Renewable Energy in Russia - A Giant Yet To Be Awakened
Although Russia has a global image of an oil and gas supplier, the overwhelming size of the country implies a strong development potential for all renewable energy resources as well and current trends of state policy in the sector look more and more attractive to investors, according to a research commissioned by the Merar Investment Network and published by ADPnews.
”...there are a number of factors that can drive demand for energysaving solutions and usage of renewable energy sources in the country.”
“If more regions exploit locally-available renewable energy resources, that could improve energy security and reduce costs.“
“...renewable sources should reach a 1.5% share in the country's electricity generation in 2010, 2.5% in 2015 and 4.5% in 2020.“
The accepted wisdom is that Russia, home to the world's largest natural gas reserves, the second largest coal reserves, and the eighth largest oil reserves, hardly needs to tap the expensive green energy sources but in fact there are a number of factors that can drive demand for energy-saving solutions and usage of renewable energy sources in the country. Although Russia as a whole exports energy, most of its regions import fossil fuels from the few energy-rich ones. Transporting fuel over vast distances dramatically increases its total cost and increases the risk of disruptions in supplies. If more regions exploit locally-available renewable energy resources, that could improve energy security and reduce costs. For example, geothermal plants are viable in Kamchatka, the Kuril Islands and the North Caucasus. Large-scale use of biomass energy is cost-effective in north-western Russia, which has a well-developed pulp and paper industry. Wind projects can become commercially attractive in far eastern coastal areas, in the steppes along the Volga River and in the North Caucasus. One study suggests that developing just 25 percent of Russia's total wind power potential will lead to the installation of 175 GW capacity. As Russia is home to 9 percent of the world's hydro resources, many regions enjoy favourable conditions for small-scale hydroelectric power. Solar is reasonable in the southern regions. Climate change concerns are also not to be ignored when considering possibilities for Russian energy market development. Public opinion has started to warm up to clean power, especially after the fires disaster Moscow suffered this summer. Even the generally high price tag of renewable power may soon be not so high at all. At present, domestic gas prices are statecontrolled and are often kept below cost, as are electricity and heat tariffs. However, Russia has declared it wants to gradually move toward
market-based pricing and plans to increase domestic fares on energy carriers up to European levels. Such a move will inevitably lift gas prices, opening new opportunities for renewables. Government policy Russia's government has already come to realise these opportunities and has begun to place a greater focus on the development of alternative energy. A new national energy strategy until 2030, approved by the Russian government in November 2009, aims to reduce Russia's dependence on fossil fuels by increasing the share of renewable sources in its energy mix. Defined as hydropower plants with a capacity of below 25 MW, tidal, geothermal, wind, solar and biomass, renewable sources should reach a 1.5% share in the country's electricity generation in 2010, 2.5% in 2015 and 4.5% in 2020. This includes 5 GW of wind capacity, expected to create a market worth EUR 5 billion (USD 6.4bn). In May this year, Russian President Dmitry Medvedev announced a set of ecological directives, including measures to enforce mandatory purchase of energy generated from renewable sources. Medvedev has also proposed the establishment of a single federal authority in charge of coordinating ecological supervision in the country to ease bureaucratic burden of project development. At present three state agencies are involved: the Ministry of Natural Resources and Ecology, the Russian Federal Service for Natural Resources Management Oversight (Rosprirodnadzor), and the Russian Federal Service for Ecological, Industrial Production, and Atomic Supervision (Rostekhnadzor). The government was instructed to develop a comprehensive legislative package and present it for consideration by the Russian parliament, the State Duma, before December 1, 2010.
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