Renewable energy: initiation

The first contest of investment projects for power station construction on the basis of renewable energy sources has started. So far, there are far too many solar applications, a deficit of wind ones, and total absence of any applications for hydro energy facilities.

According to the selection criteria, only applications for projects with commissioning scheduled for 2014-2017 are allowed for the contest. Altogether, 2.1 GWt of total capacity of small energy producing facilities, wind parks, and solar power stations are “disposed.”

Let us remind that the RF Government initiated the contest; last May it published corresponding documents targeted at the support of renewable energy. According to the rules, selected winners will be compensated for their investments through contracts for power supplies, in the same way as in traditional generation. These contracts foresee investment pay-back in course of 15 years; the rate of return for them shall amount to 12-14%. However, the projects shall be timely implemented: fines for the failures are quite sensible.

To become a contest participant, applicants shall meet certain obligatory criteria. Among the most important are the following: a guarantee bank or major generator and funds available in the amount of 5% of the declared RES facility cost. In the opinion of some contest participants, these requirements are overstated, because only major market players can afford them.

According to the present regulations, the maximal amounts of expenditures shall not exceed 65.7 thousand rubles per a wind facility; 116.5 thousand rubles for a solar PS, and 146 thousand rubles per a small HPS. With that, formation of the major parameters of capital expenditures for construction of generating capacities in the sphere of alternative electrical energy is still going on: the Ministry of Energy works on it.

As the “Market Council” NP informed, already at the second stage of the selection carried out on September 4-10, the majority of applicants aspired for commissioning of “solar” capacities. At the same time, applicants found ways to reduce declared capital expenditures by the second tour of the Contest. Contest coordinators believe that this fact is an evidence of high competitiveness in project selection. By the outcomes of this selection, the total amount of applications for construction of solar generation facilities for each year has already significantly exceeded the total amount of capacities to be selected

In regards of the projects for construction of facilities on wind generation, no specified applications had been submitted. There is deficit of wind projects at the contest: the accumulated established capacity of the stations presented for the contest amounted to 105MWt with the necessary total capacity to be selected amounting to 1100 MWt. With that commissioning of the first WPS, according to the application submitted, might take place in 2016, and of the following ones in 2017.

There were no project applications for construction of hydro power stations. RusGidro Company’s representatives justified the situation with the unclearness of the capacity attestation procedures and confirmations of the equipment localization degree. Besides this, as the company’s press-service informed, four years are not enough for a full cycle of a HPS construction, beginning with a station design and concluding with its commissioning for exploitation. The majority of the contest participants found the requirement to come up with a generating company as a guarantor (with production capacity no less than 2.5 GWt) unfeasible.

Olga Senova, leader of NGP Climate Secretariat said, that on this stage absence of hydro energy projects may be considered as a positive fact, because environmental; criteria of hydro power plants (HPP) are not-defined adequately, and there is no effective barriers against environmentally unfriendly HPPs.

As preliminary assessments showed, the reason for the high “solar” activity at the first project contest is hidden in the level of technical expenditures for linking to electrical networks: the minimal expenditures at the level amount to 6.2 % for the solar generation, while in case of wind, water, and biofuel power stations expenditures amount to 18%; they are only slightly lower in case of biogas: 15%. Cutback of capital outlays is advised for the future: the biggest decrease is expected at the facilities of solar and biological generation: by 2020, 12% a 3.5% correspondingly. Facilities exploiting wind energy will reduce their expenditures by 0.6%. Most likely, small hydro power plants will keep their indexes of capital outlays unchanged.

Director of the Foundation for Energy Development Sergey Pikin believes that cost of the land, individual for each project, will affect project costs. Pikin stressed that biogas stations have very good perspectives. By his words, certain gas stations cost nearly two times less than in the options for capital outlays indicated in this document.

Despite that some contest members hurried up to call the first contest “a failure,” “Market Council” NP pointed out that pre-qualification of participants keeps being corrected: looking for alternative instruments is actively going on, and by the time of the 2014 contest, alternative ways for project provisions shall be presented. However, according to the regulations, if there are no applications for a certain type of generation for the year 2014, these funds will be lost and not transferred to new contests.

In the opinion of Director of the Foundation for Energy Development Sergey Pikin, the 2013 contest by itself has not failed but was rather poorly prepared. “However, as it is well-known, the first pancake is always lumpy, and practice makes things better: next time, we all will have better expertise,” the expert resumed.