Energy for Growth

11 September 2023

Energy for Growth

KEY CONCLUSIONS

Low-capacity nuclear power plants offer energy export opportunities

“No consumer will be ready to purchase high-tech Russian products unless they see them being used in Russia itself. <...> That’s why we see low-capacity land-based and floating nuclear power plant projects in the Far East as one of the most interesting products on the global nuclear power market for the coming decades. This opens up enormous opportunities for Russia in terms of exporting these products. Despite being geographically remote, we are witnessing an entire pilgrimage to our current floating nuclear power plant in Pevek. <...> People are coming from far and wide to see how it works. I think that once we implement a few such land-based and floating power plant projects, we will see a range of excellent opportunities open up for developing the Far East and achieving our export ambitions,” Kirill Komarov, First Deputy General Director, Director of the Development and International Business Unit, ROSATOM State Atomic Energy Corporation.

“In 2022, Shell, the operator of the project [Sakhalin-2 – ed.], left the plant, and the question arose as to how we would continue to operate it. It should be said that the Russian company Sakhalin Energy, the operator [of Sakhalin-2 – ed.] took on all the levers of management for this project. Today, there are no risks in terms of repair and technical maintenance, and things are running smoothly,” Vitaly Markelov, Deputy Chairman of the Management Committee, Member of the Board of Directors, Gazprom.

PROBLEMS

A high accident rate at power generating facilities in the Far East, which is hindering the development of the industry

“We realize that economic growth in the Far East is a national priority. The task for this lies with the Ministry of Energy of the Russian Federation and the energy companies operating in the Far East. <...> However, we have a problem in that the accident rate at power generating facilities in the Far East is high. <...> We have prioritized the creation and adoption of various incentives in order to develop and modernize new construction initiatives,” Nikolay Shulginov, Minister of Energy of the Russian Federation.

“The Far East contains an enormous number of deposits which have been studied and known to us for many decades. The only reason they have not been exploited is that the question of whether the chicken or the egg came first invariably [arises – ed.] By this I mean what should appear first: the electricity consumer, or a power supply source in order to arrange the process?” Kirill Komarov, First Deputy General Director, Director of the Development and International Business Unit, ROSATOM State Atomic Energy Corporation.

SOLUTIONS

Instilling a single price zone to raise investment and maintaining the price of electricity

“Starting in January 2024, we plan to draft a law on competitive pricing. It is waiting to be submitted to the government and the Duma. It will support the development of energy infrastructure. Currently, we have a few companies working in the manufacturing sector. <...> This will enable them to receive money through the market mechanism and invest it development and modernizing equipment. It will also help them to address other sections which are hindering the transfer from one node, taking nodal pricing in the market into account. This will help resolve the issues surrounding these connections and supply cheaper energy to notes, where it is more expensive. <...> Everyone will have the chance to work on the market, so this will ultimately be aimed at the consumer in order to maintain the price. Meanwhile, others will have a source of investment,” Nikolay Shulginov, Minister of Energy of the Russian Federation.

“We expect to launch a number of competitive mechanisms on 1 January. <...> We expect that the price will be on a per-hour basis, and it will reflect the fuel costs borne by power plants. It will not inflate in a year in the tariff regulation cycle. In this regard, the pricing will be objective. There is also another side to this – this form of marginal pricing encourages increased efficiency. That is because if you look at the figures for separate forms of fuel expenditure today, then in the Far East it [expenditure – ed.] is higher than the set standard. This is in contrast to the situation with price zones. If we look at the needs of power plants, they are much higher than the same indicator for coal-fired plants which operate in price zones. In fact, the move over to competitive pricing undoubtedly serves to launch a process of optimization internally. If there are costs, and they are protected, then there is no incentive to reduce them, because they will be cut in the following periods,” Fedor Opadchy, Chairman of the Board, System Operator of the United Power System.

“In order to increase transmission capacity, we need to construct a 500 kV [power line – ed.]. We are also working on this, and these lines will be built in due course. We will shortly begin designing these power lines. <...> We have the zone covering Siberia and the East. These are the fastest‑growing territories in terms of load out of everywhere we are based, and the country as a whole. In terms of the East, where we are now based, of course, as well as unification, we need large-scale construction. We announced this last year, and this year I can already say that we have begun the design stage. The project will be completed in the near future. This is our biggest project – a 500 kV power line for the Vladivostok Primorye Regional Power Plant, including construction of the Varyag 500 kV substation near Vladivostok. This is a transit distance of almost 500 km, and will enable hundreds of megawatts of power to be transferred to the south of Primorye Territory, which currently does not receive enough,” Andrey Ryumin, General Director, Chairman of the Management Board, Rosseti.

“We have a great deal in common with Russia. In terms of cooperation, we can say that we are able to share our experience and technology. However, looking at the current situation, there is a difference between our companies. In China, we distribute resources which are very often located far from one another. That is why we sometimes have to transport resources from southwest China to the north in order to satisfy various needs. <...> Our company has today created the biggest platform uniting a large number of users and consumers. In order to achieve carbon-neutrality goals, we have created a specialized system which is notable for its safety, efficiency, low carbon emissions, flexibility, and smart integration,” Chen Guoping, Executive Vice President, State Grid Corporation of China.

For more information, visit the Roscongress Foundation’s Information and Analytical System at roscongress.org/en

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