Country profile: Russia's energy sector
Russia is a major producer of crude oil and natural gas and many European countries rely on its exports. The economic growth of the country is driven by energy exports with oil and natural gas accounting for 43 percent of the federal revenues in 2015.
Russia’s primary energy consumption
- Natural gas – 53%
- Petroleum – 22%
- Coal – 14%
- Nuclear, renewables and others – 11%
Russia’s energy exports
Energy accounts for 68 percent of Russia’s total exports. This is broken down as follows:
- Crude oil – 33%
- Petroleum – 21%
- Natural gas – 14%
Russia and Europe are interdependent in terms of energy. Europe is dependent on Russia as a source of both oil and natural gas, with almost 30% of European Union crude imports and more than 30% of natural gas imports coming from Russia in 2015. Russia is dependent on Europe as a market for its oil and natural gas and the revenues those exports generate. In 2015, almost 60% of Russia’s crude exports and more than 75% of Russia’s natural gas exports went to Europe.
Russia is the third-largest generator of nuclear power in the world and has the fifth-largest installed nuclear capacity. With seven nuclear reactors currently under construction, Russia is second only to China, in terms of number of reactors under construction.
Wind power amounts to about 60 percent of Russia’s renewable energy production, while solar, geothermal, biomass and hydropower make up the remaining 40 percent. The total installed capacity of renewable energy in the system today is about 550 gigawatts.
A recent study carried out by Finnish scientists suggests that a fully renewable system in Russia and central Asia is achievable by 2030. Despite Russia’s fossil-fuel-rich lands, a completely renewable energy system for the region would be half the cost of a system based on carbon capture and storage or even on the latest European nuclear technology, the Finns calculate.
On 18 December 2015, the results of a selection of investment projects for the construction of generating facilities using renewable energy sources for the years 2016 – 2019 was announced.
The government has authorized eight solar projects with a combined capacity of 95 MW by Avelar Solar Technologies, a unit of Hevel Solar. Also, Solar Systems and T Plus won contracts for 50 MW and 135 MW, respectively.
At the same time, Fortum OAO was awarded a 35-MW wind project in Russia’s Ulyanovsk Oblast. In addition, the government approved two 24.9 MW hydropower projects.
According to a recent report by GlobalData, Russia’s cumulative installed non-hydro renewable power capacity is expected to grow to 2.87 GW by 2025, with the country realising just a small portion of its potential.
Ofwat allows retailers to raise prices from April
Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.
The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.
Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.
In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue.
Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”
There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:
- Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps.
- Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold.
- Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice.
Further consultation on the proposed adjustments to REC price caps can be expected by December.
"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.
"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."
United Utilities picks up pipeline award
A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.
The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.
“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.
Camus Energy secures $16m funding
Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent Ventures, Wave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.
As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.