With its low population density, Russia is theoretically well placed to become a major renewable energy exporter to the EU. The options for exporting renewable energy to the EU include two choices that are already available today: biogas and renewable electricity from wind or solar. 

The Russian government has approved the support quotas for renewable energy in the period 2025–2035. € 3.14 billion will be allocated for the construction of wind power plants, € 2.08 billion for solar power plants and € 424 million for small hydropower plants. The federal ministry of Industry and Trade had its own ideas, such as reinforcing the localization requirement of equipment used in projects and increasing the exports to foreign markets. The federal ministry of Economy proposed to support a new program of contracts for the supply of capacity (DPM) for renewable energy in the amount of at least 10 GW by 2035. Thus, the total investment resource for supporting renewable energy after 2024 and until 2035, as expected, will amount to EUR 5.65 billion. The federal ministry of Energy calculated that up to EUR 5.72 billion) could be allocated to support the construction of renewable energy capacities after 2024.According to the ministry, investors in renewable energy should supply at least 10% of annual output for export, with growth up to 30% by 2035.

Russia still has a huge potential in renewable energy capacities. The country has large available lands, regions with good wind and solar exposure, a developed power network, industrial assets in the energy and machine-building sectors, a skilled workforce and strong energy needs. These characteristics empower the growth of the Russian renewable energy industry.

According to the draft Energy Strategy of Russia for the period up to 2035, the renewable energy share of Russia’s total primary energy consumption should increase from 3.2 to 4.9% by 2035. This includes Russia’s approved plan to expand its total solar photovoltaics (PV), onshore wind, and geothermal capacity to 5.9 GW by the end of 2024. The foundation for the growth of renewables in Russia is Decree 449, passed in 2013, which created a legal framework establishing a renewable energy capacity system for the country. The decree is designed to encourage the development of renewable energy, focusing in particular on wind and solar PV, and to a lesser extent on small-scale hydropower. The legislation sets out the terms for participation in the country’s renewables capacity markets. Under this system, energy developers of projects with an output of at least 5 MW can bid for capacity supply contracts with Russia’s Administrator of the Trading System in annual tenders. Winning suppliers are paid for both the capacity they add to the energy system and the energy they supply, based on long-term 15-year contracts with fixed tariffs. This regulation sets a legal and regulatory environment that allows developers to commercialize capacity as a separate commodity from the power itself, and ensures the economic attractiveness of these projects for the investors. In return, renewables developers are expected to ensure they can provide the promised capacity, on the right timeline, and with sufficient localization of the equipment.

Annual renewable capacity additions rose from 57 MW in 2015 to 376 MW in 2018 (320 MW solar, 56 MW wind). What is more important is the significant decline in capital expenditures in renewables auctions during the past 2 years, by 35% for wind and 31% for solar, according to the Energy Ministry. This process was not smooth; some capacity auction rounds have struggled to attract bids for a number of reasons, just over 2 GW of renewable capacity was awarded in tenders between 2013 and 2016, while the 2017 auction resulted in a total of 2.2 GW of wind, solar, and small hydro awarded in a single round, and in 2018, 1.08 GW of capacity was allocated among 39 projects. In 2017, five waste-to-energy projects were also introduced to the capacity market scheme, with a total capacity of 335 MW. But in 2018, the tender for waste energy capacity failed because of the strict new requirements for bidders to provide performance guarantees.

As technology policy is the main driver of Russia’s interest in renewables, the country is focused first of all on building its own renewables manufacturing capacity. Russia has set a fairly high level of local content required to qualify for the highest tariff rates, an essential component of the long-term feasibility of many Russian renewables projects. The percentage of Russian-made equipment required to avoid tariff penalties was relatively modest in the early days of the auction system, but has now risen to 65% for wind farms and small hydro and 70% for solar until 2020, with the long-term target of localization set by the government at 80%. These high levels have been behind several tenders, especially in wind farm development, for which there has been little to no Russian-made equipment. The requirements have encouraged foreign firms to partner with Russian power companies and manufacturers. Several international joint ventures have been established, including Fortum and state-owned technology investor Rusnano’s wind investment fund, and WRS Bashni, a partnership between Spanish developer Windar Renovables, Rusnano, and the Russian steel firm Severstal. Wind equipment was localized by Vestas Manufacturing Rus in the Nizhny Novgorod region, while Siemens Gamesa Renewable Energy (SGRE) and Lagerwey are also entering the Russian market.

The problem is that the current support mechanism will expire in 2024—Russia’s unambitious renewables share targets and ambitious localization targets will be nearly fulfilled by this time—and the influx of foreign renewables developers may stop if no new incentives for renewables are created. However, in order to create these incentives, the Russian government should first determine the long-term role of renewables in its energy balance, which is quite difficult to do without a decarbonization agenda: as the country with the world’s largest natural gas reserves and the second largest reserves of thermal coal, Russia does not see real value in a transition from fossil fuels to zero-carbon energy sources. Despite the country’s massive potential in wind and solar resources and the virtually limitless land available for development, the availability of oil, gas, and coal is suppressing the development of clean energy. Diversifying this energy mix towards carbon-free energy sources is a challenging task: low prices for hydrocarbons and the unfavorable geographical dispersal of potential renewable resources from the point of their utilization (mainly concentrated in unpopulated areas with a long distance to the center of consumption), together with their comparatively high cost (e.g. low demand for new renewable capacity and high requirements for localization, resulting in high, uncompetitive per-unit cost) hinder the development of these energy sources in Russia.

According to the International Renewable Energy Agency (IRENA), Russia theoretically has the potential to increase its share of renewables from 4.9 to 11.3% of total primary energy consumption by 2030. However, without reassessment of its energy strategy priorities and wider transformation of its energy system, this may be difficult to achieve.

The Russia Renewable Energy Development Association (RREDA) represents the interests of major players in the Russian renewable energy industry. The main objectives of the RREDA are work to extend the measures of state support for RES for the period of 2025-2035; improvement of the regulatory framework in the field of construction of RES facilities; information support of the participants’ activities, as well as expansion of technological cooperation in order to increase the depth of localization of RES equipment. One of the priority areas of the RREDA’s work is the formation of a favourable investment climate, including through the creation of an effective system of RES sector regulation, the development of mechanisms for financing RES investment projects and the creation of financial instruments that expand opportunities for attracting capital. The activities of the Russia Renewable Energy Development Association allow presenting a consolidated vision of the future development of the renewable energy industry in a dialogue with government authorities and the industry community.

Major Players in Renewable Energy Sources

  1. Lagerwey
  2. LLC Avelar Solar Technology (Hevel Group)
  3. LLC WRS Towers
  4. NovaVind (Rosatom Group)
  5. PAO Fortum
  6. PJSC Enel Russia
  7. PJSC Severstal
  8. PJSC TGC-1
  10. Siemens Gamesa Renewable Energy (SGRE)
  11. Solar Systems LLC
  12. Vershina Development LLC
  13. Vestas Manufacturing Rus
  14. WRS Bashni, a partnership between Spanish developer Windar Renovables, Rusnano, and the Russian steel firm Severstal.

Other Stakeholders

  1. Energy Committee of the RF State Duma
  2. Ministry of Energy
  3. Ministry of Industry and Commerce
  4. Russian Academy of Sciences
  5. Energy Policy and Energy Efficiency Committee of the Russian Union of Industrialists and Entrepreneurs (RSPP)
  6. Council of Non-commercial Partnership EUROSOLAR Russia
  7. Energy Center at SKOLKOVO Moscow School of Management


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