Renewable energy is now profitable in Russia
Russian renewable energy support mechanism is a unique instrument among renewable energy policies. According to a new study by Lappeenranta University of Technology (LUT) it offers considerable risk reduction for investors by protecting investment profitability from the changing market conditions. It also encourages high performance of renewable energy projects, minimizing the social burden.
The research created a roadmap for foreign investors willing to build renewable energy facilities in Russia. One of the first things investors need to do is to fulfil the requirements set by the Russian renewable energy mechanism. This will help the investors to obtain the full available protection offered by the Russian support mechanism. The requirements include limits on capital cost, electricity production targets and local content requirement which states that a determined share of equipment has to be acquired from the national market.
The scheme has proved successful in attracting foreign investors. Each year more and more foreign investors participate in the scheme. For instance, in 2017 Fortum bid and won an auction for capacity rights in Russia and will construct, in next four years, 1000 megawatts of wind energy production in different regions of Russia.
The research showed that before the introduction of this supporting scheme, industrial scale renewable energy investments were not profitable in Russia. Since the scheme has been implemented, the total amount of 4,3 gigawatts of renewable energy capacity was selected for the support, including 2,5 GW of wind power, 1,7 of solar, and 0,1 of small hydro; and some of it has been built already. Introduction of this support mechanism opened the Russian market for renewable energy investors, including foreign ones.
The results show that the typical feed-in tariff systems, in place in other countries for supporting renewable energy investments, are not the only possible solution for supporting renewable energy. There is clearly room, and perhaps also the need, for alternative support mechanisms. This observation makes this work important also for the policymakers in charge of renewable energy policies.
Mariia Kozlova, Master of Science in Economics and Business Administration, will defend her doctoral dissertation at LUT on December 12th at noon, room 4301-4302. Her dissertation is titled Analyzing the effects of a renewable energy support mechanism on investments under uncertainty: case of Russia". Professor Julian Scott Yeomans from York University, Canada will act as opponent. Professor Mikael Collan of Lappeenranta University of Technology will act as custos.
The dissertation has been published in the Acta Universitatis Lappeenrantaensis research series number 772 of the university. ISBN 978-952-335-161-5, ISBN 978-952-335-162-2 (PDF), ISSN 1456-4491. The electronic version can be found from LUTPub-database http://urn.fi/URN:ISBN:978-952-335-162-2. A printed version of the dissertation may be purchased from the Aalef bookstore, tel. +358 44 744 5511, or at email@example.com or online from the LUT Shop: https://lutshop.lut.fi/.
Name: Mariia Kozlova
Year and place of birth: 1987, USSR
Secondary education: 2004, Archangel, Russia
Degrees: B.Sc. (ecology) 2009, St. Petersburg, Russia; B.Sc. (economics) 2013, St. Petersburg, Russia; M.Sc. (Econ&BA) 2015, LUT, Finland
Places of employment: JSC Gazprom Neft, 2010-2013; LUT, 2015 -
Mariia Kozlova, +358 50 463 6186, Mariia.Kozlova@lut.fi