There is not enough export current – Newspaper Kommersant No. 238 (7439) dated 12/22/2022

As Kommersant found out, electricity production in the European part of the Russian Federation and the Urals has fallen by more than 1% year-on-year since the summer, and by 3% in the power system of the North-West. The key reason is the suspension of electricity exports to the EU countries, where more than half of the annual supply volume went. The drop in exports has also affected wholesale electricity prices: the figure is falling by 2–4% yoy.

Electricity production in the first price zone of the energy market (the European part of the Russian Federation and the Urals, about 80% of generation in Russia) from June to November fell by 1.2% yoy, according to Kommersant, and amounted to approximately 397 billion kWh. The strongest drop occurred in the unified energy system (IPS) of the North-West, where generation for six months, according to Kommersant’s information, decreased by more than 3%, to 52 billion kWh.

The main factor in reducing the production of electricity in the energy system of the North-West is the halt in the export of electricity to the EU, Kommersant’s sources say.

Deliveries to the EU went from this energy system until mid-May: from the Leningrad region to Finland, from the Kaliningrad region to Lithuania, and also from the Pskov region to Latvia and Estonia. More than half of the annual electricity exports went to Europe (13 billion kWh in 2021). Deliveries stopped due to the impossibility of international cash payments after the outbreak of hostilities in Ukraine. For five months, Russia managed to deliver to the EU, according to Kommersant’s estimates, up to 5 billion kWh.

The halt in exports was one of the reasons for the decline in demand in the European part of the Russian Federation and the Urals: Inter RAO (the monopoly operator of export-import of the Russian Federation) as a consumer bought electricity from thermal power plants in order to sell it on the European NordPool exchange. The loss of such volumes from the Russian day-ahead market (DAM, the main sector of electricity trading) led to a significant reduction in prices in the region. For example, in June in the IPS of the North-West, the price collapsed by 5.7% year-on-year due to “a decrease in consumption in the IPS and the cessation of electricity supplies to Finland, as well as an increase in the generation of HPPs,” the Market Council (regulator of energy markets ). In September, the indicator fell already by 17% year-on-year.

On the day-ahead market, power engineers sell actually generated kilowatt-hours. Generating companies use DAM revenue to cover variable costs, mainly fuel costs. In 2021, the revenue of energy companies on the DAM amounted to 1.08 trillion rubles.

Since June, there has been a drop in prices in the first price zone as a whole.

The maximum decrease in the average monthly RSV index, according to Kommersant, occurred in June: the planned volume of purchases on the RSV this month decreased by 1.5% year-on-year, and the price – by 4.6%, to 1.33 thousand rubles . for 1 MW•h.

The “Council of Energy Producers” (CPE, unites the largest generating companies of the Russian Federation) did not comment on the decline in production and consumption of electricity, as well as prices for the RSV. They only noted that in 2022 “electricity consumption in various IESs was multidirectional.” At the same time, the EIT expects an increase in consumption at the level of 1.5–1.6% by the end of the current year.

According to the latest available data from the “System Operator” (SO, power system dispatcher), in January-September, electricity generation in the Unified Energy System of Russia increased by 1.1%, to 831.1 billion kWh, and consumption – by 1.8%, up to 806.8 billion kWh. The SO refused to provide Kommersant with more recent data.

“If the lack of electricity exports leads to a decrease in domestic energy prices, and the growth of foreign supplies, on the contrary, to their increase, then the market mechanisms are set up incorrectly, they act to the detriment of the interests of the economy,” Kommersant was told in the Community of Energy Consumers (which unites industrial consumers of electricity).

Independent analyst Yuri Melnikov believes that energy companies will have to get used to the new reality without exporting electricity to the EU.

Such deliveries last year accounted for about 10% of the generation in the North-West, that is, a significant share on a regional scale, the analyst notes. In his opinion, exports will not resume in the foreseeable future, as evidenced by Lithuania’s calls for an accelerated break in BRELL (a synchronous zone linking Belarus, Russia, Estonia, Latvia and Lithuania) and synchronization with European power grids. However, the analyst notes that the drop in demand for electricity in the European part of the Russian Federation and the Urals could also be associated with a decrease in business activity.

Polina Smertina