Page 148 - RusRPTApr21

we noted in our Russian Utilities Yearbook 2021 – EU BCA to drive investors out of Russian utilities, Fourth edition, of 25 February, the Russian power mix currently includes about 40% of low-carbon electricity, while we estimate that the largest industrial consumers account for 37% of total demand (below we present the potential demand for green certificates from select large electricity consumers). Those exporters have the capacity to lower their CO2 Scope 2 footprint through bilateral contracts and the green certificates mechanism.
The government approved moving the experimental turbines auction on Friday 19 March for 2027-29 from 1 April to 1 May.
Moreover, the previous 2GW quota was adjusted to 1.61GW, of which at least 322MW has to be selected in Siberia. The selection could consist of two gas turbines with capacity of 65-80MW, up to three 100- 130MW turbines and up to four 150-190MW turbines. According to the Ministry of Energy, such a decision would make it possible to reduce the burden on consumers while supporting local producers of equipment. The approved capex per kW is RUB 73,437/kW for large turbines (with capacity above 100MW) and RUB 100,000/kW (for smaller turbines). Companies can now also decommission generation capacities and commission new capacity at another of their power plants in the same pricing zone.
The approval of the previous proposal did not come as a surprise (the volumes are only slightly above what was guided on 1 March) while on our estimates, at the capex cap the total capex for the localised turbines selection could imply about RUB 30bn of annual payments and contribute 0.5% growth to the end-user price (vs. the 0.6% that could have been triggered by the 2GW turbines auction at the previous price tag). A one month delay to the auction is not critical, while most of the key terms have already been finalised, suggesting that the auction is finally going to take place and the capex terms are better than the RUB 70,000/kW implied previously. Most of the gencos under our coverage are interested in the selection (confirming it during their FY20 conference calls), and so we expect the competition to be high, while winning at the auction would imply a decent contribution to profitability after 2027 with a proper return.
148 RUSSIA Country Report April 2021 www.intellinews.com