Peretok Light: highlights of the Russian and global power sectors for January 28 to February 3

Источник: Игорь Агеенко / РИА Новости

The government decree on CHP plant renovation is issued.

On January 30, the government issued the much-anticipated decree on CHP plant renovation in the Russian energy market pricing zones, which the energy sector had been awaiting for more than six months.

So far, only steam power plants (SPPs) can qualify for the KOMMod program

Given the repeated postponement of the launch of the program, as well as the tough deadlines for the competitive power take-off for modernization (KOMMod) and the annual competitive power take-off, the regulators have already joined the process and started accepting preliminary renovation applications. It turned out that by February 1, the volume of applications had quadrupled the “storm selection” quota – there are going to be selected projects the total capacity of which amounts to 11 GW (15% will be distributed by the Government Commission for the Energy Sector Development outside all the tendering procedures). In the first market selection round, only steam power units are likely to qualify: their renovation is cheaper, and regulators have not yet received any applications for modernizing steam and gas units. The total value of the program, scheduled to close down in 2046, will amount to 3.4 trillion rubles in 2021 prices, which corresponds to the last year indicator of the program value – in 2018, the Energy Ministry representatives estimated its total cost to be up to 3.5 trillion rubles.

The Market Council adopted a number of amendments rendering possible Lukoil CHP plants’ participation in the renovation program

Five days after the official signing of the government renovation decree (January 25), the Market Council changed the regulations and revised the procedure for setting the renovation limits for old CHP plants in energy-deficient areas. Lukoil needs these amendments badly, as the company was at risk of not qualifying for the renovation program due to the Southern UPS’s lack of insuring capacity in the reconstruction period. Now, the balance will take into account the capacity of the Novocherkasskaya HEPP the decommissioning of which has been discussed by its owner, Gazprom Energoholding, and regulators for some time now.

The Ministry of Defense unit managed to make a channel in the blockage on the Bureya

Last week brought good news from the Far East: the military managed to make a channel in the dam blocking the Bureya HEPP reservoir. The mud volcano that fell in the Bureya blocked the water supply, which meant an imminent plant standstill after the drawdown of the reservoir in late spring. The shotfirers managed to make a duct through which 200–250 m3 of water per second is channeled to the reservoir. The military plan to complete the second stage of the disaster relief operation by February 18.

An emergency state at the Bureya HEPP can add an amount equivalent to the so-called “Far Eastern extra charge” to WECM consumers’ costs

However, the incident in the Far East could still result in WECM pricing zone consumers paying a tidy sum. In any case, the fall of the mud volcano will negatively affect the average annual HEPP output; RusHydro will have to give more load to CHP plants in the Far East, where energy production is much more expensive than hydrogeneration. All that is going to result in a rise in regional economically reasonable prices, but for Far Eastern consumers the cost of energy will not increase – the difference is likely to be covered by the “Far Eastern extra charge” that energy buyers get paid on the wholesale market in the Center, the Urals, and Siberia. At the request of Kommersant, analysts calculated that the annual replacement of 20% of the Bureya HEPP output (the plant capacity amounting to 2 GW) with the Far East thermal capacities will increase the extra charge, which is now 32 billion rubles, by another 2.9 billion.

En + revealed its share capital structure after the lifting of the sanctions

Last week, two significant for energy workers events took place in related sectors. First, the US Treasury, despite opposition from Democrats in the Senate and Congress, excluded RUSAL, EuroSibEnergo, and En+, companies previously controlled by Oleg Deripaska, from the sanctions list. After that, the leadership of the En + holding revealed its new shareholder structure. Oleg Deripaska, who previously controlled En+, will now control just 35% of voting rights; eight of the 12 members of the company’s renewed Board of Directors turned out to be independent directors, six of them are US and UK citizens.

In the wake of Senator Rauf Arashukov’s arrest, his father and cousin are detained

The dramatic arrest of Senator Rauf Arashukov, accused of ordering contract killings and detained during a session of the Federation Council, the upper house of the Federal Assembly of Russia, made headline news. A few days later, his father, his cousin, and a number of Gazprom Mezhregiongaz employees, suspected of long-term gas theft in the North Caucasus and southern Russia, were also taken into custody. The damage is pre-estimated to be 30 billion rubles, but it is assumed that in the course of the investigation the amount of the damage may turn out to be even greater.

04-02-2019 00:00