Russian Capacity Supply Agreement

As noted above, the Russian wholesale capacity market has not evolved at the project level, which is typically the case in international energy markets, since russian market activities are strictly regulated by law. We expect the market to evolve and include segments that are not currently within the scope of Order 449, such as. B energy supply sectors in remote areas. Russian policy supports these developments. Today, Russian renewable energy offers more potential and opportunities than ever before. If this is the case, suppliers can currently avail themselves of the provisions of their respective capacity supply contracts, since epidemics, quarantine and related restrictive measures can be considered as cases of force majeure, in accordance with the standard agreement on capacity supply. In such circumstances and subject to the supplier`s request, the Market Council`s supervisory board may grant additional time in which no late penalty is imposed. Major industrial consumers opposed the extension of the policy and instead called for alternative measures to support the renewable energy sector. The main reasons for their dissatisfaction are the price of electricity capacity and the rising cost of implementing renewable energy projects. However, major investors in the Russian renewable energy sector (such as Rusnano) have called for the policy to be extended until 2035. They believe that the Russian renewable energy sector is still too young to operate under the general competition rules of the Russian energy market, which are in force in other sectors. It was also announced that, subject to some changes, the capacity supply system implemented under the directive would apply until 2035. Preliminary estimates suggest that funds to finance investment projects in the renewable energy sector during this period could reach around 400 billion rubles and new capacity is expected to reach 10 GW.

However, exact volumes have not yet been determined. For each potential supplier, the tendering process, with its specific form requirements, will represent a major challenge. Developing a specific offer that meets all technical requirements is an important task. What complicates matters further is that, in recent tenders, most bidders were consortia between Russian and foreign companies, organized in different forms of companies. With regard to the content of an offer, the bidder must consult with suppliers of technologies and components capable of locating production in Russia. In return, suppliers who cooperate with bidders must meet localization requirements, which will often require them to create new production facilities, as most key generic renewable energy technologies are not currently produced in Russia. Importing such components will not meet the required location level.

Comments are closed, but trackbacks and pingbacks are open.