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56 I Eastern Europe bne April 2020
Energy intensity of GDP, USD/kWh in 2018*
It is no surprise that the utility investing the most heavily into renewables is owned by Italians, as Europeans are
a lot more conscious of the sea change in attitudes towards the environment that has taken place in the last year, personified by Greta Thunberg.
Despite Russia’s dominance in the nuclear power sector and Enel’s drive towards renewables, coal remains a very important fuel for power generation
in Russia: from amongst the leading power generators just over half (54%) of Unipro’s power is generated by coal- burning power stations as a share of the revenues it generates, as is a fifth (21%) of OGK2’s power.
Change is coming, but it will be driven by market forces more than policy for the time being. Analysts are waiting to see what role renewables will play in
the new 2030 strategy due soon from power major InerRAO that is expected
to be a bellwether for the power sector. But despite the growing pressure to go green, things like ESG have not become part of the power sector’s DNA. It's going to be a slow process.
“We believe that Enel Russia’s strategic choice is a more optimal long-term pathway than that of InterRAO, which continues to show little interest in building renewable capacity and continues to consider the acquisition
of coal-fired capacity, such as one of the Kaliningrad CHP units,” says Skylar.
coming to an end following the launch of reforms in 2007, the power sector has become very attractive to investors.
But with cash in their pocket and predictable revenues for several years to come thanks to Russia’s tariff policies, each power company has a different plan for what to do with its money and only the Italian owned Enel Russia has focused on going green as the main plank of its strategy going forward. The other companies are investing in new production, or paying more dividends as well as doing some green investments, but Enel radically transformed its generation profile by selling off its main coal-burning power plant in October.
“Taking into account the high energy intensity of the Russian economy and
CO2 emissions in Russia
the importance of the EU as a trading partner for Russia, we believe [the carbon import duties] might have profound consequences for Russian industry in general, and electric generators specifically,” says Sklyar.
Sklyar speculates that Russia will
be pushed into the position where companies have to pay a premia for green energy and utilities will have to give discounts for coal-fired capacity. The analyst also believes that Russian power companies could sign more bilateral electricity trade contracts
as they look to source cleaner power. And finally, that all of Russia’s power companies will be forced to follow Enel’s lead and invest more intensively into renewable energy sources.
Source: European Comission
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