Page 92 - RusRPTAug19

for solar and 90% for wind, as well as the mandatory minimum volume of export. The key unanswered question concerns the volume of supported renewable capacity. Moreover, the shift in support from minimum capex to LCOE, and the clear enforcement of grid parity between renewable and traditional generation by 2036, indicates to us that the government expects no further support beyond the aforementioned timeframe and that equipment producers will be able to lower their renewable equipment prices to being on par with traditional generation in the next 15 years. We tend to agree with this. We believe the ongoing DPM2 investment scheme is the last major investment cycle for fossil-fuel generation in Russia and expect any further incremental demand for electricity in the country to be covered from renewable sources. Thus, those companies, which are not ready to dip their toes into the newly emerging pool of energy sources, might lose out in the long run.
Putin asks Federal Anti-monopoly Service to investigate growth in utility costs. While the administration has attempted to reduce the number of varying fees on domestic utilities, the cost to average consumers continues to grow. Putin therefore looks to the Federal Anti-monopoly Service to investigate this growth for dirty dealing on the part of service providers.
Though somewhat tied to the inexorable growth in cost of waste disposal, utility expenses have a particular impact on residents of distant regions. This is because these clients tend to be poorer, services are less efficient as they are less concentrated, and local entities including governments can charge their own fees. Several factors work against progress in this sphere, including that entrenched local entities profiting off the current system have no real incentive to change their ways, but also that citizens want higher standards of living, which entails expensive upgrades to infrastructure.
In 2019, the cost of utilities increased twice to accommodate growth in VAT; the first time in January by 1.7%, the second in July, by 2.4%.
In 2018, the FAS reviewed almost all regional fee operators, gave out 86 compliance orders, went through 225 notices of pre-trial disputes.
The FAS ultimately cut into net profits by organizations in the fields, excluding 17.5bn rubles ($275mn), a 235% increase from 2017.
Russian government will not insist that domestic partners control at least 75% in joint ventures with foreign companies in bids for state contracts for gas turbines, Kommersant daily reported on July 4 citing unnamed sources in the government.
About 50% of Russia's electricity is generated using natural gas, and a major generation capacity modernisation drive launched by the government also includes a state programme for supporting gas turbine production.
Reportedly, the idea of setting a minimum requirement of 75% domestic company participation in joint ventures with foreigners was proposed by the sanctioned Power Machines of tycoon Alexei Mordashov, and would pose difficulties for the joint venture of current market leader Siemens and a subsidiary of Gazprom - GEH or GazpromEnegroHolding, as well as the joint venture of InterRAO utilities major and GE.
But the initiative was reportedly rejected by the government, over the fears that it would deter foreign majors from transferring technology otherwise not
92 RUSSIA Country Report August 2019 www.intellinews.com