Recent Wind Energy Market Developments in Russia
/28th November 2017, RENEWABLE MARKET WATCHTM/ In 2016, the Russian Federation, together with 118 countries, all in all, responsible for 75 per cent of global emissions, signed the Paris Agreement. This outcome of the UN Climate Change Conference COP21 in Paris was adopted by consensus on 12 December 2015. The Russian Federation is one of the world’s largest emitters and fossil fuels producers. Consequently, it has a large mitigation potential and could play a major role in international climate policy.
However, Russia is the only big emitter that has not yet ratified the Paris Agreement and instead has presented a national strategy that may delay ratification until at least 2019. Under current policy projections, the upward trend in the share of renewable sources in primary energy demand will continue, going from around 3.2% in 2014 to 4.8% by 2030 (IEA, 2016). The expected upward trend has been attributed to the benefits of renewable energy sources in Russia that go beyond emissions mitigation and contribute to economic growth, diversification of the energy mix, and reduction of energy supply costs in remote areas of the country (IRENA, 2017). A new regulation that allows small renewable energy units to feed part of their generation into the grid can be expected to accelerate the uptake of renewables by households in the future (Friends of the Earth Russia, 2017).
Russia and most other countries can only achieve its obligations according to the Paris Agreement under the accelerated development of renewable energy. The possibilities of its wind power market are enormous, as Russia provides the world’s largest wind energy resources and basically all the required industrial capacities. Also, 2017 is the Year of the Environment in the Russian Federation. To date, wind power has an insignificant role in Russia’s power supply, nor encounters Russia itself amongst the leading countries in that matter reveals the report Russia Wind Power Market Outlook 2016 - 2015.
So far only few wind farms with an installed capacity of over 1 MW have been built in Russia: Today, according to WindEurope, the installed wind capacity in Russia at the end of 2016 amounted to 15 MW. Most of the wind farms were built before the year 2013. However, the situation has started to change due to the Russian legislation for renewable energy support and wind power capacity tenders held according to this legislation. In the next few years, many large scale wind power plants shall be launched into operation in Russia.
Enel S.p.A., acting through its subsidiary PJSC Enel Russia, has been awarded in June 2017 with two wind projects (the Azov wind farm and the Murmansk wind farm) for a total capacity of 291 MW within the framework of the 2017 Russian government tender for the construction of 1.9 GW of wind capacity in the country. The two projects will be developed and built by Enel Green Power, Enel’s global renewable energies division. The overall investment in the two wind farms amounts to approximately 405 million euros. The two plants will sell their energy in the Russian wholesale market and will be supported by the Russian government's capacity payments.
The Azov wind farm, which is expected to enter into service by 2020, is located in the Rostov region, in Southern Russia, and will have a 90 MW installed capacity, generating around 300 GWh per year and avoiding the emission of around 99,200 tonnes of CO2 into the atmosphere. Enel has acquired this project from the development company SOWITEC, which has been active in Russia for many years.
The Murmansk wind farm, located in the Northwestern Russian region bearing the same name, is expected to enter into service by 2021 and will boast a 201 MW installed capacity, generating around 730 GWh per year and avoiding the emission of around 241,400 tonnes of CO2 into the atmosphere.
Last week on 22 November 2017, Vestas Wind Systems A/S announced its entry with first order in the world’s fourth-largest electricity market. The framework agreement engages Vestas to supply its 4 MW platform for wind energy projects in Russia, while the order includes 14 V126-3.6 MW turbines for a 50 MW project at an undisclosed site. With the agreement, Vestas and OOO Fortum Energy will lead the expansion of wind energy in Russia and work with local partners to establish a strong local manufacturing and supply chain capacity. This includes setting up a blade factory in the region of Ulyanovsk and a nacelles assembly plant in Nizhny Novgorod region, and a towers factory in the Rostov region.
The first 50 MW phase of one of the country's largest wind power developments is expected to be completed by the end of this year. The Priyutnenskaya project, sited in the Kalmykia Republic, southwest Russia, is being developed by Czech firm Falkon Capital. It can be expanded to 150MW, but 20 FWT 2.5 MW turbines will power the first phase. The Kalmykia wind farm project Priyutnenskaya VES 51 MW is the first private investment wind farm of industrial scale in the Russian Federation. The Energy Competence Centre, a subsidiary of Corporate Energies company group, shall be responsible for independent third party consultancy and supervision for the construction and completion process of the wind farm Priyutnenskaya.
It is estimated that Russia has large wind potential, its gross theoretical wind energy potential is defined to be 197,477 billion kWh/year (at 100 m.a.g.l.) and gross technical wind energy potential – 21,850 billion kWh/year (at 100 m.a.g.l.). The favourable zones for wind energy development include territories of South and North Caucasus federal districts (FD), territories of the North West, Ural, Siberian, Far East FD located in the Arctic Circle, coastal areas northeast of the country, as well as the Kamchatka Peninsula and Sakhalin Island.
More information about wind power market in Russian federation you may read here: Russia Wind Power Market Outlook 2016 - 2015