Wind Energy in Photo by Karsten Würth In Russia, energy is supplied to users either via the National Current Situation of Electricity Transmission Grid (NETG) or through off-grid solu- Renewables tions. 35 percent of Russian territory is supplied by the NETG. This applies mostly to the more densely populated areas, the With its enormous geographic scope and varying climates, largest cities in the West and South of the country. Energy Russia has large potential to exploit renewable resources. from large wind projects is fed into this grid. The other 65 1 According to IRENA , Russia could in theory increase the share percent of Russia, the more remote areas, are not served by of in its total to 11.9 percent in the NETG. These sparsely populated areas in and the 2030. The government has set targets for 2024 and 2030 of Far East are still dependent on energy that is produced by old 2.5 and 3.5 percent respectively. In 2024, the share of wind and environmentally unfriendly diesel generators. The slow energy should amount to 1.5 percent of the total energy mix. pace of wind energy development can be traced back to the harsh climate, logistics problems, costly technology, a lack of The current level lags behind this ambition however. In 2018 proven technical solutions for integrating wind generators renewable energy (wind and solar, excl. hydro) made up 0.1 with diesel power stations and insufficient qualified staff in percent of the total energy mix in Russia (0.98 TW). In 2019, the area. Merely one wind turbine of 100 KWh has so far been mainly the installed capacity of solar power plants increased installed in the Far East. In order to ensure a stable supply of significantly. By the end of 2019, the total installed capacity of energy in these regions in the future, and because of eco- wind energy totaled 190 MWh. Due to COVID-19 crisis, the nomic and environmental incentives, the demand for small planned installed capacity of one GW of the wind turbines in scale wind projects will increase further. 2020 is expected to reach only 650 MW. More information about the installed capacity by 2019 can be found in the mar- All large projects that will be built during the next four years ket study of RAWI. have been approved by the government and most will be built in the top 10 regions according to RAWI2. These regions are presented below and an up-to-date map of installed 1 International Renewable Energy Association: “Remap 2030 Re- wind power plants in Russia can be found here. 384 MWh of newable Energy Prospects for the Russian Federation” (2017) the total capacity is implemented by the largest companies;

the consortia Fortum Russia-Rusnano-Vestas (1.858 MWh), lops and approves the wholesale market regulations. Yearly NovaWind-Lagerwey (1000 MWh) and Enel-Siemens Gamesa tenders are organized by the state company ATS Energo in (291 MWh). May and June for projects generating more than 5 MW of en- ergy and covering a time span of five years. It is unknown if the tender procedure remains the same for the period post Top 10 Regions 2024. 1. Kradnodar Krai (860 MW) 2. Rostov Region (453.7 MW) Further conditions for companies to be able to participate in 3. Ulyanovsk Region (321 MW) public tenders is formulated by decree no. 449, which obliges 4. Region (350.97 MW) project investors to use equipment that is partly produced or 5. The Republic of Adygea (250 MW) assembled in Russia. Currently, the localization requirement 6. Perm Region (189.9 MW) for the wind energy sector is 65 percent. This requirement is 7. Republic of (175.1 MW) further enforced between 2024 and 2035. The government 8. Astrakhan Oblast (153 MW) has now proposed to introduce a points system, whereby 9. Stavropol Krai (102.7 MW) wind turbine components are subject to different points, in 10. Republic of (100 MW) order to assess if the production is sufficiently localized. Only then, companies may apply for financial support. The re- quired number of points is expected to further increase after Russian Policy 2030. Another new requirement in the new proposal is the Russia will remain dependent on its oil and gas sector in the requirement to export 4 (until 2030) and 8 (between 2030 and foreseeable future. Nonetheless, the Russian government has 2035) percent of the production. The proposal has not yet been increasingly paying attention to the renewable energy been adopted. sector, with the ratification of the Paris Climate Agreement in September 2019 as the most recent example. Given the fact that in transporting energy, a percentage of the energy is lost, grid operators are obliged to compensate these In 2013, the government introduced Decree 449 (2013) „on the losses. Since 2015, decree no. 47 prescribes that five percent mechanism for the promotion of renewable energy on the of the energy compensation should come from renewable wholesale electricity and capacity market‟ lays the foundation energy sources. Although the localization requirements for for the rules and regulations on the renewable energy market the generation of renewable energy for this purpose are not in Russia until 2024. It is meant to act as a catalyst for invest- formally applicable, the price for energy is significantly higher ments in projects larger than 5MW by ensuring a return on if the requirements are met. investments of 14 percent. The exact amount is set yearly, and is based on both electricity prices and the total level of Besides the NETG, which involves large wind projects and investment in the project. The total capacity that it supports large companies who have localized their production, direct is 6 GW, all of which has been contracted already. contracts and trade on the retail market have also increas- ingly been stimulated by the government. Other than in pub- This financial support scheme will be prolonged after 2024 lic tenders, the localization requirement is not applicable on until 2035, however under a different regulatory framework. the retail market and for direct contracts. The potential of The government will reserve 400 billion Ruble (5.1 billion renewable energy development on the retail market is ex- EUR) for the development of renewable energy. With this, the pected to reach 3 GWh. Until now however, this market re- expected subsidized capacity reaches 7 GWh (2 GWh for solar mains dominated by Chinese and Russian manufacturers. In -, 4 GWh for wind- and 200MWh for hydro energy). By doing 2017, the government introduced Decree no. 937 (2017), so, the government aims to reach wind capacity of 4.5 GW by which lays down the rules that apply for injecting excess en- 2030. ergy from micro-generation and home power generation of less than 15 KW. To further incentivize investments in renew- Currently, the procedure to participate in the wholesale elec- able energy, income from microgeneration is not taxable. The tricity and capacity market obliges companies to become a government plans to adopt a further simplification of the member of the NP Market Council. This organization deve- rules. This may increase the demand for renewable energy equipment by small companies and households in this mar- 2 Russian Association of Wind Power Industry: “Review of the Rus- ket in the future. sian Wind Energy Market and Russian regions ranking 2019” (2020) Market Development More Information

In order to meet the targets sets by the government, Russia For further information, you can contact the Economic de- will continue to stimulate investments in renewable energy partment of the Netherlands Embassy in Moscow via mos- post 2024 in order to contribute to economic growth, to di- [email protected] or phone no. +7 495 797-29-21. versify the total energy mix and to reduce energy costs in remote regions. You can find general information about doing business in Russia, available subsidies and financing for entrepreneurs on Equally so, the government‟s ambition to increase the share the Embassy‟s website and on the website of the Netherlands of Russian technology means that, the supply of energy to the Enterprise Agency (in Dutch). NETG is expected to remain dominated by the three biggest consortia of companies. What can the Embassy do The demand for wind energy projects in remote areas and for for you? the retail market is likely to further increase, partly out of fear for unstable supply of energy from the diesel generators, The Netherlands Embassy in the Russian Federation can fa- partly because of economic and environmentally incentives. cilitate your company in a number of ways: Especially those regions that fully depend on external fuel  Provide more detailed market information based on your supply, such as Arkhangelsk, Karelia Region and the North of specific questions and needs, including a company check Yakutsia will look for smart solutions. Other remote regions on a prospective partner on the Russian market; who have an interest in local power generation and hybrid  Answer first-line questions re. doing business in Russia; power solutions are , Kamchatka, Chukotka and  Facilitate contacts with regional authorities (or federal). Tomsk.

Since localization requirements for off-grid energy projects in Sanctions remote regions are locally determined and not uniform, this Please note that EU sanctions are imposed on the Russian market seems more suitable for companies that are inter- Federation. Companies are responsible to ensure that their ested in implementing small scale wind energy projects and/ activities comply with the sanction regulations and are ad- or have not localized their production in Russia. For these vised to contact the Dutch Central Import and Export Office projects, which in the far East face harsh climate conditions (CDIU) if they have any questions regarding the poten- tial and other location-specific requirements, Russia is counting need for an export license. For more information about sanc- on foreign expertise and technology. This also includes de- tions, you can contact the Netherlands Enterprise Agency‟s mand for specific engineering, and the development and sanctions desk (in Dutch) and consult the handbook on deal- production of windmill parts. ing with sanctions on their website. Relevant conferences and fairs in Russia These dates are up to date as of June 25, 2020. Dates may change depending on the impact of COVID-19. Interested companies are ad- vised to closely monitor the events’ websites to ensure access to the latest information.  Russian International Energy Forum (RIEF), St. Peters- burg. 6-9 October 2020  Russian Energy Week (REW), Moscow, 13-16 October 2020  Renewable energy for regional development, Moscow, 20 -22 October 2020  Russian Association of Wind Power Industry (RAWI) Fo- rum, Moscow, 2021