Source: Russia System Operator; Federal Tax Service.
Russia holds the world’s largest natural gas reserves, second largest coal reserves, and eighth largest oil reserves. It is the fourth largest generator and consumer of electricity in the world; its 440 power stations (77 coal-fired) have an installed generation capacity of 220 GW. The grid links over two million miles of power lines, 93,000 miles of which are high voltage cables over 220 kV. Electricity generation is based largely on thermal (gas - 46%, coal - 18%), hydro (18%), and nuclear (17%) power. Sixty percent of thermal generation is from combined heat and power plants (CHP). Russia operates 31 nuclear power reactors in 10 locations, with an installed capacity of 21 GW Despite considerable geothermal, wind and wave resources, renewable energy production accounts for less than one percent.
In 2002, the Russian government began reforming the power sector. The main goal was and remains upgrading the aging and outdated heating and electricity infrastructure. The restructuring involved the separation and privatization of the generation, transmission and sales companies. The grids were brought under regulatory supervision. Power generation was divided up into seven wholesale generating companies (OGK) – including RusHydro, 14 territorial generating companies (TGK), independents and state-owned entities. OGKs contain power plants and specialize mainly in electric power generation. TGKs contain predominantly combined heat and power plants (CHPs). The gradual liberalization of the wholesale electricity market, completed in January 2011, now allows producers to charge market prices. The transmission grid remains mostly under state control.
As a result of the reorganization, Inter RAO UES became a major generating company in Russia in the field of export and import of electric power. The total installed capacity of the power plants owned or managed by the company is around 18,000 MW. The company’s main types of activities are generation of electric and thermal power, sales of electric and thermal power to consumers and export and import of electric power.
Foreign and domestic companies have invested about $27 billion in the power sector; as a condition of their investment, they committed to create 186 GW of new capacity by 2020. As Russia emerged from the crisis, some investment plans were resumed. According to the International Energy Agency, the Russian power sector will require a $440 billion investment by 2030 to avoid regional blackouts and meet future demand. This will include installing new generating capacity and significantly modernizing what is currently installed.
The European Bank for Reconstruction and Development (EBRD) has invested in many of the new power generating companies. In addition, as part of its crisis response actions in its Russia strategy for 2009-2012, EBRD states it will provide support to both private and state-owned power companies, with balance sheet restructuring, refinancing, liquidity support or financing of investment shortfall for priority projects with high energy efficiency parameters. In June 2010, EBRD also laid the groundwork for a strategic partnership with the Federal Grid Company. Russian equipment producers are also modernizing their production. Power Machines (Siloviye
Mashiny) Is the market leader with a share of over 50%. It unites production, supply, construction, maintenance and modernization of equipment for thermal, nuclear, hydraulic and gas turbine power plants. The following big international energy equipment holdings are well established and have joint ventures or their own production facilities in Russia: General Electric, Siemens, Alstrom, ABB, Skoda Power, Mitsubishi Heavy Industries, Ansaldo Energia, and Areva.
Sub-Sector Best Prospects
The development of the energy sector has led to an increasing demand for highly technological equipment that is efficient and environmentally friendly. The Russian power engineering industry, well developed before the fall of the Soviet Union, can no longer supply all of Russia’s energy sector needs.
The most competitive markets are concentrated around the cities of Moscow and St. Petersburg, whereas the regions are considered growing markets. Western equipment is usually installed in newly built infrastructure, while existing equipment is mainly maintained with locally produced equipment and to a lesser extent upgraded with Western devices. According to the Energy Strategy of Russia for the period up to 2030, the priorities in the electric energy industry are:
Russia is generally very receptive to U.S. products. Companies such as General Electric, Dresser-Rand, and Compressor Controls Corporation are present in the Russian market and their products are available either directly or through representatives or distributors. Imports from third countries are also growing. U.S. firms encounter increasing competition in the Russian market from European and Chinese manufacturers. Companies with production capacities in Russia tend to have an advantage over those that produce equipment abroad. This is the main motivation for foreign companies to form joint ventures and start production in Russia.
Tenders for energy projects are processed through the world’s largest marketplace for power generation equipment online at www.b2b-energo.ru. Most of the OGKs and TGKs also have their own marketplaces on their websites. A foreign vendor needs to keep in mind that paper documentation for tenders is generally required in the Russian language. The power stations officially publish tenders for some renovation tasks. For major projects, they work with specialized engineering, procurement and construction companies (EPCs).
Current information about new tenders, analytical materials, regulatory documents, application procedures and other participation requirements may be found at http://tenderenergo.ru. The website is in Russian and intended for local representatives of foreign companies and Russian power supply firms. Information on state procurement (government purchases) can also be found at http://www.b2b-energo.ru/?lang=eng.
The Russian government has stated that it intends to expand the role of nuclear and hydropower generation in the future, to allow for greater export of fossil fuels, with a plan to increase nuclear generation to twice its current level. However, many nuclear plants are due for decommissioning, some of the older reactors will likely be replaced in the near future (ten nuclear units currently under construction), and meeting such a target will require billions of dollars of investment per year over the next decade.
Russian Ministry of Energy http://www.minenergo.gov.ru
Rosatom - Federal Agency for Nuclear Energy http://www.rosatom.ru/en
Press Center of Nuclear Energy and Industry http://www.minatom.ru/en
System Operator http://www.so-cdu.ru
Federal Grid Company http://fsk-ees.ru/eng
Inter RAO UES http://www.interrao.ru/eng
The OGK and TGK websites (many also in English) may also contain information about each
company’s investment, procurement and production plans.
Enel OGK-5 http://www.ogk-5.com/en
Volzhskaya TGK/TGK-7 http://www.en.votgk.ru
Southern Generation Comp/TGK-8 http://www.tgk-8.ru
Yenisei TGK/TGK-13 http://eng.tgk13.ru
March 28-30, 2011
Power Industry and Electrical Engineering
May 17-20, 2011
Efficient Power Engineering in Industrial and Municipal Sectors
May 31- June 3, 2011
June 6-8, 2011
Electric and Power Infrastructure Sochi
October 4-6, 2011
Commercial Service Contact
Anna Avetisyan, Commercial Specialist
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