Renewable energy in every house

Amendments to the Law on Electric Power Sector should give the “green light” to micro generation. They are a part of the RF Government’s plan for stimulation of the small-scale power generation expansion that the Ministry of Energy had developed about a year ago and the Commission has recently approved.      

By the authors’ idea, now, when owners of renewable energy units with capacities up to 15 KWt are allowed to connect to the general network, this would give incentives for the development of small-scale power generation. That said, the law is applicable only to the owners of individual houses: multi-apartment houses are outside the purview of the law.

A private person can now turn into a power producer at their own will, while network organizations located nearby the new objects of micro generation are obliged to sign electricity and capacity contracts with private power producers. It is presumed that energy management companies will not be out of pocket: they will be compensating the network transfer losses with this privately produced power.

As the Ministry of Energy law drafters informed, the plan was to purchase electricity from small-scale power generators under the average price. The landmark will be the cost of purchases from major local producers. In the areas with no access to the United Energy System of Russia or not included in the pricing zones of the European part of Russia, the Urals and Siberia (e.g., the Kaliningrad Region and Far East), the power will be purchased under specially regulated tariffs.

The total potential of private sources of renewable energy might reach the total capacity of 80 GWt based on the expectations of the present 17 million house holdings, such figures brought Alexey Khokhlov, director of the “Electric Power Production” direction at the Skolkovo Business School

The experts bring approximate cost estimates: with the 10 thousand rubles average cost of a solar unit for 330 Wt, about 45 panels will be needed to produce 15 KWt. With consideration of installation expenditures, this brings us to approximately half a million rubles, says Eurasia Group analyst Dmitry Martynov. Under the electricity purchasing tariff of 1.5-1.7 rubles per kilowatt, the owner of such solar power station might net up to 90 thousand rubles per year. This way, the investment will pay back no earlier than in five years in southern regions, where the sun is in abundance, and in 7-8 years in the Volga region and Siberia.

Even if they will buy power from private RES producers at the retail price, the payback period of a solar power station (SPS) will approximately amount the period of its serviceability, believes the Head of the Your Solar House Company Vladimir Kargiyev.  That means that under the current power prices, it is hard to speak about any profitability in the majority of RF regions.  “This is why purchasing under the wholesale price within 30 thousand per year, and even more, payback within only 5 years, is an absolute nothing and not a measure of support at all.”   

Some experts believe that lawmaking in the micro generation sphere is nothing else but an attempt of the state to reload the RESs development expenses onto private producers, while the state support in this sphere of power production is extremely meager.

It is presumed that the principle of mutual settlement (balancing accounts of the amount consumed and the amount produced and supplied to the network). In the experts’ opinions, in those countries where they had really achieved growth of private RESs productivity, the private producers’ power was bought by the networks at the cost exceeding the retail one, the so-called “green tariff.”

The “green tariff” has got a very broad distribution in Europe. This scheme was often called the major growth driver for the entire European market of renewable energy while it had remained extremely expensive.  In the recent several years, application of the “green tariff” in Europe has been losing its actuality because power production by solar and wind power stations of high capacity got competitive or nearing the breakeven point as compared to traditional generation.

The world practice shows that this segment has good growth prospects: micro generation is not something absolutely new for the world practice: it has been under development for over 30 years. Each year, about 500 billion KWt*h are voluntarily purchased in 75 countries of the world; this is more than France consumes and almost as much as Germany does. “Companies are ready to buy more but they lack convenient contract instruments and better developed regulations,” the Market Council quoted PRIME materials.

One of the most serious pluses of the current legal developments is that the micro generation producers will not have to resolve the issue of power storage, and that means avoiding expenditures related with expensive and technologically complex additional instruments.

We could even call the Law on Micro Generation a revolutionary one: the power sector had remained in the grip of monopolies for a long while, and now it is opening the doors to private producers. The very acknowledgement of micro generation is also important: this concept is brought into the sphere of law. Besides this, the renewable power production comes out into the market: this brings the opportunities to make profit and, consequently, possibilities for the development and growth.  

“The time will show how the micro generation will be developing in Russia,” Olga Senova, Director of Climate Secretariat of the Russian Social and Ecological Union, says. “The available natural and technical potential is more than sufficient, but for the full-fledged development, the state, besides the laws, must be looking for and implementing additional incentivizing forms and methods which would help make RESs affordable and economically profitable for a broader circle of private owners.”