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Energy against warming: what place Russia takes in the "green" market
Material posted: Publication date: 12-07-2016
About 60% of Russian thermal power plants built over 40 years ago and in the coming years needs to be upgraded or replaced. This is a chance to create a new sector of the economy, renewable energy sources.

At the end of April Russia among 175 countries have signed the Paris agreement to combat global climate change. The purpose of the agreement is to limit emissions of greenhouse gases and thus prevent the increase in the average temperature on earth more than 2 degrees by 2100. Otherwise, according to the calculations of climate scientists, the world expect irreversible changes, the economic damage would reach tens of trillions of dollars. We are entering a new era — the gradual transition from fossil organic fuel for maximum use of clean energy sources in all spheres of life. And now it's important to understand how Russia can get the maximum benefit from the upcoming changes and what steps should be taken.

Technology vs carbon

Energy is one of the main sources of greenhouse gases in the world — according to the International energy Agency, it accounts for almost 40% of all emissions. In absolute terms this amounts to about 23 billion tons per year, or about 700 tons of CO2 every second. Russia is the fifth largest producer of electricity. The energy balance of Russia looks very good compared to other countries. More than 80% of electricity in Russia is produced on the basis of carbon-free (hydro and nuclear energy) or low carbon (gas) sources. For comparison, in China the share of coal in the energy mix of more than 60% in the USA and Germany — about 40%.

In 2015, there have been several developments which illustrate the new underlying trends in the energy sector. First, the consumption of coal the world's main fuel for power plants, which has grown steadily over the past 20 years (excluding the crisis year of 2009), stagnated. Some of the world's coal mining companies, such as American Peabody, were bankrupt. Second, global investment in renewable energy — more than $300 billion — almost twice the investment in the construction of conventional energy. A year in the world were built more than 60 GW of wind generating capacity, about 50 GW of solar and 35 GW of new HPPs in total, more than half of the entire Russian energy sector. Preconditions for rapid growth associated with both, care about the environment and the changing economy of the projects.

We've learned that renewable energy has traditionally been obtained in one form or another of subsidy. But due to massive investments in new technology, the price of "green" energy is decreasing faster than all predictions. Last year the International energy Agency forecast a decline in prices of solar stations to 8.9 cents per 1 kWh by 2020, which is two times lower than the price in 2010. But at the may tender for the construction of large solar power plants in the UAE was won by the company that offered to supply energy at the price of 2.99 cents per 1 kWh, without any subsidies from the state or consumers. This is almost two times lower than the retail price of electricity in Moscow.

In early may throughout the week, Portugal was completely provided by renewable energy, in Germany, on some days the share of renewables in the energy mix reached 85%, resulting in the electricity market, negative prices, and the excess energy was exported to neighboring countries.

Unreliable supply

Russia does not have such resources for the development of wind and solar energy on an industrial scale, as the Mexican desert or the Arabian desert (the key resource of renewable energy in our climate is the second largest in the world hydropower potential, developed only 20%). But the exponential trend: consistent investment in new technologies has led to a drastic reduction in the price of clean electricity from renewable sources. And in the foreseeable future it may become cheaper than traditional.

Actively developing the technology of "storing" energy company Tesla has already sold over 2.5 million household kits to allow the day to "save up" energy from solar panels on rooftops and use it in the evening and night when there is no sun. The Nordic countries with a cold climate are actively investing in clean renewable sources of energy that do not create greenhouse gas emissions. For example, next year in Finland must earn the country's first geothermal thermal station, which will provide environmentally friendly heat for the whole district, the second largest city of Espoo. Technology is developing "electrification of heating", allowing to refuse from burning fuel to produce heat.

Russian energy has passed an important stage after the reform of RAO UES to build 30 GW of capacity risk of shortage of energy at some time in the past. Moreover, due to overly optimistic projections for growth of energy consumption has a surplus of power, which leads to higher energy prices and excessive financial burden on consumers. However, if you look at the age of thermal generation in Russia, about 60% of all power plants built over 40 years ago and in the next 15 years should be dramatically upgraded or replaced with new, more efficient and clean. This unique opportunity should be used to improve energy efficiency, reduce energy prices and create a new sector of the Russian economy, associated with renewable energy.

What should I do?

First, how would this cliche may sound, is to invest in the development of its own technology. But the mechanisms of investment must change.

Unfortunately, in the Russian realities to Fund breakthrough R & d private energy companies, even large ones, is not always a virtue. A simple example for the construction of the Abakanskaya solar power plant, which is more than 55% are built on the basis of Russian equipment, we have created production on the growth of multicrystalline silicon ingots (the base material for solar modules), as well as the manufacturing of inverters. Here we have used proven technologies in the world, and all went well. But the real venture investment is high risk. Investing several billion rubles in the development of a compact nuclear reactor of the new generation together with Rosatom, we are faced with technological difficulties, which led to the rise in the cost of the project is almost two times the increase in terms of its implementation.

The solution to this situation would be the establishment of a special body that would define future development and technology for the industry and expected demand. In the composition of the body could go interested in innovation, energy companies, research institutions, equipment manufacturers, and financial institutions. Thus, R & d would have received a decent funding, understand the market, and the industry would be able in the future to reduce dependence on foreign equipment. As history shows, the really disruptive technologies are born not so much in academic laboratories, many with the cooperation of science and business.

Secondly, Russia needs to enter the market of "green" financing.

The first green bonds appeared in 2010, in 2015 the volume of "green market" has already exceeded $40 billion In global scale it a bit, but at the Paris conference on the fight against climate change is one of the hottest topics of discussion was the arrival on the market of pension funds with their enormous financial resources. In this case, the market could grow hundreds of times. The G20 developed new "green" financial products, and recently created with the participation of Russia, the BRICS development Bank has already announced plans to issue "green" bonds. Russian banks should be actively engaged in this process.

And, of course, we should talk not only about financing the construction of new solar plants and wind turbines. The potential for reducing greenhouse gas emissions — one of the conditions for "green" financing — there are in the entire energy chain from fuel production, energy production and its transportation to the efficiency of its consumption. For example, "the EuroSibEnergo has reduced CO2 emissions over the past 15 years almost half. This result we have achieved through the modernization of our power plant (they have to produce more power using the same amount of water, which replaced the energy of our coal stations), conversion of the coal boiler-houses on gas, and most importantly the radical reduction of network losses. Having access to green financing, we would have done it for two or three years.

Thirdly, it is necessary to review the Energy strategy of Russia until 2035 in terms of plans for the construction of new facilities and stated goals to reduce greenhouse gas emissions.

The transition to new energy technologies will create new high-tech sector of the economy and tens of thousands of jobs. In the global renewable energy sector — production, installation, maintenance of equipment, already has about 10 million people, and according to current projections, by 2030 the number of people employed will reach 25 million people. What part of them will work in Russia?

I have no illusions that the proposed plans will be easy to implement. But, as history has shown, technical progress does not stop 20 years ago we listened to music on a CD, used pagers and hardly thought about smartphones. Today everything is different. Ten years ago it was difficult to assume that the interest rate can affect the assessment of corporate social responsibility of the company. Today it is a common thing.

Better to be part of progress than to be at his side. Especially in such basic industries as energy.

Vyacheslav Solomin



Tags: Russia , innovation

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