Peretok Light: highlights of the Russian and global power sectors for February 25 to March 3
The Cabinet of Ministers resumed the discussion of the project on the decommissioning of must-run generation, while nuclear power plants can become part of it
Last week, the representatives of the energy sector resumed their discussion of several important legislative initiatives. On February 25, Kommersant announced that as early as March, a bill on the decommissioning of must-run generation the elaboration of which had been “stalled” for years could go to the State Duma. The authorities are once again trying to raise money (this time to close inefficient power generation plants) at the expense of consumers: the latter can be obliged to finance the decommissioning of not only worn-out CHP plants but also of those NPP units whose authorized service life has expired.
The Ministry of Energy has published the terms for the renovation and construction of CHP plants in non-price zones
On the same day, the Ministry of Energy published a draft amendment to Federal Law No. 35 “On Electric Power Industry”, which is essential for the launch of the CHP plant renovation program in non-price zones, including in the Far East. The project contains no surprises: predictably, the government electric power committee will select renewable CHP plants.
In the Far Eastern Federal District, regions can pay for the CHP plant renovation pro rata to their consumption
However, the published project does not specify the proportion in which consumers in price zones and those in non-price zones are to return to generators the investments spent on the renovation. On Wednesday, the first deputy head of the Ministry of Energy, Alexey Tesler, came out with a clarification on this issue.
By 2027, RusHydro is going to decommission 1.6 GW of old capacities in the Far East
On the same Wednesday, the main beneficiary of the CHP plant renovation program in non-price zones, RusHydro, held the Investor Day. The generator’s top managers confirmed the plans to upgrade capacities in the Far East.
RusHydro does not want to finance the Chukotka projects at the expense of additional share issues
But at the same time, RusHydro announced its unwillingness to finance the Chukotka projects through additional issue of its shares in favor of the state, although the company and the authorities have already taken a number of measures to allocate 14 billion rubles to the generator from the budget in exchange for new shares. “We need a decision on the allocation of budget funds without increasing the equity capital of RusHydro,” the representatives of the company believe.
“Inefficient consumers would like to mothball the network reserve issue”
Also last week, the Ministry of Energy announced the finalization of the bill on the introduction of a network reserve fee. Pavel Snikkars, the director of the Electric Power Industry Development Department at the Ministry of Energy, stated in his interview given to Peretok that one of the initiatives most criticized by consumers had been upgraded to reflect the comments of the core community and was planned to be sent for the government’s consideration in mid-August. According to the official, when calculating the maximum capacity, it is planned to introduce a digression factor for the housing and utilities infrastructure and hazardous industries (provisionally, it will be as much as 0.7); generators will pay for the reserve only in excess of the standard volume of consumption for their own needs; no preferences for industrial generation and consumers of the 1st and 2nd reliability categories are provided for.
The Power Machines company does not rule out the termination of the contract for the construction of CHP plants in Vietnam
Last week brought further sad news from the “sanction front” concerning PJSC «Power Machines». Last January, Alexey Mordashov’s company (and he personally) fell under the restrictions imposed by the US Treasury, and in October, Kommersant reported severe challenges the company’s Vietnam project had faced. Due to the sanctions, the deadlines were missed, cash transactions blocked, and some of the contractors dropped out of the project. Now, Power Machines announced that the Vietnamese contract worth almost $1 billion could be terminated altogether.
The net loss of Power Machines under IFRS in 2018 increased 6 times, amounting to 59.7 billion rublesIn the years to come, PJSC «Power Machines» expects to receive 7 billion rubles from the budget to develop domestically produced alternatives of high-capacity gas turbines, while Alexey Mordashov’s holding will have to invest 8 billion out-of-pocket rubles in the project. The sums look formidable, especially against the background of Power Machines’ reports for 2018, published on March 1.