Russia is already transitioning to green energy – abundant land and economic pressure incentivize renewable development

Russia hosts only 143.2 million inhabitants, less than Nigeria. Its natural gas, oil, coal, and uranium reserves are immense. Why then should Russia be willing to develop electricity production from intermittent wind and solar energy, or start manufacturing electric vehicles?

The reasons, I argue in this study, are of economic and industrial nature. The ongoing rapid and massive uptake of new energy technologies enabling energy self-sufficiency via a combination of electricity production from renewable energy sources, energy storage, and digital technology,6 threatens to dramatically lower the abundant revenues earned by Russia from selling abroad oil, fuels, natural gas, coal, and even uranium. This picture is further worsened by the concomitant and imminent uptake of battery electric vehicles (BEVs)7 well beyond China where BEVs are now a large fraction of the >20 million vehicles sold every year in the Asian country.

An highly developed nation, with large and advanced steel, naval, chemical, automotive, and aviation industries, Russia simply cannot lag behind in the basic industrial sector—energy—when most world's countries achieve the key economic advantages of energy self-sufficiency made possible by almost silent industrial and technical progress in renewable energy and energy storage technologies.6

Putting arguments in the rapidly evolving global energy context, this study provides arguments justifying this forecast.

2 ENERGY AND RENEWABLES IN RUSSIA

Tsarist Russia hosted an advanced oil industry with several oil refineries (export of crude oil was forbidden), but it lagged behind in electrification.8 By 1913, Russia hosted 327 MW of installed power, 177 MW of which were located in just three cities: the capital St. Petersburg, Moscow, and Baku.9 World War I and the subsequent civil war worsened matters. In the early 1920s, the overall power from all the Russian power stations had decreased to about 70 MW, producing about 500 million kWh of electrical energy.10

On 7 February 1920, the State electrification commission (GOELRO) was formed and tasked to devise a plan for electrifying the country. By December 2020, the commission presented the delegates of the eighth All-Russia Congress of Soviets held in Moscow a document of more than five hundred pages urging the construction in 10 years of a network of huge (“regional” in a country whose regions are as large as entire countries) thermal, hydropower, and combined heat and power stations.8, 9

By 1935, the output of electricity in Russia had reached 13.5 billion kWh from 2 billion kWh in 1913.11 After World War II, Russia pioneered the use of nuclear power with the world's first nuclear power plant (a 5 MW reactor) located in Obninsk, about 100 km southwest of Moscow, connected to the power grid in June 1954.12

In accordance with the 2003 law “On electric power industry”, the electricity market in Russia is open (since 2011) to full competition in generation by ensuring third party access to the grid. The energy market regulator is the “NP Market Council” whose main task is to ensure the correct functioning of the national wholesale electricity and power capacity market. All companies in the wholesale electricity market must become member of the NP Market Council (which by mid May 2018 had 415 members).13

Since mid-2013, the development of renewable energy in Russia is regulated by a decree entitled “On Procedure for Incitement of Use of Renewable Energy Sources at Wholesale Power Market.”14 The law establishes a system for which renewable energy developers of projects with an output between (at least) 5 MW and 25 MW can bid in annual tenders for capacity supply contracts with Russia's Administrator of the Trading System.

Winning suppliers are paid both for the capacity they add to the energy system, and for the energy they supply, based on long-term 15-year contracts with fixed tariffs. The incentives are subordinate to purchase 55%, 50%, and 20% of wind, solar and hydro project equipments from within Russia (in 2016, these figures were further increased to 65%, 70%, and 45%).

To avoid a rise on electricity prices, yearly limits control the increase of newly added renewable generation capacity. According to a resolution of May 2013, auctioned power between 2014 and 2020 cannot surpass the 5871 MW threshold (3600 MW wind, 1520 PV, and 751 MW small hydro).

Between 2013 and 2016, slightly more than 2 GW of renewable capacity was awarded in the annual tenders. The 2017 auction saw a total of 2.2 GW across wind, solar, and small hydro awarded in a single tender. The 2018 auction had 1.08 GW of capacity distributed across 39 projects.15

Finally, in 2019 the competitive tender for new renewable energy capacity from 2019 to 2024 was set at slightly more than 313 MW, most of which comprised of new hydro power capacity (about 230 MW), followed by wind (78 MW) and only 5.6 MW new photovoltaic power (Figure 1), to be connected to the grid in 2022.15

The Yelshanskaya 25 MW photovoltaic park in the Orenburg region supplies power to the grid since 1 July 2019. Using only components made in Russia, the plant is expected to produce 30.5 million kWh annually. [Image courtesy of Hevel Energy Group, Reproduced from hevelsolar.com]

The effects of the newly installed wind, solar, and hydroelectric power capacity on power generation became noticeable in 2018 when production of wind energy in Russia rose by 69.2%, and that from PV by 35.7%. Combined, wind and solar PV output crossed the 1 TWh threshold.5

Perhaps even more importantly, the amount of yearly hours during which wind and solar PV parks in Russia in 2018 supplied energy at their nameplate capacity was, respectively, 1602 and 1283 hours.5

Russia's almost unlimited land available for development, the latter long functioning times, and the low and decreasing cost of both PV and wind power generation systems create the conditions for significant penetration of wind and solar PV in Russia's energy mix via utility-scale PV and wind parks coupled to storage in large Li-ion battery and solar hydrogen systems.

In other words, the combined effect of today's low-cost power generation and storage via, respectively, photovoltaic, wind turbine, Li-ion battery, and solar hydrogen technologies will shortly have a profound impact on Russia's energy and mobility industries. In the following, I analyze first the consequences of BEV massive uptake driven by the newly achieved low cost of Li-ion batteries, and then of stationary storage in Li-ion battery energy systems and in solar hydrogen, namely hydrogen derived from water via electrolysis driven by renewable electricity.