Russia Renewable Energy Program
2010 - present
Supported with funds from the Global Environmental Facility (GEF)
Supported with funds from the Global Environmental Facility (GEF)
The Program aims to mobilize investments and through advisory services increase the scale of private sector involvement in renewable energy. The Project also promotes a sustainable market for renewable energy in the Russian Federation by supporting the development of enabling policies, institutional capacity, introduction of financial mechanisms, and expanding access to finance.
The Challenge
Russia’s current electricity generation portfolio is estimated at more than 220 GW installed capacity, of which 68 percent is thermal (oil, gas, coal). Some forecasts predict that Russian gas supply could, without significant additional upstream investment, fall short of projected domestic and export demand within the next few years. Despite the quadrupling in the domestic tariff for natural gas between 1999 and 2006, domestic gas consumption has continued to grow.
Average domestic gas consumption during the same time span increased by 1.7 percent annually. The current annual growth rate is 2.5 percent. To meet increasing electricity demand, over the next two to four years Russia will need to add a minimum of 20,000 MW of new generating capacity. There is a growing realization by Russia’s policy makers and the private sector that increased use of energy efficient and renewable energy technologies can help meet the growing demand for energy resources. The Energy Strategy of Russia until 2020 sets the target for installed renewable electricity generation to 4.5 percent by 2020.
Given Russia’s abundant resource base of renewable energy sources, with enabling legislation and proper industry support mechanisms in place, achieving the 4.5 percent target is viable. At the same time, reaching this target would require approximately 22 GW of new installed capacity and displace more than 36 million tons of CO2 per year, representing approximately $44 billion in capital investment. In addition, it is estimated that in order to meet Russia’s growing energy demands, retrofit aging assets, and replace retiring power generation assets $250-300 billion in investment will be required through 2020.
The IFC Approach
The Challenge
Russia’s current electricity generation portfolio is estimated at more than 220 GW installed capacity, of which 68 percent is thermal (oil, gas, coal). Some forecasts predict that Russian gas supply could, without significant additional upstream investment, fall short of projected domestic and export demand within the next few years. Despite the quadrupling in the domestic tariff for natural gas between 1999 and 2006, domestic gas consumption has continued to grow.
Average domestic gas consumption during the same time span increased by 1.7 percent annually. The current annual growth rate is 2.5 percent. To meet increasing electricity demand, over the next two to four years Russia will need to add a minimum of 20,000 MW of new generating capacity. There is a growing realization by Russia’s policy makers and the private sector that increased use of energy efficient and renewable energy technologies can help meet the growing demand for energy resources. The Energy Strategy of Russia until 2020 sets the target for installed renewable electricity generation to 4.5 percent by 2020.
Given Russia’s abundant resource base of renewable energy sources, with enabling legislation and proper industry support mechanisms in place, achieving the 4.5 percent target is viable. At the same time, reaching this target would require approximately 22 GW of new installed capacity and displace more than 36 million tons of CO2 per year, representing approximately $44 billion in capital investment. In addition, it is estimated that in order to meet Russia’s growing energy demands, retrofit aging assets, and replace retiring power generation assets $250-300 billion in investment will be required through 2020.
The IFC Approach
IFC aims to build market capacity by analyzing and removing barriers to market infrastructure development, as well as by introducing various renewable energy technologies. Increasing public awareness about renewable energy is a key part of this effort.
Main issues to be tackled include but are not limited to:
- certification and grid integration of renewable energy installations,
- standard capacity agreements for renewable energy generation, and
- adaptation of the wholesale market rules to specific characteristics of renewable energy based installations.
IFC encourages Russia's regions to play a role in the development of a national renewable energy market. To do so, IFC assists the regions in conducting renewable energy resource assessments and developing regional support schemes. This will result in capacity building of regional project developers and creation of a pipeline of renewable energy projects in the region.
IFC expands access to renewable energy financing through customized financial products needed by renewable energy developers and investors. Long term project financing and addressing the requirements to enable these products to be offered on the market are the corner stones of this platform. It translates into building capacity in the banking sector, developing tailored financial products and supporting investment in pilot renewable energy projects.
Expected Impact
- Direct GHG emission reductions (CO2 eq), estimated at a cumulative 5 million tons over a 20-year investment lifetime, and estimated indirect GHG emissions reductions between 20 and 200 million tons;
- Introduction of an enabling regulatory and incentive framework for renewable-based power;
- 205 MW installed capacity of new renewable power generation.
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