Approaches to assessment of energy security in the region (by the example of oblast) BRANCH-WISE AND REGIONAL ECONOMY

UDC 620.9(470.55) © Vorobyov A.G., Myakota Е.А., Putilov А.V. Approaches to assessment of energy security in the region (by the example of the ) The article presents the results of analysis of key aspects of economic activity in the Chelyabinsk oblast by the example of assessment of energy security in the region. The article shows its dependence on individual elements of the fuel and energy complex. The authors calculated indicators of energy security and identified possible solutions of problems related to the potential threat to energy security in the region. Energy security, energy system, economic analysis, fuel and energy complex, innovative technology.

Alexander G. VOROBYOV Professor, Doctor of Economics the Head of the Department of Economics National Nuclear Research University MEPHI [email protected]

Ekaterina А. MYAKOTA Senior Lecturer, Department of Economics NNRU MEPHI [email protected]

Alexander V. PUTILOV Professor, Doctor of Technics Dean of the Management and Economics Department of High Technology at NNRU MEPHI [email protected]

Energy security in the region is the most The Chelyabinsk oblast was selected for the important economic aspect of the market initial analysis of approaches to economic conditions, when different types of energy assessment of the regional energy security. This markets are appeared, the government regulates article is the first attempt of economic analysis the tariffs and there are seasonal and other of regional problems by the example of energy. fluctuations in energy consumption. Such researches will be continued. In future we

62 4 (12) 2010 Economical and social changes: facts, trends, forecast BRANCH-WISE AND REGIONAL ECONOMY A.G. Vorobyov, Е.А. Myakota, А.V. Putilov

plan to refine approaches to assessment of The Chelyabinsk oblast is a scarce energy energy security in the region and develop region, i.e. production volume of its own specific economic recommendations. resources is insufficient to meet the needs. The 1. Characteristics of energy situation main source of the vast majority of energy in the region resources (FER) is the external supply from the The Chelyabinsk oblast is one of the largest other regions (fig. 1). economic players in the Russian Federation. This situation is dangerous for energy Here the economical level, as in the whole economy of the Chelyabinsk oblast; it threatens Southern Urals, determines the significant energy security in the region. industrial potential, which contains the The fuel and energy complex of the region metallurgical, machine building, military is presented by facilities of power industry, coal industrial and nuclear facilities. Stable mining, a system of longhaul gas and oil operation of these enterprises is possible if there delivery ducts (fig. 2, 3). will be a powerful and dynamic fuel and energy Characteristics of the major energy capacities complex (FEC). The fuel and energy complex of the Chelyabinsk oblast is the most significant component of the energy Troitskaya State District Power Station supply system in regional economy, the sustainable functioning of which is the major (SDPS) is the largest source of electric power factor of energy security. Ensuring of energy generation in Chelyabinsk oblast. Installed security in the region involves determining of capacity: electric – 2059 MW, heat – 315 Gcal/h. the effective use of energy resources and •The station is included in the united industrial potential of FEC in different ways of system of the Urals; it is located in the area of development of regional economy, including power interchange Ekaterinburg – Chelya the terms of possible restrictions on foreign binsk – and on the line of direct supplies of resources. deliveries to Northern Kazakhstan.

Figure 1. Production and consumption of fuel and energy resources in the Chelyabinsk oblast in 2009 (according to the Federal State Statistics Service)

381.4 Coal 11846.9 0 Gas 16984.7 0 Oil 8.4 37.7 Other fuels 38.7 419.1 Natural fuel, total 28878.7 11091.3 Products of fuel processing 11533.7 8886.6 Side energy resources 8886.6 9613 Electric power 12188.3

Heat energy 7556.9 7065.7 28680.3 Fuel and energy resources, total 68553

0 10000 20000 30000 40000 50000 60000 70000 80000

Consumption of fuel and energy resources Production of fuel and energy resources

Economical and social changes: facts, trends, forecast 4 (12) 2010 63 Approaches to assessment of energy security in the region (by the example of Chelyabinsk oblast)

Figure 2. The main objects of the fuel and energy complex in the Chelyabinsk oblast

Symbols: Heat power plant

 Coal mine/cut

Figure 3. Trunk pipelines located in the Chelyabinsk oblast

Symbols: Oil pipeline Gas pipeline Pipeline

64 4 (12) 2010 Economical and social changes: facts, trends, forecast BRANCH-WISE AND REGIONAL ECONOMY A.G. Vorobyov, Е.А. Myakota, А.V. Putilov

•The main type of fuel – Ekibastuz coal. •It is the main source of electricity and heat •There are such consumers of electricity for the village of Novogorny, the town of Ozersk and heat power of SDPS as OJSC “Chelyabinsk and the chemical plant “Mayak” 13. Electrometallurgical Plant”, LLC “Magnito •Chelyabinsk CHPP1. Installed capacity: gorsk Energy Company”, OJSC “Chelya electric – 149 MW, heat – 1341 Gcal/h. benergosbyt”. •The main types of fuel – natural gas, coal South Ural SDPS. Installed capacity: (about 1.2%). electric – 882 MW, heat – 395 Gcal/h. •Consumers of electricity and heat: •The main types of fuel – gas, Chelyabinsk industrial enterprises and housing sector of the coal (20%). Consumers of electricity and heat southeast district in Chelyabinsk. are industrial enterprises of Chelyabinsk oblast Chelyabinsk TPP. Installed capacity: and , municipal and private electric – 82 MW, heat – 814 Gcal/h. housing funds of the town of Yuzhnouralsk. •The main type of fuel – natural gas. •Part of electricity, generated in the South •Consumers of electricity and heat are Ural SDPS, is delivered to wholesale electricity industrial plants and builtup areas which are market. located near the station. Chelyabinsk CHPP3. Installed capacity: In addition to the heat power plants more electric – 360 MW, heat – 1092 Gcal/h. than 790 departmental and municipal boilers •The main type of fuel – natural gas. supply towns and regional centers in •Consumers of electricity and heat are Chelyabinsk oblast with heat. The main industrial enterprises and housing sector of the problem in providing consumers with heat is northern and northwestern districts of wear and tear – it is over 80% for the majority Chelyabinsk. •The largest regional substations such as of boilers. “Kozyrevo” (500 kV) and “Novometal Prospects for development of electricity in lurgicheskaya” (220 kV) as well as power lines Chelyabinsk oblast are associated with the linking them were put into operation to ensure reconstruction of Chelyabinsk TPP, the power output of the second power Chelyabinsk CHPP1 and Argayashskaya generating unit of Chelyabinsk CHPP3. CHPP because they have a high degree of wear Chelyabinsk CHPP2. Installed capacity: of power equipment. electric – 320 MW, heat – 956 Gcal/h. The total length of oilpipelines in the region •The main types of fuel – natural gas, coal in one line version is more than 1330 km. (about 2%). Oil pumping is carried out by the trunk lines: •Consumers of electricity and heat: •Tuymazy (the Republic of Bashkor industrial enterprises and housing sector of tostan) – Omsk – Novosibirsk; Chelyabinsk. •Nizhnevartovsk (Tyumen oblast) – •There are three heat lines which go from Kurgan – Kuibyshev; the station to the center, the northeast and in •UstBalik (Tyumen oblast) – Kurgan – the village of Churilovo (Churilovo is the most Ufa (the Republic of Bashkortostan) – promising area for additional heat supply from Almetyevsk (the Republic of Tatarstan). CHP2). Oil delivery ducts: Argayashskaya CHPP. Installed capacity: •Ufa – Chelyabinsk – Petropavlovsk electric – 195 MW, heat – 576 Gcal/h. (North Kazakhstan); •The main types of fuel – natural gas, coal •Chelyabinsk – Yekaterinburg (Sverdlovsk (near 20%). oblast).

Economical and social changes: facts, trends, forecast 4 (12) 2010 65 Approaches to assessment of energy security in the region (by the example of Chelyabinsk oblast)

The total length of gas pipelines is about 10 power plants. Much of the equipment at the thousand km. The following gas mains pass stations (including departmental affiliation) through the territory: was set up till 1960. Wornout equipment has •Western Siberia – Center. low energy and economic efficiency. So the •Central Asia – Center. specific fuel consumption for electricity •Urengoy – Chelyabinsk. production averaged 379 g/kW·h in 2009 •Vyngapur (Tyumen oblast) – Surgut – (at UVI – 342.7 g/kW·h; in – 335.7 g/ Chelyabinsk. kW·h). The boilers with low energy efficiency, •Bukhara – Ural. which is no more than 60%, are also dominated •gas pipeline branch Bukhara – Ural in the municipal sector. Negative processes in “” (Chelyabinsk oblast) – Magni the operation of generating facilities could togorsk (Chelyabinsk oblast). increase threats and the potential •gas pipeline branch Bukhara – Ural destabilization of the region’s energy security. “Kartaly” (Chelyabinsk oblast) – Kustanay The consequence of various emergency (Kazakhstan); gas pipeline branches from situations at facilities generating electricity is a Bukhara – Ural to , , , failure or damage to energy resources and KatavIvanovsk, UstKatav (Chelyabinsk energy communications, serious problems with oblast). the energy supply system of population and There are 646 km of gas pipeline branches material damage to different fields of economy. and 85 gasdistribution stations in this region Also the region is suffered from uneven to provide consumers with natural gas. loading of the stations with electric power, peak 2. Economic evaluation of energy situation in demand and lack of electric network resources the region to connect new customers. Chelyabinsk oblast is one of the most power The Chelyabinsk oblast is the largest consuming regions in the Russian Federation: consumer of boiler and stove fuels (BSF). The consumption of electricity is more than 32 region has such own natural fuel resource as billion kW • h per year (according to the Fede brown coal. The region was the fifteenth on coal ral State Statistics Service). The Chelyabinsk mining in Russia and the second in the Ural oblast was the third in the Ural federal district federal district in 2009. The regional self and the twelfth in Russia by power generation sufficiency by coal is only 5.5%. Also there is a in 2009. Power plants can provide about 78% reduction in production volumes here. So it was of the total demand for electricity in the region. produced 863 thousand tons in 2009, it is 80.5% Since the generating enterprises are part of a less than in 2000. Chelyabinsk coals are system of the single energy cycle of Ural and characterized by the regional boundaries of the Unified Energy System, the amount of marketing and they are consumed mainly in the missing energy is made up with its purchase in mining area. The main customers are power the wholesale electricity and power market. plants (90%), industrial boilers, municipal There is a deficit of energy and capacity of sector and the population of the Chelyabinsk transmission lines and substations in the region. oblast. The coal industry of the Chelyabinsk There is a large load on the networks, but many oblast has a lot of difficulties recently. Further of them are worn out. As a result, there isn’t a development of coalfields makes the geological reliable scheme of power supply in 40 conditions of production worse. This fact is a settlements and there isn’t backup power supply reason of increasing of coal’s price and reducing in 400 settlements. of its competitiveness. Demand for Chelyabinsk Nowadays the main problem of coal has dramatically fallen that’s why coal is development of the power industry is a produced only in the mine “Korkinskaya” and progressive deterioration of the equipment of openpit mine “Korkinsky”.

66 4 (12) 2010 Economical and social changes: facts, trends, forecast BRANCH-WISE AND REGIONAL ECONOMY A.G. Vorobyov, Е.А. Myakota, А.V. Putilov

Due to the high ash content, low heat While creating an information base for the dissipation and thus high selling prices calculation of indicators, factual data of annual Chelyabinsk coal cannot compete with Kuzbass statistical reports on production, consumption, coal or Ekibastuz (Kazakhstan) coal. CHP and import or export of energy resources and some power plants which carried out supplies were other estimates as well were taken into account. originally designed for local fuel, but it couldn’t Comparative analysis of indicators of energy save the situation. Energy enterprises have been security of the Russian Federation is carried out buying brown coal because they are under the to identify the possible emergence of pressure from regional authorities. The stability “threatening states” of the main characteristics of the remaining enterprises of Chelyabinsk of the functioning of fuel and energy sector, coal field and socioeconomic situation in the while comparing the current value of the mining towns depends on the purchase of the indicators and their threshold (limit) state. The local brown coal that can ensure profitability indicative analysis of the energy security rate of production. It is also useful to reduce the of the Chelyabinsk oblast showed that many share of imported Ekibastuz coal to assure indicators of EnS have reached thresholds of energy security in the region. threatening state of energy security (ind. EnS Limited own fuel resources put regional № 4, 1517, 20). This situation is conditioned, power engineering into the dependence on primarily, by the region volatility, i.e. the lack suppliers. Natural gas which comes from the of own raw materials, the lack of generating other regions through the gas pipelines has a capacity, significant depreciation of fixed assets, dominant position in the regional fuel balance – liquidation of coal mines, etc. 44.7% (share of gas in power plants – 61.6%). The main threats include energy lack in the The volume of natural gas supply to region, receiving 100% of natural gas and domestic consumers in 2009 was 14.7 billion almost 20% of electricity from external supplies cubic meters (93.6% to 2008), 0.7 billion cubic from outside the region. Coal produced in the meters (97.7%) of which – to the population. oblast satisfies only 5.5% of the demand of the The Chelyabinsk oblast is one of the most region. In addition, there is a sharp decrease in gasified regions of Russia: the level of coal production over the previous year. It should gasification is 68% (the average nationwide also point out the lack of generating capacity rate – 62%). The transport component of the (shortage of generation in 2009 – 6.8 bln kW·h), HPC (the main gas, oil and oil products the progressive aging of the equipment and pipelines) solves the major task of stable infrastructure in the power industry (the average ensuring of the Chelyabinsk oblast with energy wear and tear indicator by the stations – up to resources. Disruptions of the functioning of the 60%, boiler and electric grid equipment – over main pipelines and laterals may disrupt oil, gas 80%), the use of obsolete equipment in coal and oil products supplies to companies of the mining, etc. Full or partial expression of these region and other regions as well. threats and their consequences, as well as the 3. Economic analysis of energy security development of the existing negative trends in in the region fuel and energy sector of the region may Ensuring of energy security in the region inevitably lead to a breach of the stability involves identifying of factors and risks, which operations of the fuel and energy supply, if directly or indirectly can pose a threat both to necessary measures are not promptly taken. the energy sector companies and consumers of 4. Economic approaches to the prevention its products. For these purposes an analysis of of threats to energy security current system status of indicators – indicators Preventing and overcoming of existing and (ind. EnS), characterizing the level of EnS and potential threats of internal and external threats depth of EnS in the region (table) was character is essential for ensuring energy carried out. security in the region. To ensure energy

Economical and social changes: facts, trends, forecast 4 (12) 2010 67 Approaches to assessment of energy security in the region (by the example of Chelyabinsk oblast)

Dynamics of indicators of energy security of the Chelyabinsk oblast (according to the Federal State Statistics Service)

Year of Year of Year of Year of Year of № Indicators 2005 2006 2007 2008 2009 1. The weighted average security of the region with own energy resources, *% 23.9 25.5 24.5 24.9 22.7 2. Selfsufficiency of the region with electricity,% 73.6 80.7 81.6 80.3 78.0 3. Index of electricity production to the previous year,% 98.4 114.8 104.3 97.6 875 4. Electricity production per capita, kW • h / pers 6944.0 8004.5 8357.2 8163.5 7147.2 5. Electricity consumption per capita kW • h / person 9430.8 9920.4 10242.7 10164.1 9166.2 6. Index of change in per capita consumption of electricity to the previous year,% 99.4 105.2 103.3 99.2 90.2 7. Index of heat production to the base period,% 100.0 102.9 101.7 99.9 97.2 8. Production of heat energy per capita, Gcal / person 14.0 14.4 14.3 14.0 13.7 9. Heat energy consumption per capita, Gcal / person 13.3 13.6 13.3 13.1 13.7 10. Index of change in per capita consumption of electricity to the base period,% 100.0 102.5 100.1 98.8 102.8 11. Share of the most major energy source in the TES, % 42.1 42.1 40.3 40.3 40.3 12. Relative magnitude of power grids reserve, % 5.2 5.8 3.4 4.8 5.5 13. Annual growth rate of energy capacity, % 0.7 0.1 4.4 0.1 0.1 14. Annual growth rate of energy capacity, % 1.2 4.8 3.1 0.8 9.8 Ratio of capacity and consumption growth of electricity (the meanings of paragraph 15. 1.9 4.9 1.3 0.9 9.9 13  the meanings of paragraph 14), % 16. Selfsufficiency in the region with coal fuel, % 18.8 15.0 12.1 11.1 5.5 17. Index of coal production to the previous year,% 94.0 89.0 78.5 87.0 42.4 18. Share of the dominant type of fuel (gas) in the consumption structure of HPR*, % 26.8 26.0 25.1 24.8 24.6 19. Share of the dominant type of fuel (gas) in the total consumption of BSF*, % 48.1 46.5 43.1 43.8 44.7 20. Share of the dominant type of fuel (gas) in power plants,% 63.6 57.1 58.4 59.0 61.6 21. Share of coalfired plants in electricity production, % 20.1 31.9 30. 8 31.5 31.0 * Red color shows threatening and pre threatening state of indicators. security is necessary to implement measures nuclear industry, some branches of Research aimed at improving the reliability and power Nuclear University MEPHI, which may later quality, efficient use of natural energy be connected to monitoring the state of deve resources, that is: lopment of the regional power.  introduction of new generating capacity, Economic evaluation of necessary expenses upgrading and rehabilitation of existing to overcome these threats are beyond the scope equipment; of this work, they will be made in subsequent  construction of new and reconstruction cycles of research work. It is import to note that of existing power lines and network equipment; all of them are related to the investment  balanced development of fuel and energy processes, and energysaving technologies, complex; development of alternative and low power  with  reliable providing of customers with high innovative approaches and hightechnology. quality coal fuel in view of ensuring its Within a particular region it can be expressed competitiveness;  energy efficiency use of energy resources; in the formation of innovative investment  introduction of energy saving techno programs, development of projects in other logies; organizational and economic activities. It is  development of alternative and low important that the result of these measures was energy, etc. the increase of energy security in the region, Note particularly that in the Chelyabinsk which is a very strong incentive for attracting oblast there are some large enterprises of the investment into the regional economy.

68 4 (12) 2010 Economical and social changes: facts, trends, forecast BRANCH-WISE AND REGIONAL ECONOMY A.G. Vorobyov, Е.А. Myakota, А.V. Putilov

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