Page 95 - RusRPTFeb22

in European Russia last year and 7% y/y in Siberia. Capacity prices were up 19% and 21% y/y, respectively, and from 1 January 2022 capacity prices were further indexed up by 20%+. Overall, this bodes well for gencos’ financials and is already starting to attract the attention of the antimonopoly service. We expect a strong 4Q21 from Russian gencos across the board and highlight a quite favourable outlook for 2022.
Market Council changed spot price rules. The Market Council, a wholesale market regulator, yesterday approved some changes to the rules of calculation spot power prices. The changes have contradictory effects – some are negative, some are positive. Changes will apply from March 2022 and will run until the end of the year. Analysis: We reserve judgement. We will wait for the actual trading results from March onward to judge the changes and their impact onto the spot price levels and most importantly onto GenCos (IRAO, HYDR, UPRO) financials. However, we would note that potentially changing the rules may have a material effect on pricing and thus earnings of GenCos. Spot prices in European Russia are now running at above Rb1400/MWh, which is 7% above last year’s level. Earlier last year, the anti-monopoly service indicated its interest in investigating potential breach of anti-monopoly rules on the wholesale market.
On 2 February, Interfax reported, citing draft legislation, that the price for GHG emissions in excess of the quota could be RUB1,000/t ($13.23) CO2e from 2024, and then grow thereafter. The materials submitted for approval to the ministries propose two options for calculating the rate for 2025-28.
The first involves an increase in the ‘starting’ price, taking into account the CPI (for the previous year) and a special increase factor for exceeding the quota.
The second option contains fixed rates: RUB2,000/t CO2e for 2025, RUB3,000/t CO2e for 2026, RUB5,000/t CO2e for 2027 and RUB10,000/tCO2e for 2028. The proposed rate for 2024 corresponds to the average price in China, while the 2028 level corresponds to the current EU price.
The payments collected are to feed into the budgets of those participating regions and be used to achieve the experiments goals.
Two dates are key, according to the documents: 1 July is the deadline for submitting verified emissions and 1 December is the quota approval for the next year. This suggests that the first reporting campaign will take place in summer 2023, with the quotas for 2024 approved on 1 December 2023.
The report noted that the size of the quotas for companies would be determined taking into account their revenues, investments, payments to the budget, features of the technologies they use, and based on information about GHG emissions, as well as the number and types of emission sources.
95 RUSSIA Country Report February 2022 www.intellinews.com