Sector Overview
The Russian national energy system consists of close to 70 regional energy systems that are brought together into seven interconnected power systems: Northwest, Centre, Middle Volga, Urals, South, Siberia, and East, which in turn consists of four power systems in the Far East. Russia is one of the largest electricity producers and consumers in the world. In 2014, the country’s total installed capacity was 259 GW, the bulk of it being natural gas (47%) and nuclear stations (19%). Under its latest draft energy strategy, the government is planning to increase the share of nuclear and renewables at the expense of coal mainly for environmental reasons and to keep natural gas for export to foreign countries.
Exports
Over the ten years between 2005 and 2015, Russian electricity exports remained relatively flat in volume terms, varying in the range of 15bn-19bn kWh. In 2013, electricity exports came down by 4% to 18.4bn kWh and fell by another 20% to 14.7bn kWh in 2014. The main reason behind the exports slump in 2013 and 2014 was the high water levels in the Scandinavian countries, which provided Nord Pool Spot SA, the Oslo-based electricity exchange, with cheaper hydro-generated electricity and put Russian exports at disadvantage. In 2013 and 2014 the export prices for electricity generated in Russia stayed above USD 50 per MWh, while the average spot price on the Nord Pool Spot SA touched the USD 40 per MWh mark in March and April 2014 (see next slide). In late 2014 exports started rising and in 2015 export volumes increased by 24% to 18.2bn kWh as the country gained a competitive advantage on the ruble devaluation against major currencies. The main export markets for the Russian electricity are Finland, Lithuania, Belarus and China.
Coal
Russia has the second largest coal reserves in the world, most of them situated in the eastern part of the country. It is also the sixth largest coal producer globally. Given the size of the reserves, coal production is relatively small with the reserves-to-production ratio at 440. The government plans to stimulate coal production through infrastructure projects with a specific focus on railways. The current energy development plan, the Russian Energy Strategy to 2030 (ES-2030), envisages a decrease of the share of natural gas and an increase in the use of coal for electricity generation. Under ES-2030, more coal-fired thermal plants are to be built in order to reduce domestic demand for natural gas, allowing for more natural gas exports. In the new strategy to 2035 (ES-2035), the government is planning to preserve the gas share in the power mix and reduce the coal share mainly for environmental reasons.
Nuclear
Russia is the third-largest generator of nuclear power in the world and fourth-largest in terms of installed nuclear capacity. The Russian energy policy in the field of electricity generation is focused on doubling nuclear power capacity from 25 GW in 2015 to 50 GW in 2035. The nuclear power facilities are ageing and the government has a life extension programme in place.