Medvedev issues bold first by stumping for more renewable energy in Russia

Increased RES and RFNBO targets need to be followed with a robust RES deployment plan.

Publish date: May 29, 2013

MURMANSK – Russian Prime Minister Dmitry Medvedev has signed a resolution aimed at stimulating more use of alternative energies and government compensation for the high cost of renewables – the first sign ever from the prime minister that he believes in an alternative energy future for Russia.

Analysts have suggested that Medvedev is often the hardline Kremlin’s mouthpiece for soft issues that Putin’s inner circle is neither concerned about, nor intends to honor.

But Medvedev, with his record of attendance at United Nations climate negotiations and recent domestic efforts to lead modernization campaigns that openly admit to Russia’s ecological shortcomings make him, if only in title, Russia’s highest-level governmental advocate for the environment.

“At the moment, the use of renewable energy sources and green energy is far from what we would like it to be. We probably use only an inconsiderable part of our potential,” said Medvedev, addressing the Startup Village international investor conference at the Skolkovo hi-tech hub outside Moscow, hosted by the Skolkovo Foundation, according to RIA Novosti.

“But now that attitude has changed, for various reasons. I see various countries and their leaders changing their approach to the issue of green energy, green growth and renewable energy sources,” he said, adding, “These changes are happening before our eyes. In Russia, the attitude toward renewable energies is changing, and we think a serious future stands behind them.”

Medvedev said “the abundance of hydrocarbons” in Russia was a reason for the low use of renewable energy sources, according to the news agency.

The development of the resolution 

At a mid April meeting on renewable energy with Deputy Prime Minister Arkady Dvorkovich, he presented an accounting to Medvedev that each year some 100 million rubles ($3.1 million) is earmarked to compensate for the costs associated with plugging renewable technologies into Russia power grid. The resolution to allow for manifold increases in investment in the solar, wind, and small hydroelectric sectors was prepared at Medvedev’s behest.

“We are talking about an annual competition between investment projects employing renewable energy, for the right to receive payment for power over the 15 year period from the moment the installation goes into operation, with the guarantee on an investment return of around 14 percent,” said Dvorokovich according to the Russian government’s official website.

“Our country is huge, our landscapes varies. When you fly across Europe, it is so small, but nevertheless is studded with various new forms of energy production,” Medvedev answered during the April meeting, according to the Russian transcript. “We have very little of that. But that doesn’t mean that we must refuse traditional sources in favor of new one because we have enough traditional [sources], thank heavens, for may years to come. Nevertheless, this percentage should change.”

Developing renewable energy

Despite the fact the meeting between Dvorkovich and Medvedev took place in April, the resolution was not signed by Medvedev until last week.

The resolution concerns the stimulation of renewable energy sources and compensation of the expense of building them “in order that it be profitable to engage in.”  Now, according to Medvedev, when all the corresponding agreements on power generation are concluded, they will be concluded on much more profitable terms.

Earlier reports fro Bellona had indicated that a project to supplement the government’s decree on targeted values for specified power output by years and sources of renewable energy had been approved. This is required to wrap up long-term agreements on available capacity, as well as to define capital limits for open tenders on investment projects. Amendments have also been introduced to the specifics of production and supply of electric power (capacity) by generating companies based on renewable energy sources and to the establishing of mechanisms and order of trade in renewable energy capacity.

At such, the gross volume to be presented for bidding at tender, as well as the generation volume, will be limited to about 6 gigawatts to avoid excessive additional burdens for consumers, as the cost of such power generation remains higher than the cost of traditional generation. Demands for allocating equipment that will be used to generate these capacities will be foreseen at tender. The allocation levels must gradually rise from 20 percent between 2013 and 2014 to a minimum of 65-70 percent by 2020.

Medvedev said he hoped that this would be “a push toward the use of renewable energy sources on the territory of such a powerful energy country, energy superpower as Russia.”

“Of course, we consider that a serious future stands behind renewable energy,” said Medvedev (in Russian) on the government website.    

Renewable energy in Murmansk 

Bellona sincerely hopes Medvedev is correct and that the resolution will indeed a shove in the direction of renewable energy use in Russia. Bellona has worked with renewable energy projects in the Murmansk Region since 2006 During this time, in conjunction with the Kola Research Center of the Russian Academy of Sciences, the organization published a number of reports on the potential for and economics of renewable energy on the Northwesterly Kola Peninsula, which is home to Murmansk, and has also conducted a number of forums on the development of renewable energy in the area.

During the term of former Murmansk Governor Yury Yevdokimov, who served from 1996 to 2009, a working group on regional programs for developing renewable energy was formed. After Yevdokimov’s resignation, however, these initiatives were put on the back burner for the simple reason that so long as federal authorities remained silent on the renewable energy subject, regional leaders saw no reason to bring it up or pursue it. 

Such was the case with energy efficiency and savings projects: Russia’s regions only began to address them when Medvedev, while still president, issued the corresponding decrees. It’s possible that such will prove to be the case with renewable energy as well.

“This is a long-anticipated event that had many enemies,” said Yury Sergeyev, Bellona Murmansk’s coordinator for renewable energy projects. “Investors are placing a lot of hope on this resolution.”

Sergeyev added that, “Of course, all of this still needs to be implemented in practice, but at least it’s no longer just an empty promise, but rather a real blueprint for the formation of systems of normative and legal acts regulating development and functioning of renewable energy in Russia.”

Bellona Murmansk hopes that now that regional authorities can no longer blame a lack of federal legislation and federal support for renewable energy development.

On the Kola Peninsula, one hopeful outcome could be the completion of the Holland Wind Park. This project, with a capacity of 200 megawatts, is already a decade old.

“All measurements have  long been completed, agreements on equipment delivery are in place, preliminary agreement to attach it to the power grid has been given, there were not only blueprints of government support, such that the project would be economically viable,” said Sergeyev. “Now there is hope the project will be implemented – and not only that one.”

Sergeyev said he hoped that Russia would implement its potential for renewable energy more rapidly and that a figure of some 2.5 percent of all energy produced in Russia would come from renewable sources by 2020.

But it will likely be an uphill battle, federal support or not, according to Bellona Murmansk Director Andrei Zolotkov.

“Implementing renewable energy its going to meet with its share of hurtles, but it will develop in fits and starts,” he said. “I am not sure that the Murmansk Region will be active in this process – we have, after all, a significant budget deficit, and looking for investors is tedious work, and out local bureaucrats have nothing to brag about in terms of progress.”

Zolokotov, nonetheless, expected that Medvedev’s resolution would mean some progress on Murmansk Region wind power.

“Despite my pessimistic commentary, I am sure that we will soon see active wind installations in the far-flung villages of the Murmansk Region,” he said.

Additional reporting by Charles Digges.

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