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Russia Sets Renewable Energy Auction Dates

The Russian Government has announced that renewable energy source (RES) investment project auctions (IPA) for the years 2015 through 2018 will be held May 28 through June 10, 2014.

Some 1,645 MW of wind power and 496 MW of solar will be up for grabs and the results will be tallied before June 30, 2014.

Along with a planned RES project crediting alleviation, the auction system is expected to boost the country’s RES sector development.

Following the revised IPA program, auction winners will secure rights to manage selected projects for 15 years, also should see a return on investment of no less than 14 percent.

However, the annual limit for the total volume of power generation from the renewable facilities will be limited to 6 or 7 GW.

In preparation for the new IPA system, Russian Prime Minister Dmitrij Medvedev has also ordered to alleviate lending conditions for sustainable energy developers, asking respective governmental bodies and state co-owned banks to draw up a plan of measures aimed to support RES projects.

Among the government-proposed measures is a potential extension of the terms for loans and lower interest rates.

The Russian PM also told respective ministries to work out measures aimed to promote the industrial use of biomass in power generation.

Russia’s current renewable energy generation satisfies only 0.8 percent of the country’s power needs, but the country hope to hike the share to 2.5 percent.

Although Russia has made advancements in sustainable energy development recently, Russia’s renewable market, some experts say, is not yet as developed as that in the West.

“Russia’s renewable energy market is not as developed as it is, for example, in Europe. Despite the evident growth of solar capacities, we still have few solar panels stations, bio-fuel stations and wind power stations. Renewable energy accounts for less than 2 percent in overall Russia’s electric power generation,” said Ekaterina Shishko, analyst at Investcafé, an independent research agency.

According to her, the main obstacles to RES development in Russia are, first, undeveloped legislation, second, lack of investment activity due to crisis in the whole power sector, third, lack of state support and, fourth, stagnating electricity consumption.

“One of the weakest points, in my opinion, is demonopolization and development of competitiveness of Russia’s power market in Russia, as very few steps have been made towards it and at first it may only cause increase in prices for ultimate consumers. Moreover, it will be a very long and hard process to change the model of power and electricity market,” the expert noted.

Russia held its first ever state-backed RES investment project auctions last fall, giving out subsidies for 39 sustainable power projects with a combined capacity of 504 MW.

The solar sector is expected particularly to gain from the advantageous result, according to estimation by IBCentre, a U.K. and Russia-based research and consulting organization. But the Russian solar sector’s advantage over wind and hydro is that solar plants are obligated by law to use at least 50 percent of locally produced solar PV components.

Lead image: Russia flag via Shutterstock

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