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essentially oblige generators to keep DPM2-modernised power units operational for 16 years after relaunch. Moreover, guaranteed returns are only assured if utilisation of the modernised capacity does not dip lower than the auction bid (in most cases, the utilisation of 2017-18). In this regard, we believe taking on an obligation to keep coal-fired capacity working for the next 16 years and expect that its utilisation would not significantly deteriorate – taking into account the ongoing unfolding and expansion of renewable energy, the significant outperformance of coal prices vs. gas prices domestically and an ever-rising railway tariff – would be overly ambitious,” VTB Capital (VTBC) said in a note. As a result most surviving power plants will continue to switch to gas.
Russia’s Electricity Market Council, the electricity generators’ self- governing body, is working on the concept of a green certificates (GC) system in Russia, Kommersant reported on February 13. According to the presentation, the GCs will be allocated for each 1MWh of electricity generated using wind, solar or small hydro capacity. The purchase of GCs would be voluntary, based on whether consumers want to support renewable energy, with the price of the GCs to be defined by the supply-demand situation. Revenues from selling GCs would be subtracted from the DPM revenues that renewable capacities currently receive, generating a guaranteed return on the investment. “We believe the concept of moving towards a GC system (whereby renewables are paid for by those who want, or are required, to support it by international obligations), as opposed to the current DPM scheme (under which all electricity consumers are burdened by providing financial guarantees of return) is fundamentally correct and adds the component of market competition to what is otherwise a highly regulated electric utilities sub-sector. However, unless there are minimum GC purchase requirements for consumers (which is usually within the goals of the share of renewables in the fuel mix as adopted by governments within the Paris Climate Agreement accords), the motion would be fruitless, in our view,” Vladimir Sklyar of VTB Capital (VTBC) said in a note. “Taking into consideration the high energy intensity of the Russian economy and the lack of an environmental agenda (at both the government and the broad consumer levels), we find it impossible to pinpoint where demand for GCs could come from in Russia. Nevertheless, should the government take a stronger stance on renewable energy, the platform might well be utilised on par with the best foreign practices. Enel Russia remains the only listed stock in the Russian utilities universe with meaningful exposure to renewable energy, through the 290MW wind farm which is under construction (due to be commissioned by 2022-23),” Sklyar added.
9.1.11 Metallurgy & mining sector news
Russia’s gold output rose 2.45% to 314.42 tonnes in 2018, the Finance Ministry said Wednesday citing data on gold supplies to refining plants. Mined gold output rose 4.14% to 264.41 tonnes, while by-product gold output decreased 5.85% to 15.44 tonnes, and gold scrap production fell 5.55% to 36.6 tonnes. Russia’s silver output increased 7.24% to 1,119.95 tonnes in 2018. Primary silver production rose 1.17% to 498.66 tonnes, while by-product silver output increased 1.76% to 310.47 tonnes, and production of silver scrap grew 26.2% to 310.82 tonnes.
109 RUSSIA Country Report March 2019 www.intellinews.com