The green energy subsidy program can be reduced by a quarter

The scope of the program to support the creation of generation in Russia based on renewable energy sources (RES) for the period 2025-2035 could be reduced by almost a quarter, according to a letter from Energy Minister Nikolai Shulginov to Deputy Prime Minister Alexander Novak, who oversees the fuel and energy complex. Vedomosti has a copy of the letter, the authenticity of which was confirmed by two sources familiar with the contents of the document.

The document states that the Ministry of Energy and the Ministry of Economic Development have agreed to reduce funding from the 400 billion rubles originally planned. up to 306 billion rubles. At the same time, in October last year, the head of the Ministry of Economy, Maxim Reshetnikov, proposed a cut in half – up to 200 billion rubles. The sources explained this approach with the Ministry of Economy’s concerns that the growth in the cost of electricity cannot be kept within the limits of inflation, as capital expenditures for new construction projects to generate renewable energy are included in the energy tariff. The Department of Energy opposed the cut.

In a letter to the Deputy Prime Minister, Shulginov reported that as a result of the discussions, inconsistencies regarding the scope of the program were removed. The volume of subsidies in 2021 prices will amount to 305.9 billion rubles, which is almost 30% less than the amount originally proposed by the Ministry of Energy – 437 billion rubles. Taking into account the transfer of additional capacities of solar power plants from the current RES support program until 2024. Taking into account the reduction of the volume of support under the second program until 2035, instead of the 6.2 gigawatts originally planned, only 4.6 gigawatts of The message is that “green” generation can be introduced into the country, including 1.8 gigawatts of solar power facilities and 2.7 gigawatts of wind power (the rest are small hydropower plants).

The Energy Ministry assured Vedomosti that interdepartmental differences over the scope of the program have been removed. Vedomosti also sent inquiries to the Ministry of Economic Development and Novak’s representative.

The government must finalize the terms of the program. In October, the Cabinet of Ministers has already approved by his order a number of criteria – in particular, the objectives of localization of equipment and exports. But the main question – how much support for the “green” generation – remains open.

The current Renewable Energy Resources Support Program (solar, wind and small hydro) is implemented from 2014 to 2024. The selected projects guarantee a return on investment with a base return of 12% per annum due to increased payments from wholesale consumers.

The Association “Community of Energy Consumers” (the lobby of energy-intensive industrial enterprises) Vedomosti stated that they were initially against the extension of the green energy subsidy program. According to Valery Dzyubenko, Deputy Director of the Association, taking into account the fifteen-year period during which the payback of renewable energy projects is guaranteed, the “green” generation under the first program will receive about 2 trillion rubles. support from consumers. “By the end of 2020, the price of electricity from renewable sources will be equal to the cost of conventional energy. The industry will be competitive in market conditions,” he said.

The Market Council (energy regulator) recognizes that reducing renewable energy subsidies will reduce the burden on consumers. But the issue of fulfilling the condition that the inflation rate should not be exceeded depends not only on the renewable energy program, but also on a number of decisions to support various projects through payments for electricity, capacity and transport services. Therefore, a comprehensive solution is needed to reduce and further reduce mutual support.”

In turn, director of the Association for the Development of Renewable Energy (which unites investors in renewable energy sources), Alexey Zhikarev, Vedomosti mentioned that the second phase of the program has already undergone reductions in 2019 from more than 600 billion rubles. up to 400 billion rubles.

“At the same time, market participants have been loaded with additional export requirements and a doubling of equipment localization,” he said. It took more than a year to adapt its investment programs to the new conditions. With the guarantees of ensuring the market size at a level above 6 GW, the participants seriously improved the specified capital and operating costs, the reduction amounted to more than 50% of the values ​​of the first program. According to Zhikarev, the decision to significantly reduce the size of the program will force some investors in renewable energy to refuse to work in the Russian market.

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