8 July 2022
As part of the Innoprom
2022 international industrial exhibition, a panel session was held on ‘The
Development of Distributed Generation in the Far East and the Arctic as a
Challenge for the Domestic Industry’. The event was organized by the Far East
and Arctic Development Corporation, which is subordinate to the Russian
Ministry for the Development of the Far East and Arctic, and OPORA RUSSIA, a
Russian public organization for small and medium-sized businesses, as part of
preparations for the Eastern Economic Forum. Eastern Economic Forum will be
held in Vladivostok from 5 to 8 September 2022. The Forum operator is the Roscongress
Foundation.
According to the
moderator of the discussion, Maxim Gubanov, Head of the Energy and Utilities
Division at the FEDC, the Corporation is working systematically to attract
investment in the development of local energy infrastructure in remote and
isolated areas of the Far East and the Arctic.
The result of this work
was the formation, promotion and approval by the professional community of the
idea (Concept) of creating an industry-wide distributed generation development
institute in the form of a fund. Its purpose will be to provide financial
support to investment projects for comprehensive modernization of the municipal
energy sector and provision of a guaranteed local power supply to consumers.
“The development of the
energy sector is inextricably linked to the development of the energy industry.
Ensuring state support for the implementation of investment projects in the Far
East and Arctic regions of Russia in the local energy sector will create demand
for modern technological equipment for generating electricity and heat. To
implement these projects and ensure energy security in the Far East and the
Arctic in the context of sanctions pressure, it is necessary, first and
foremost, to focus on equipment produced by domestic manufacturers or with a
high degree of localisation. The purpose of our participation in Innoprom is to
identify the potential and opportunities for import substitution in this area,”
said Maxim Gubanov.
According to the session
co-organizer, OPORA RUSSIA board member Mikhail Kolesnikov Russian
machine-building companies will be able to offer an effective alternative to
European and Asian brands, but this requires a public procurement order for the
development of the energy industry in the distributed power generation sector.
“The majority of
investor companies in the distributed generation sector operate imported
equipment, which has high technical characteristics, high-quality service and
is supplied at a large discount on terms of further guaranteed service. Foreign
companies have a wide dealership network in Russia, which, due to the scale of
the market, enables them to meet domestic demand and create an order for the
development of power engineering in other countries. Sanctions are certainly
changing the geography of suppliers, but the involvement of the industry
regulator is needed to produce domestic equipment, primarily small diesel and
gas-fired generation, which ensures guaranteed power generation regardless of
weather conditions, as well as small capacity wind turbines that reduce fuel
dependence,” Mikhail Kolesnikov explained.
During the session,
Russia’s largest private investors in distributed generation and power
engineering presented their views on import substitution in distributed
generation.
Evgeny Lysakov,
Development Director of Energoteсhservice Ltd., noted the high competition
among generation equipment suppliers and the need to use the best technological
solution to ensure the effectiveness of the commercial electricity supply
contract.
“We work with various
energy equipment suppliers, have our own production of gas-fired power plants
and are actively investing in the creation of distributed generation
facilities. Our priority is to provide consumers with a reliable energy supply
on time and in a cost-effective manner. Sanctions are having a negative impact
on import supply chains. Our company is considering cooperation with domestic
producers, provided that the quality of products is high enough,” said Evgeny
Lysakov.
Alexander Osyka, Deputy
Director General for Production at ERSO Holding Company, spoke about the
potential of domestic electrical engineering production and Russia’s
technological sovereignty in the power sector.
In its time,
Electrozavod was established on the basis of a public procuremnt order to
implement the GOELRO Plan, the aim of which was to provide a centralized power
supply for the entire territory of our country. That is why the company’s main
products were equipment for transmission and distribution of electric power.
The market economy required the company to expand its scope of activities, and
it now includes a full range of services, from feasibility studies and
engineering to in-house financing of investment projects.
“The development of
distributed generation in remote and isolated areas of the Far East and the
Arctic, as an alternative to centralized power supply, is an urgent area of
state energy policy and poses a new challenge to the domestic industry. To
ensure Russia’s technological sovereignty in this industry, it is necessary to
create a full cycle of generating equipment production with appropriate service
and warranty maintenance and subsequent entry into the international market,”
said Alexander Osyka.
Anton Ivanov, Commercial
Director of INCO-ENERGO, and Vyacheslav Panchenko, Deputy General Director of
Electroagregat Trading House, also presented their views on the development of
the domestic power engineering industry in the field of distributed generation.
“The government
programme for the development of distributed generation in remote and isolated
areas may indeed become a stimulus for the development of domestic power
engineering, which can still compete with foreign companies only in a limited
segment in this area. There is successful experience in localization of
production of high-tech equipment in the renewable energy sector under the DPM
VIE programme, and we understand that it was primarily related to attracting
foreign investment. The implementation of local energy projects in the Far East
and the Arctic is connected with ensuring energy security and requires a
different approach to import substitution, which it is advisable to define
together with domestic enterprises at the stage of developing a state support
programme for investors in this area,” commented Evgeny Gribov, Director of the
Fuel and Energy Industry Engineering Department of the Russian Ministry of
Industry and Trade, on the results of the session.
Vasily Potyomkin, Deputy
Director of the Department of Industry Expertise at the FEDC, spoke about the
approaches of the state development institution to attracting investment in the
energy and industry sectors and the opportunities for achieving synergy in
implementing the state programme for the development of distributed generation
in the Far East and the Arctic.
The key objective of the
FEDC is to attract private investment through state support mechanisms. For
distributed generation in remote and isolated areas, an analogy has been made
with the housing and utilities sector and the experience of the Housing and
Utilities Reform Support Fund, which offers a set of financial measures to
increase the investment appeal of inefficient utility modernization projects
within the existing tariff sources. Creation of a similar fund for local energy
sector will make it possible to multiply the number of investment projects in
this area.
Increased investment
activity in distributed generation will create demand for necessary high-tech
equipment. In the face of unprecedented sanctions pressure, imports are
becoming less affordable, so in the long term, investors in the power sector
will look more actively at domestic power engineering. In turn, investors in
manufacturing need state support measures to obtain preferential loans without
a collateral base. The Industrial Mortgage, announced at SPIEF and actively
discussed at the Innoprom 2022 Forum, could be such a solution.
“By systematically
attracting investment in the development of distributed generation in remote
and isolated areas, we are gradually opening up a huge layer of investment
opportunities for the development of related industries in the Far East and the
Arctic. At Innoprom, we were able to talk to a large number of investors in a
short period of time and identify a real need for import substitution for an
entire line of generating equipment. Currently, the Russian Ministry for the
Development of the Far East and the Arctic and the EEF are making active
preparations for the 7th Eastern Economic Forum. We invite all interested
companies in the energy and power engineering sectors to an active dialogue on
the margins of the EEF in the capital of the Russian Far East,” said Vasily
Potyomkin.
As a reminder, at the
Innoprom international industrial exhibition, the stand of the Far East and
Arctic Development Corporation, supported by the Ministry for the Development
of the Far East and Arctic, operated throughout the days of the event.
Participants in the business event were presented with advantageous conditions
for doing business in the 55% of Russia – the Far Eastern Federal District and
the Arctic Zone. In particular, the country’s best taxation for the
implementation of investment projects, infrastructure support, provision of
land on favourable terms and other support measures provided by the state.
Private investors have already come to believe in the effectiveness of existing
pre-fraud regimes, such as TOR, SPV and the Arctic Zone. More than RUB 2.5
trillion of private investment has already been invested in localising
production facilities in Russia’s East and North.
Also, working meetings
with leading companies and organizations, such as JSC United Engine Corporation
(part of Rostec State Corporation), were held at the FEDC stand at Innoprom:
United Engine Corporation (part of Rostec State Corporation), Urals Turbine
Plant (part of ROTEK), Avtokom State Company, Industrial Cluster of Sverdlovsk
Region, Urals Mechanical Engineering Cluster, LLC Holding Company Locus,
Polymer Composites State Company, Dorogobuzh Kotlomash State Company,
ULNANOTECH Nanotechnology Centre, KAMAZ, LLC Ural Diesel Engine Plant (part of
SINARA Group), EFCO State Company, Minsk Motor Plant Holding, PO BELAZ, etc.
All up-to-date news on
EEF 2022 preparations can be found on the Forum's official social media
channels.
Telegram: t.me/roscongress
VK: Восточный экономический форум (vk.com)
The official website of
the EEF: forumvostok.ru.
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