Russian Far East Continues Ramping Up Renewables Capacity, Yet Uncertainty Looms

This has become a matter of key urgency for the Russian Far East, a vast area of 6.2 million square kilometers, which makes over one-third of the Russia’s total area with the population of a mere 6.2 million. With plans to ramp up capacity to 4 MW, the facility will become the largest solar installation behind the Arctic Circle.

Out of four bidders, Xelios Strategije proposed the lowest price for the construction with RUB 156.7 million (US $2.9 million). The project is slated to launch in the first half of 2015.

“When interconnected with the grid, the 1-?W facility, coupled with a local diesel-fired combined head and power (CHP) system, will complete in Sakha the creation of a single energy complex able to fully satisfy the demand for power and heat and, importantly, cut down the generation costs at local diesel-fired power plants and better manage the use of expensive diesel,” said Alekseij Kaplun, deputy director general of Energiceskije sistemy Vostoka.

Upon completion, Energiceskije sistemy Vostoka will be able to save over 54,000 tons of diesel fuel worth US $43.4 million every year, said Kaplun. The Batagaij settlement is one of the first localities already able to use the program’s benefits.

“For Batagaij Verxojansk, a settlement of nearly 4,000 people and with its own kindergartens, hospitals and educational establishments, securing an uninterrupted energy supply is extremely important. Besides, the new facility will allow for the accumulation of power capacity reserves, which subsequently will increase the reliability of power supply to the Batagaij power hub during fall and winter, when it experiences maximum load,” stressed Kaplun.

The plant is part of Vostoka’s strategy to install a set of autonomous hybrid power systems in Sakha, which use is applauded due to the region’s limited access to the conventional energy network that results in a gap between supply and demand.

Renewable Committments

Russia is committed to boost its solar and wind capacity from 250 MW currently to 6 GW by 2020. Russia’s current electric power generation capacity is estimated at more than 220 GW.

Currently, Vostoka is operating seven solar facilities in the region. But the holding eyes developing more than 170 renewable energy facilities with a total capacity of 120 MW by 2020.

The solar-diesel hybrid installations are thought to reduce the cost of local electricity output by 40 percent and, consequently cut down the regional and federal governments’ energy subsidies.

Wary Expansion

Despite these cost reductions, Russian federal authorities in Moscow have been wary and weary of the renewable energy costs in the region, where the temperature can dip under -50 degrees Celcius in the winter.

“Solar development in the remote and isolated regions of our country cannot be seen as a single solution, especially in the light of the mind-blowing cost at $3 per kWh. In general, I don’t like to see when the hype about green energy compromises conventional energy sources,” Ivan Dmitrij Graciov, chairman of Russian Duma (Parliament) Energy Committee, told Renewable Energy World.

While the Russian Far Eastern region boasts high solar insulation — around 800 kW per square meter per year — high renewable energy costs along with the local content production requirements are impeding more rapid expansion of the renewables in the region.

“In addition to the money already pumped into the region’s energy system, an extra US $13.3 billion is needed to maintain and boost the investment environment and attract for that new investments to the problematic sector today. To secure the flow of investments, legislative investment-“friendly” amendments are necessary first,” insisted Kaplun.

According to him, the industry needs regulation, but it has to be reasonable. The Far East needs long-term tariff regulation so that payback in investment — and generation — can be achieved, explained Kaplun.

“If conventional energy needs 20 years for seeing payback in investmnent, for renewable energy, it would be enough 10-15 years. Securing that kind of tariff would create clear conditions for potential investors, and company would be able to independently attract third-parties in investments,” said Kaplun. “Now, special tariff policies for renewable energy are regulated by direct agreements with regional administrations, but they do not provide sufficient assurance to those who are willing to invest in these projects.”

 Kaplun also urged to exercise caution on the local content requirement.

“We understand the situation, but the fact is that the hardware requirements are different everywhere, depending on the region, whether we speak of Yakutia, Kamchatka, Sakhalin or others. For example, in the village of Batagai, where we will put solar panels, the annual fluctuation in temperature is up to 100 degrees. Which manufacturer can guarantee an industrial-scale operation of its equipment in such conditions? Therefore, the equipment is made especially for us,” said Kaplun.

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