Three future thermal power plants will not cover the energy deficit in Siberia, and there are no new investors yet

A competition for projects to build power plants in the southeast of Siberia will not make it possible to close the entire energy deficit in the region. Only three projects, En+ and TGK-14, totaling 525 MW, won the selection, for the capacity of which the business, according to consumer estimates, will pay 775 billion rubles. for 20 years. Players did not come to the competition, calling the price parameters too low, and energy consumers consider the winning projects to be “record expensive.” However, these facilities will cover only 40% of the deficit in the region, so another competition for 700 MW may be necessary. The Ministry of Energy reminds that the decision on the need for additional competition is made by the government.

“System Operator” (SO, energy system dispatcher) published the results of the selection of projects for the construction of power plants in the southeast of Siberia. Three projects for the construction of coal power generation won. PJSC TGC-14 will build one unit at the Ulan-Ude CHPP-2 with a capacity of 65 MW with a total CAPEX of 26.3 billion rubles. The Baikal Energy Company (part of En+) will have to build two power units at the Irkutsk CHPP-11 with a total capacity of 460 MW with a total CAPEX of 109.9 billion rubles. Investors are required to launch facilities by December 31, 2028. Both companies did not comment.

The competition was won by the participants who submitted applications with the lowest price. The maximum value of the total specific capital costs (costs of construction and technological connection of the facility to the electrical grid and to the main gas pipeline) was 423 million rubles. for 1 MW (in 2028 prices).

The winner of the competition will recoup the costs of the project through increased payments for capacity with a base yield of 12% (with an OFZ rate of 8.5%).

According to estimates by the Community of Energy Consumers (unites industrial consumers of electricity), the energy market payment for the capacity of three facilities over 20 years will amount to about 775 billion rubles. in natural prices. The Market Council (the energy market regulator) told Kommersant that over the entire payback period (20 years), the total cost burden of payments for capacity on the wholesale energy market for selected facilities (525 MW) will be about 330 billion rubles. in 2023 prices. The impact on the weighted average by price zones of the wholesale market single-rate wholesale price is about 1% (estimated for 2029 – the first year of supply of capacity of the new facility), it was clarified there.

The competition was announced to cover the energy shortage in the region. However, three 525 MW facilities will not be enough. The deficit is more than double that size at 1.225 GW. 700 MW were not awarded at the competition, including 395 MW in the south of the power systems of the Trans-Baikal Territory and Buryatia, the CO said in a statement. Nobody submitted applications for these volumes. Inter RAO, which did not hide its interest in the competition in Siberia, told Kommersant that the company did not participate in the selection because it “was not satisfied with the conditions of the competition.”

Another competition may be announced for the remaining volumes.

“The timing of the decision to re-hold the competition is not determined by the current regulatory framework,” the CO explained to Kommersant. “At the same time, decisions that ensure the possibility of fully covering the projected deficit must be made in the shortest possible time.”

The Ministry of Energy said that they were summing up the results of the selection. They remind that there are two options to cover the deficit: construction of generation or construction of networks. Both are considered every time a competition is held. The decision to conduct an additional selection may be made by the government based on the results of consideration by the government commission on the development of the electric power industry.

“Regulators preferred the construction of record-breakingly expensive generation to the painstaking work of shifting “loose” mobile demand to surplus energy zones, a more flexible attitude to the localization of equipment and increasing the responsibility of applicants for energy demands,” they say in the “Community of Energy Consumers.” “This approach can hardly be called effective, but there is still hope for its adjustment in the uncovered part of the deficit.”

Sergei Rozhenko from Kept notes that the victory in the competition for projects to expand existing coal-fired thermal power plants is quite logical: “The region needs a prompt increase in available electrical capacity, and in addition, solutions to issues related to updating and increasing the capacity of heat supply systems to provide infrastructure for new housing and industrial facilities.”

Polina Smertina