Peretok Light: highlights of the Russian and global power sectors for 2 to 9 September
Utility connection no longer to be subsidized
The end of the holiday season was marked by hotter debates over a number of key issues for the Russian energy sector. On 4 September premier Dmitry Medvedev convened a conference on grid infrastructure operation: the event brought no significant news. But the concrete steps the government is willing to take to improve the financial health of grid operators (first of all, the provincial subsidiaries of the Rosseti government-owned group) become known from the minutes of the meeting chaired by vice prime minister Dmitry Kozak. That 31 August conference preceded the premier-chaired debate; the document became available to the energy community last week.
E.g., despite resistance from FAS, the government accepted the proposal of Minenergo and Rosseti to adjust the mechanism of subsidized utility connection (UC). So far subsidized UC is among Rosseti's least cost-effective expenditures. The authorities are willing to revise the connection charge, as well as bringing back the investment component to the UC charge rates for all consumer categories.
Far-Eastern Hectare programme participants filed 100000+ UC requests
Subsidized UC, however, is a financial problem not only for Rosseti. The scale of the problem can be judged by the situation with the Far-Eastern Hectare programme. The affiliates of RusHydro, the No 1 player in the Far-Eastern power market, will have to connect to the networks more than 100 thou. sections distributed among Russians under the federal programme.
Authorities discuss introduction of full payment for grid capacity as of 2024
There were no statements of global impact regarding one of the sector's major issues – cross subsidization – after the meeting chaired by Mr Medvedev. As it became clear, however, from the minutes of the conference chaired by Dmitry Kozak, the authorities are ready to introduce a charge for unused grid capacity. Consumers can start paying for energy transmission services based on the maximum connected capacity as early as 2024.
Sources: «President weighs in on modernization programme WACC»
Last week probably saw a line drawn under a key issue of the national cogeneration modernization programme costing up to 1.5 trln roubles. After an intervention from the president, the programme's baseline rate of return must be 14% rather than 12%, as proposed by Minekonomrazvitiya [Ministry for Economic Development and Trade], Kommersant reported. Involved in the decision-making were Sergey Shmatko, the former head of Minenergo, and president Vladimir Putin. The concerned energy market participants and the regulators tried to avoid commenting on the subject of the programme's profitability for a month.
Cabinet approved CA rescheduling from 15 September to 15 December
The government also approved the amendments needed for launching the TPS modernization programme this year.
SO proposes funding gas turbine development through NGCA mechanism
The forthcoming modernization keeps relevant the subject of setting up manufacturing of equipment for high-capacity combined-cycle plants (CCPs) in Russia. Sistemny Operator proposed setting up a separate mechanism to support investors who will be installing new Russian gas turbines at TPS. It is proposed to take as the basis the mechanism for new generation capacity auction (NGCA), which is already in use, specifically in the Crimea. The idea did not find support with most players in the sector.
Inter RAO – Elektrogeneratsiya files lawsuit against ODK-Saturn to recover 854 mln roubles
So far generators are attempting to recover losses incurred from the installation of prototypes of Russian gas turbines. Inter RAO lodged a claim for more than 850 mln roubles against ODK-Saturn, whose turbine breaks down on a regular basis at the Ivanovo CCP. This is but one of 14 similar proceedings issued by members of the Inter RAO Group against ODK-Saturn for direct and expectation damages.
STGT and SilMash to have full local content for Siemens turbines
Apart from developing proprietary solutions, other market participants look to set up production of foreign-designed state-of-the-art CCPs in Russia. Minpromtorg has already enquired with Siloviye Mashiny whether the company will have full local content for Siemens turbines by 2021.