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Can the Frigid Sakha Awaken Russia’s Clean Energy Potential?

Russia’s current electric power generation capacity is estimated at more than 220 GW. Some energy experts, however, predict that without a major additional upstream investment, Russian gas supplies could fall short of projected domestic and export demand within the next few years.

Experts predict that a minimum of 20,000 MW of new generation capacity is necessary to be added to the grid over the next two to four years in order to meet the ever-rising power demand. Renewable enrgy technologies are believed to be able to patch the looming gap, but solar and wind power may face some development roadblocks.

Regions in the Russian Far East like Sakha (Yakutia) are widely seen as among the best for larger renewable energy presence because they are home to some of the highest solar irradiance in the area.

Ignored Potential, Lofty Goals

Though Sakha is perhaps the most recognizable poster child for renewables in the country, it ironically serves as an example of the ostensible expensiveness of solar energy, and has not made many innovative efforts to slash costs, according to policy makers.

“Sakha, like Kamchatka and Sakhalin, our remote and isolated regions, sure, don’t have many energy alternatives due to the adverse climate conditions. But developing solar capacity there cannot be seen as a single solution, especially in the light of the mind-blowing cost at $3 per kWh,” admitted Ivan Dmitrij Graciov, chairman of Russian Duma (Parliament) Energy Committee.

Graciov believes that if regions can use conventional energy sources instead, they should go with them.

“In general, I don’t like to see when the hype about green energy compromises conventional energy sources,” he said.

For Sakha, Graciov explained, building a floating nuclear power plant in Tiksi could be “perhaps the best solution” long-term. “Economically, [nuclear] is much smarter and substantiated than developing the expensive non-hydro renewable sources,” the lawmaker noted.

Yet in late 2007 the Yakutia region and Russia’s Federal Atomic Energy Agency (Rosatom) had agreed on developing an investment project for the construction of a floating nuclear power plant off the town of Tiksi.

In the isolated, frozen and rugged region, where the costs of fossil fuels and transportation are soaring, Rosatom’s ABV-6M reactors with an estimated capacity of round 18 MW were seen as the best alternative to provide both electrical power and heat.

But the project, slated for 2015, never got off the ground despite the then-Sakha government and Rosatom’s secured support for the project from a Russian fund and agreement to seek other investors.

“There was no political will to pursue the venture. Absence of construction experience and the enormity of the project were cited among other reasons,” a senior editorial staff member at a newspaper in the Russian Far Eastern told RenewableEnergyWorld on the condition of anonymity.

The idea of a floating nuclear plant in the country’s Far East is still titillating policy-makers in Moscow.

And Grachiov, the head of the powerful Duma committee, is not an exception: “We have not scrapped the idea yet…I’ve always been a staunch supporter of conventional energy sources.”

As a matter of fact, Russia did come back to the idea of floating nuclear last year at the 6th International Naval Show in St. Petersburg, but suggested other locations.

Despite its conventional energy plans, Russia’s commitment to hike its solar and wind capacity from 200 MW today to 6 GW by 2020 may seem like a dream.

For comparison, Russia’s current non-hydro generation at 200 MW is half the renewable generation the seceded Ukrainian region of Crimea boasts.

“The Crimean solar generation cost, now at a whopping 0.34 euro cents, is largely fed with the budget money. This is pretty insane taking into account that Ukraine has been on the brink of bankruptcy for quite some time,” Grachiov said.

With $4.2 billion earmarked in subsidies for solar sector by 2020, little, if any, money will reach Yakutia.

“For many, it is first a vivid example of super-expensive solar energy, not of the benefits it gives,” the deputy editor insisted.

“Sure, it is such an example. The 200 MW we are receiving now from non-hydro generation may seem to some like our backwardness, but the advanced Germany spends $40 billion in green subsidies annually. I don’t think this is a right thing to follow,” the Russian Duma’s Energy Committee chairman argued.

In Need of Federal Attention

Despite the adverse investment background, the faraway region’s “green” performance are worthy of praise: four 90-kW PV installations in the settlements of Batamaij, Juchugeij, Dulgalax and Kudu-Kiueljm generated nearly 10,000 kWh during the wintriest months, saving the region over 3,300 tons of the expensive diesel fuel.

Saxaenergo, an affiliate company of JSC Jakutskenergo, which is part of Far Eastern Russia's major power holding PAO Energeticheskije Sistemy Vostoka, operates the PV installations.

“The technologically advanced, weather-adapted equipment has proven to be very efficient and cold-proof,” Saxaenergo said in a statement.

Saxaenergo’s net generation at the plants was 100,000 kWh last year, but the operator expects to overcome the mark.

In addition to the solar generation, Yakutia got a boost last year from a 40-kW wind farm in the settlement of Bykov and a 250-kW wind park in Tiksi.

The region saved between 9.5 and 16.2 tons of diesel fuel with wind and solar in 2012, while the whole Kamchatka region is thought to have saved nearly 300,000 tons over the last two years.

“There has been some success in the regions on the retail market, specifically solar plants in Yakutia and wind stations on Kamchatka. We view isolated regions such as these as having great potential for the development of renewable energy, as they often rely on expensive and heavily subsidized diesel generation,” said Cody Thompson, a program analyst at IFC Advisory Services for Europe and Central Asia. “As such, renewable technologies can compete economically even without additional support from the government, when compared to the true cost of diesel generation, including fuel costs and subsidies.”

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However, he noted, due to the nature of the support scheme for renewable energy projects, specifically capacity payments prescribed by Government Decree no. 449, “large scale wind and solar plants will most likely only be successful with the continued efforts of the federal government.”

“The probability of having the federal money reaching Sakha is not big,” insisted the journalist who spoke on the condition of anonymity.

But Thompson of IFC, which is part of the World Bank Group, is nevertheless more upbeat about non-hydro renewable potential in Russia’s Far East.

“There has already been concrete, albeit modest, success in the development of renewables in Russia…We still view Russia as having some of the greatest potential for the development and expansion of renewable energy in the world. We continue to feel that this potential is a dormant green giant, which is waiting to be woken up,” he said.

 However, it is unfortunate that the authorities, he points out, have failed to give a clear signal to investors, to give them the confidence to expand into new markets.

“The renewable energy support legislation leaves room for interpretation and the envisioned capacities are not enough to support a new industry.  As such, investors are asked to bear an unreasonable share of the risk.  There is also the misconception that renewable energy will increase electricity prices for final consumers,” Thompson said.

The current price of electricity, according to him, does not reflect the real cost and, regardless of this, the impact of renewable energy installations on the end consumer would be quite marginal under the magnitude considered.

There is also heavy opposition by vested interest groups who do not wish to change the status quo, the expert maintained.

“Until these issues are dealt with, we fear the development of renewable energy installations to remain modest, which is unfortunate for a country that is in dire need of replacing its outdated generation capacity,” Thompson said.

And though Sakha perhaps should first be a great example of solar and wind potential development under the severe weather conditions, the federal government as well as the majority of Grachiov-like MPs is the ones who often jerk the reigns instead of embracing the developments.

“I do not want to be portrayed as a bad, against renewables grudging old-fashioned politician. In fact I am supportive of most of the green projects. But be they carried out from local budgets and funds, not forgetting the potential of our conventional energy resources, nuclear in particular. I just don’t buy the myths of solar and wind,” said Grachiov.

His words reverberates the majority of Russian lawmakers’ unilateral perception of green energy sources and uncertain return on investment in cold, distant lands like Sakha, despite it’s proven potential.

“In fact, the great deal of insolation [Sakha] boasts shows a great potential for development. The key is to balance the variability of the resource, specifically during the winter months,” Thompson insisted.

The Yakut government officials did not respond to RenewableEnergyWorld’s inquiries.

Lead image: Kolyma region of Russia via Shutterstock

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