System Operator proposes to build about 1.75 GW of green generation in the Far East

System Operator proposes to build about 1.75 GW of green generation in the Far East to cover part of the electricity shortage in the region. According to the regulator, building renewable energy sources will be faster and cheaper than thermal power plants. Most of the volume will be awarded through open competitions, but investors can also move the construction of their projects from other parts of the country. Investors in renewable energy sources estimate the maximum price for the construction of 1.75 GW of renewable energy sources at 150 billion rubles. But analysts warn of soaring costs for shipping components to remote regions.

The “System Operator” (SO, energy system dispatcher) proposes to cover part of the electricity shortage in the Far East through the construction of renewable energy sources, the head of the organization Fedor Opadchiy said on February 14, speaking at an industry conference of the Russian Union of Industrialists and Entrepreneurs. According to preliminary estimates by CO, 1.75 GW of green generation can be built in the Far East. Mr. Opadchiy called the construction of renewable energy sources in the region a more effective solution compared to the construction of thermal power plants.

Some renewable energy projects for construction in the Far East are proposed to be selected through a technologically neutral competition using the mechanism for competitive selection of new generation (KOM NG), where all types of generation will participate. Part of the required volume can be covered by renewable energy projects that have already been selected through competitions in other energy systems under the mechanism of power supply agreements (PDM). KOM NG and DPM mechanisms make it possible to recoup the facility due to a higher electricity tariff. Both competitions can be held after the launch of the energy market in the region, which is expected this summer.

The issues of construction of renewable energy sources in the Far East, according to Kommersant, were discussed on December 8, 2023 at the government commission on the development of the electric power industry. Questions were raised by Unigreen Energy (controlled by Mikhail Sivoldaev’s Ream Management) and Forward Energy (owned by the Finnish Fortum, managed by the Federal Property Management Agency). According to Kommersant’s information, the government commission recommended that regulators and investors work on possible sites for RES facilities in the region.

According to preliminary estimates, at the KOM NG competition in the Far East it is proposed to compete for 1 GW of projects. The remaining 750 MW can be transferred within the framework of the CSA program for renewable energy sources from the rest of the country, Kommersant sources say.

Unigreen Energy told Kommersant that after the launch of the energy market in the Far East, they are ready to transfer up to 300 MW of their SPP projects, previously selected under the CSA program for renewable energy sources. The company also proposes to hold a CSA competition in the Far East for the remaining volume of 350 MW with earlier project commissioning dates (in 2026–2027). The company is also ready to participate in KOM NG.

The situation with wind power plant (WPP) projects is more complicated. The remainder of the wind farm quota for competitions under the CSA is 1.8 GW. The current portfolio of Forward Energy is 750 MW of wind power plants with a launch before December 2025, as well as 0.9 GW with a launch in 2027–2029. However, Forward Energy does not have an equipment supplier, therefore, Kommersant’s interlocutors say, the company is asking regulators for the opportunity to shift the launch dates of projects and relax localization requirements. Forward Energo did not answer Kommersant’s questions.

To cover the forecast electricity shortage, the potential for renewable energy generation is 3–5 GW, says Alexey Zhikharev, director of the Association for the Development of Renewable Energy. According to his estimates, the construction time for renewable energy generation is up to two years, and the specific CAPEX of 1 kW is up to 85 thousand rubles. depending on the technology. Yulia Miroshnikova from Kept warns that the cost of building renewable energy sources in the Far East may increase due to more complex logistics, as well as new supply chains for imported components amid sanctions. The Market Council (the regulator of energy markets) reminds that the introduction of large volumes of renewable energy sources may require significant costs for the development and strengthening of electrical networks.

The Energy Consumers Community believes that the correct criterion for selecting renewable energy sources in the Far East, if they are really necessary, should be the final cost of electricity. Part of the investment should be ensured through effective mechanisms of bilateral investment treaties.

Polina Smertina