November 17. According to the document, the requirements for the activities of persons engaged in cryptocurrency mining will be established by the government in agreement with the Central Bank, and the authorized executive body will control their compliance.

Anatoly Aksakov, head of the State Duma committee on the financial market, said on December 23 that consideration of the bill was suspended due to concerns that mining could be used to withdraw capital from Russia. The MP expressed hope for the adoption of the bill in the first reading in January 2023.

The biggest problems with network load due to mining are observed in the Irkutsk region and Khakassia due to cheaper electricity for the population, says Aleksey Belogoriev, Deputy Chief Director for Energy Direction at the Institute of Energy and Finance. According to him, the construction of new capacities in these regions may be necessary if mining volumes grow “very much.”

Now, a more equitable distribution of costs between electricity consumers, the legalization of miners and the conclusion of commercial energy contracts by them seems necessary, Belogoriev adds. In his opinion, the legalization of mining will also create investment resources for the development of networks and, if necessary, for the construction of new capacities.

Director of Bitriver (operator of data centers for mining) for interaction with government agencies Olga Ogienko explains that when building large data centers for industrial mining with a power consumption of 50 MW or more, it is most often necessary to develop and coordinate an external power supply scheme with the power grid organization and the “System Operator of the UES “(SO UES; dispatcher of the Unified Energy System of the country). Such a scheme should confirm the system’s ability to provide this consumption or show that a new consumer needs network construction or the construction of additional power generation facilities, she explained.

With the participation of Natalia Zarutskaya