Page 170 - RusRPTJan23

end consumers. We remind that increased fuel costs currently generate losses for gencos. However, the flip side of deregulation is rising power costs for the industrial offtakers and eventually for consumers.
In September, German Uniper signed a sale deal for Unipro, where it controls 84%, the company said in a press-release. The transaction has been suspended since then due to pending regulatory approval it is subject to. Potential buyer has not been named. Divestment is a risk to Unipro’s minorities. As we have long argued, divestment is a risk factor for Unipro’s minorities, as it may change virtually everything from dividend policy to corporate governance of the company. Nonetheless, fundamentally Unipro’s story remains quite solid, due to power prices, efficient assets and positive FCF.
Russian state grid major Rosseti (Russian Grids) faces RUB225bn ($3.6bn) of additional capital investment out to 2026, including RUB170bn for energy infrastructure in the Far East, Neftegaz.ru reported citing Deputy Minister of Energy Evgeny Grabchak. As followed by bne IntelliNews, the outlook on Rosseti deteriorated due to dividend and investment uncertainties, as well as upcoming consolidation its subsidiary FSK (Federal Grid Company).
EL5-Energo (formerly Enel Russia) put out a press release on December 1 indicating that it had received permission to put the first stage of its Kolskaya WPP project - with an initial capacity of 170 MW (84% of the wind farm's designed capacity) - into commercial operation on December 1. The company had already received permission to sell electricity and capacity on Russia's wholesale electricity and capacity markets. It also noted that it would start receiving CSA payments for the capacity early this month. The launch of Kolskaya WPP had been postponed several times (it was originally scheduled for December 2021), for various reasons. Most recently, the deadline was pushed back to 1Q23 due to issues with the delivery of equipment. Siemens Gamesa Renewable Energy LLC (the Russian structure of Siemens Gamesa) refused to fulfill its contract and supply equipment for the wind farm due to sanctions, so EL5-Energo filed a lawsuit against it with the Arbitration Court of Murmansk Region, asking for R22.9bn. It was therefore rather unexpected that Kolskaya WPP was ready to launch, with most of its capacity set to come online. This is clearly a positive development for the company. We estimate that the launch of Kolskaya WPP (assuming the remaining capacity will come online in April 2023) will bring the company R0.2bn, R3.6bn and R3.8bn of CSA payments in 2022, 2023 and 2024 (2024 will be the first full year at full capacity). These payments are equivalent to 2.5%, 27.4% and 27.1% of the EBITDA we project from the company in the respective years. The effect of electricity sales in the DAM (the spot market) on EBITDA will be far less pronounced, as the WPP represents only 4% of the company's total installed capacity.
170 RUSSIA Country Report January 2023 www.intellinews.com