Extend impossible to stay

Presently, support for renewable energy sources (RESs) is provided through tenders for power supply contracts (PSCs). Using the latter, renewable energy sources with total capacity of 5.4 GWt are scheduled to be put into service before 2024. In October 2018, RF Vice Prime Minister Dmitry Kozak claimed that support measures for the “green generation” were to be extended for the years 2025-2035; however, it is not yet clear if a decision of this matter will be adopted.

The professional power production community split down the middle on the issue. One party stands for extending support for RESs, while the other considers that useless. One of the opponents’ arguments is that the program has never reached the goals set. The most indicative examples of “failed expectations” are: insufficient increase of RESs quota in power generation; the creation of 20 times fewer jobs than planned; noncompetitiveness of technological solutions as compared to foreign analogues.


In today’s Russia, the cost of purchase by consumers of electricity from renewable energy power plants is 3-4 times higher than for world analogues. On the contrary, in the U.S., where the cost of gas and power are comparable with Russian ones, the primary costs of RESs power are practically the same as for the power produced by traditional power stations.  


“The PSC mechanism destroyed the attitude towards RESs in the Russian Federation,” believes Director of the Association of Power Consumers Community Valery Dzyubenko. “The choice of this mechanism created the most negative image of renewable energy sources among consumers. We were obliged to cover non-market expenses which have absolutely nothing to do with the reality. The mechanism chosen for support of RESs, i.e., PSC, is a reverse auction; it puts on hold the technological backwardness in the conditions of weak competition: the lower is the price, the higher is the odds of winning. And what can you buy low? Nothing but yesterday’s technology. This way the funds are withdrawn from real economy sectors where a much higher payback could be achieved.”


Advocates of RESs support estimate the situation in a more optimistic way: in their opinion,  2013-2024 support for RESs has provided for the establishment of new branches of industry and power production already by 2018: manufacturing of solar panels and wind generators. “Investments to RESs will reach 1 trillion rubles by 2024, which would stipulate up to 0.5% GDP growth,”  RAWI specialists wrote in their Petition  and solicited to extend the “legislative support for RESs in the amount of 10 GWt up to 2035.”  


“There is a real danger that the work done will go down the drain. If we do not extend the program, the industry might degrade,” believes Anatoly Chubais, Rusnano Director General. Without extension of the PSC program, Russian manufactures of the equipment for RESs have most clouded prospects because they have not yet started exporting,” Natalya Porokhova from the Analytical Credit Rating Agency is sure.


The government has no unified position regarding the further schemes for RESs support. Representatives of the Ministry of Economic Development, the Ministry of Energy and the Federal Antimonopoly Service (FAS) agree with the arguments of opponents. They point at the need to focus on the development of renewable energy in remote areas and to stimulate voluntary demand. The Ministry of Industry and Trade noted that they speak for the support of extending contracts for the supply of capacities after 2024; however, the accent, in the opinion of the department’s representatives, should be made on the promotion of exporting and further equipment localization in the RF.  


“There is all the reason to extend RES contracts under new conditions, with gradual reduction of the tariffs,” believes the head of the Solar Power Production Association Anton Usachev.


“It is necessary to change our approaches to the state support for renewable energy sources,” says the State Duma Chairman First Deputy on Power Production Valery Seleznev. “The most expedient mechanism for the support of RESs development after 2024 is seen as subsiding them through state funds, as is the case in the majority of countries.” 


First Deputy Energy Minister Alexei Texler supports the extension of the program.  He proposes to continue working on improving energy efficiency, develop renewable energy, and change the role of consumers, who can produce electricity on their own.


The official confirms that at the first stage of the program, its goal was not the generation capacity but support of national technical and technological competencies and localization at the level of 65-70%. “We have already completed a full cycle from science to production of our own solar batteries on our national basis,” Texler says. In the opinion of the deputy energy minister, the most important goal now is the export orientation. “As compared to China, we are still behind in costs; however, we have other advantages, the high efficiency rate, for example (in some cases it reaches 23%)…. We have already elaborated a number of proposals in this sphere, including in the part of the ‘green certificates’ development. Most likely, we will include it as an option in the support program, which might diminish the burden on the market...”  


The Government is due with the verdict on the PSC for RESs program before the end of this year. In the opinion of public environmental organizations’ representatives, support of renewable energy sources should remain a state duty. That said, for the full-fledged progress in this sphere, most efficient ways and means should be selected. “It is necessary to provide for re-orientation of subsiding fossil energy resources and nuclear power production in favor of RESs and energy efficiency,” wrote representatives of the Russian Social and Ecological Union (RSEU) in their Position. “…We should start practical actions on stimulating energy efficiency, RESs progress, introduction of new technologies, and investment instruments.”

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