MOSCOW — The Russian Prime Minister Dmitry Medvedev has amended Russia’s federal law on the electric power industry. Ordinance No47 lays out a number of measures aiming to stimulate renewable energy sales in the national retail market.
The new support measures will affect all types of renewables, including biogas, biomass, landfill gas, solar, wind, and small hydropower, and experts expect that solar will benefit most. As of now, solar developers have been granted the largest chunks in Russia’s yearly green capacity tenders.
According to the amendments, Russia’s grid companies will be obliged to buy RES (renewable energy source) companies’ power despite the difference in tariffs — renewable energy tariffs are now 3.5 times higher than those for conventional energy generators.
The amendments include a stipulation that states the volume of electricity to be purchased from renewable energy generators should not exceed 5 percent of the forecasted amount of electricity that grid companies lose while transporting it from the power plant to consumer. The tariff for sustainable energy developers will be set by regulators of each region of Russia using a new methodology that is still under development.
The Russian government also decided to set renewable energy purchase caps and imposed new requirements of local content for renewable facility equipment. As of January 2017, each project must include 70 percent local content. With the amendments in force, each renewable energy facility that applies for a renewable tariff will be obliged to obtain a certificate of competency and be included in the scheme of electric power expansion of a particular region of Russia.
According to the amendments, tariff rates will depend on whether it meets local content requirements. If the project does not use local content, the green tariff might be slashed by more than 50 percent. There is a 15-year payback period, with 14 percent rate of return for projects commissioned before 2017, and 12 percent for renewable facilities launched after 2017.
The amendments have been largely hailed by Russian renewable energy developers, but irked many power consumers and grid companies who fear that the legislative intrusion may lead to a significant hike in prices and should be left up to the market regulation.
Anton Usachiov, director of Russia’s Solar Energy Association (RASE), said the new support mechanism aims first to aid small distributed generation or commercial projects.
“That will help partly offset electricity loss. For example, in central Russia, the annual technological loss in local transmission grid exceeds 5 billion kWh, while the total loss in the country reaches 100 kWh each year,” said Usachiov.
According to Usachiov, the 5 percent amendment can be lowered in the future when renewable facilities prove their efficiency.
“The 70 percent local content rule will boost local renewable production. Already from the outset of 2015, the requirement is met by the most major investments. For example, Russia’s Xevel [a joint company of Russian energy giants Rosnano and Renova] has built PV module factory in Novocheboksarsk, ‘Solar Systems’ has announced of plans to erect a similar plant in the Republic of Tatarstan and Germany’s Schneider Electric is manufacturing grid inverters in Russia,” said Usachiov.
Usachiov emphasized that in order for these amendments to succeed, the government must limit capital expenditures for renewable facility production, and Russia’s Federal Tariff Service must develop a methodology for calculating tariffs and a mechanism to offset renewable generation losses.
Lead image: Victoria Gamas. Credit: Shutterstock.