CRMs cannot guarantee Russia’s energy security in the long term

Russia's capacity market and capacity remuneration mechanisms (CRMs) have not been effective in achieving the so called energy trilemma goals: energy security, sustainability and affordability. This is the finding of a doctoral dissertation at Lappeenranta University of Technology, LUT.

The results show that implemented CRMs can guarantee Russia's energy security in the short term. However, the current capacity market design cannot provide market-based incentives to invest in new power plants, thereby undermining the provision of energy security in the future. CRMs for renewable energy alone will not suffice to achieve the sustainability goals set by the policy makers, at least in the short term. At the same time, CRMs, capacity payments, and challenges faced in the wholesale electricity result in high final consumer electricity cost, incentivising consumers to leave the market.

Capacity remuneration means that power producers receive capacity payments, which should cover their investments in new power plants within 10 to 20 years, while agreeing on building contracted capacity on time. However, the implementation of CRMs, together with overestimation of the demand growth, has resulted in a capacity oversupply in Russia. This has increased the amount of the old capacity that receives capacity payments to stay in the market in order for the system to stay reliable.

"As a result, capacity payments question the design of the capacity market and impact on the final consumer capacity price, and thus, result in an energy affordability issue," explains Evgenia Vanadzina, researcher behind the study.

Energy trilemma is a widely discussed topic in the energy community. It is believed that only good balancing of the trilemma dimensions can ensure safe, just and sustainable transformation of energy use towards sustainable future.

Evgenia Vanadzina, Master of Science in Technology, will defend her electrical engineering doctoral dissertation at the Lappeenranta University of Technology on December 16 at 12:00, Auditorium of the Student Union House. Her dissertation is titled "Capacity market in Russia: addressing the energy trilemma". Doctor Marc Ozawa of University of Cambridge, United Kingdom will act as opponent. Professor Samuli Honkapuro of Lappeenranta University of Technology will act as custos.

The dissertation has been published in the Acta Universitatis Lappeenrantaensis research series number 729 of the university. ISBN 978-952-335-036-6, ISBN 978-952-335-037-3 (PDF), ISSN 1456-4491. The electronic version can be found from LUTPub-database http://urn.fi/URN:ISBN:978-952-335-037-3. A printed version of the dissertation may be purchased from the Aalef bookstore, tel. +358 44 744 5511, or at kirjakauppa@aalef.fi or online from the LUT Shop: https://lutshop.lut.fi/.

Doctoral candidate:

Name: Evgenia Vanadzina

Year and place of birth: 1988, Yakutsk, Russia

Time and place of completing secondary education: 2006, Republican Lyceum, Yakutsk, Russia.

Other degrees: 2010, Bachelor's Degree in Electrical Engineering, Moscow Power Engineering Institute, Moscow, Russia; 2012, Master's Degree in Electrical Engineering, Lappeenranta University of Technology, Lappeenranta, Finland

Most important places of employment: Lappeenranta University of Technology

Further information:

Evgenia Vanadzina, +358 46 886 6388, evgenia.vanadzina@lut.fi