In brief
Renewable-energy power producers have been invited to participate in a competitive selection of projects, under a new round of Russia's RES (renewable energy sources) program for the wholesale power and capacity market (WPCM)1. The upcoming round of the program, known as CSA RES 2.0 (capacity supply agreement for renewable energy sources) sets parameters for solar, wind and small hydropower plants scheduled for commissioning in 2023 - 20352. CSA RES 2.0 also creates opportunities for RES equipment manufacturers and for corporate customers with renewable energy and carbon management targets.
The last competitive selection of projects under the initial round of the program, CSA RES 1.0, was held in 2020. Under CSA RES 1.0, upwards of 5.4 GW of renewable energy capacity is to be commissioned by 2024. Together with CSA RES 2.0, Russia's total renewable capacity should reach approximately 12 GW by 2035.
Essentials of CSA RES 2.0
- Capacity payments will remain the main tool to incentivize companies to invest in RES generation in the WPCM. Winning projects will be entitled to collect such payments from WPCM consumers under capacity supply agreements.
- 360 billion rubles – the aggregate amount of financing for RES projects slated for commissioning between 2023 and 20353. According to the Russian Ministry of Energy, this amount will provide for 6.7 GW of RES capacities4. This estimate represents only the WPCM; it does not take into account retail or off-grid RES generation, including RES power used for the production of hydrogen.
- Localization, export and efficiency of the generating facility will become the key parameters for a RES project's participation in the selection process. RES power producers must comply with localization and export targets relating to RES generating equipment, as well as parameters for the RES generating facility's efficiency which reflects the power production costs5.
First RES project selection
Projects eligible for the first selection process under the CSA RES 2.0, to be held September 3-9, 2021, include:
- solar power plants scheduled for commissioning in 2023-2024;
- wind power plants scheduled for commissioning in 2025-2027; and
- small hydro power plants scheduled for commissioning in 2025-2028.
Recommended actions
- RES power producers should consider preparing for participation in the competitive selection of projects by determining the corporate structure of the project, the parameters of its financing, and the construction of a generating facility;
- RES equipment manufacturers should review the options for participation in localized production and export of RES equipment; for example, consider partnering if necessary with technological and other partners and/or obtaining tax, customs and other benefits under special investment regimes and territories with a special status;
- Corporate energy consumers that have set RES and carbon management targets should consider purchasing RES power directly from WPCM generating companies (for WPCM consumers) or from utility companies (for retail consumers), or purchasing renewable energy certificates confirming the green attributes of RES power6.
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1 To participate in the selection, companies must submit their applications within the first stage during September 3-9 2021. The second stage of the selection process will take place from 10 September through 16 September 2021. During the second stage, only clarifications are allowed; no additional applications will be accepted.
2 See Russian Government Decree No. 1-p dated 8 January 2009 "On principal guidelines of the state policy in the field of increasing the efficiency of renewable energy production for the period up to 2035" with amendments dated 01 June 2021.
3 The amount of RUB 360 bln is not expressly stated in Decree No. 1-p; this figure is based on information published on the Russian Government's website on 2 June 2021 http://government.ru/news/42377/.
4 https://minenergo.gov.ru/node/489.
5 Determined in rubles per MWh as the ratio of (i) the required annual revenue from the sale of electricity and capacity at the WPCM to (ii) the planned annual volume of electricity production.
5 International Renewable Energy Certificates (I-RECs) are available in Russia. Russian regulators are working on the national certificates of origin scheme.
