Russia To Improve Support Mechanisms For Renewable Energy Projects In Retail Markets

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The Russian Ministry of Energy has developed and submitted to the Russian Government a package of regulatory changes aimed at improving mechanisms for renewable energy projects support in retail markets.

The government agency offers a comprehensive approach to the selection and implementation of RES-based generation projects in retail markets, including:

  • transition to technologically neutral selection, in which projects for construction of renewables would compete regardless of the technology used for generation by the criterion of the minimum price of electricity produced from RES, which will reduce the price burden on consumers in a region;
  • formation of price for electricity of RES generation objects based on the price in the application submitted by the investor for competitive selection, but not higher than the approved limit level, rather than at regulated tariffs. Thus, the investor gets the guaranteed price for electric energy for the whole payback period of the investment project (15 years) and, accordingly, the possibility to compete on the criterion of the minimum price for electric energy, which, combined with the principle of technologically neutral selection, promotes the competition among investors and gives the implementation of the most effective renewable energy projects build-up for a region;
  • establishment of uniform rules for conducting competitive selection of RES projects construction for all regions, which will result in lists of projects planned for implementation with indication of annual volumes of electric power supply by RES-based generation facilities and prices for electric power produced by them;
  • establishing the obligation of grid companies to enter into a power purchase agreements for the compensation of network losses with the winners of the competitive selection prior to the start of the investment project implementation, which makes it easier to attract debt financing for the project implementation;
  • setting requirements to the minimum share of non-renewable energy sources for RES-based generation facilities using hybrid fuel types. Such approach increases the investment attractiveness of renewable energy projects providing for the use of traditional fuel in tolerable amount, without reducing the economic variables of such projects. The approach also makes it possible to exclude the need to provide certificates confirming the volume of electricity production at RES-generation facilities needed for the power delivery by the grid companies to compensate network losses;
  • reduction of the list of documents provided for qualification of RES-generation facilities, including elimination of necessity to provide design documentation for facilities utilising only renewable energy sources, as well as reduction of the time frame required for the qualification of RES-generation objects.

The Ministry of Energy believes that these innovations can provide incentives for the widespread deployment of renewable energy facilities with a capacity below 25 MW in the retail electricity markets, which will increase the reliability of power supply through the diversification of energy sources. The changes will give an impetus to the development of innovative activities and introduction of new types of generation adapted to local conditions, as well as contribute to achieving the targets of the Paris Agreement and the Sustainable Development Goals set by the UN General Assembly in 2015.

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