Power demand in Russia to grow 2 per cent in 2011

Russia’s electricity consumption has returned to pre-crisis levels and demand will grow by 2 per cent this year, according to energy minister Sergei Shmatko.
Speaking at the opening keynote address of Russia Power in Moscow on Monday, Shmatko said electricity production topped 125 TWh last year, representing a 24.5 per cent increase on 2009.
The energy minister emphasized the importance of the Russian power sector describing electricity as the “driving force” behind innovation and economic development.
However, he also stressed the need for Russia to address the problem of its aging power infrastructure. Sixty per cent of the power generation capacity has been in operation for at last 30 years, and in the hydroelectric sector that jumps to 40 years.
Shmatko said 2.8 trn roubles ($544bn) was earmarked for renewing the transmission grid and distribution network, representing a replacement of 50 per cent of obsolete equipment, and close to 156 000 km of power lines.
The minister added Russia was in the process of conducting a “unique” modernization programme of its hydropower assets, which accounts for 17-18 per cent of generation capacity. RusHydro, Russia’s primary hydro generator, expects to replace all its obsolete equipment by 2025.
This was confirmed by Evgeny Dod, management board chairman of RusHydro. Russia’s estimated hydro reserves are huge, only topped by China, but only an estimated 20 per cent of the potential has been realized. Currently, Russia has over 100 hydroelectric facilities, representing 44 GW of capacity.
Dod said the country’s true hydro potential was not accurately known. The last analysis was conducted back in the 1960s, so it is essential for a reassessment to be made. Dod confirmed that RusHydro was working with institutes in both Moscow and St Petersburg on such a project.
He also described RusHydro as Russia’s ‘biggest renewable energy producer’ and said that there was a lot of interest in renewable energy, and he hoped that this year would see a robust legislative framework put in place to provide impetus for renewable energy development.
He also called for a “holistic approach” to the development and modernization of the hydropower sector; an approach that could be applied across the whole Russian power sector.
Vladimir Kaschenko, general director of Atomenergomash, one of Russia’s leading power equipment maker, was bullish about the future of Russian equipment manufacturing, both domestically and abroad, and across a number of strategic industrial sectors.
Nuclear power is an important power generation source for Russia, accounting for 15 per cent of the mix, with Atomenergomash a key player in this sector. In light of the recent events in Japan, Kashchenko stressed that all equipment manufacturers serving the nuclear sector had to ensure safety and security were top priorities in equipment design and manufacture.

The modernization of Russia’s power infrastructure will not come cheap, begging the question: how will it be financed?

Shmatko concluded his speech by saying increasing electricity prices, which traditionally are very low in Russia, was not the answer to raising the necessary funds for this modernization but that alternatives had to be explored such as the issuing of bonds.