Power policy

Russia aims to increase the share of renewable energy power generation from under 1% currently to 2.5% by 2024. In order to encourage renewable energy uptake, Russia has implemented auctions and net metering. To date, there have been eight tenders awarded with varying annual capacity. In 2021, about 2,700 megawatts were awarded. The net metering policy was implemented in 2021. It applies to systems that are a maximum of 15kW and can only provide energy on location. System owners will be able to sell extra generation to the distributor at rates of about 1.7 to 2 rubles or $0.02-0.03 per kWh. Russia also has tax incentives, such as accelerated depreciation and tax exemptions through special economic zones.

Power prices and costs

In areas with unregulated pricing, retailers offer peak and off-peak pricing. The average residential, industrial and commercial tariff increased in 2021, to $47.22, $65.26 and $96.07 per MWh respectively, while the wholesale tariff decreased to $13.97 per MWh.

Power market

Russia’s power market is completely unbundled. Consumers in the retail market are able to choose their supplier and change at any time. Additionally, commercial and industrial power projects are growing in popularity, especially around renewable energy. However, the generation market is dominated by several large players and transmission is done primarily by RusHydro.

Russian power primarily comes from natural gas and coal. There is a small uptake in renewable energy, mainly wind power, which grew over 500% between 2019 and 2020. Renewable energy represents 2.5% (excluding large hydro) of the total installed capacity of Russia. Renewables grew slowly in the last decade, and represented around 1.1% of capacity in 2010. Russian utilities are indebted given the sanctions and restrictions post the Ukraine invasion. Power prices are very high in Russia, so while producers were not historically in debt, many consumers are. The government provides high subsidies on fossil fuel, making producing renewable energy less attractive. Local network companies are obliged to purchase electricity produced by renewable energy units but only to cover 5% of their network losses.

According to a Government Decree (No. 1472-R) of July 28, 2015, local content requirements apply to all wind, solar PV and small hydropower projects. By 2024, requirements will reach 70% of all equipment used for solar PV and 65% for small hydropower and wind. As of mid-2017, the average age of Russian power plants was 32.5 years, likely to only have grown since then, as little investment is going into new capacity. A capacity mechanism is available to support modernization in the first stage, from 2022-25, under the "Thermal Power Plant Modernization Program Based on Capacity Delivery Agreements." About 1.9 trillion rubles ($29 billion) should cover 41GW over 2022-31. Recipients are to use Russian equipment. RusHydro is also undertaking its own comprehensive modernization plan of hydro assets.

Doing business and barriers

Russia has both a retail and wholesale market. Installations up to 25 megawatts participate in the retail market rather than the wholesale market. The rules for interconnection are very clear.

Russia has 100% electrification. Peak demand had been decreasing from 2018-2020, but increased significantly in 2021 to 161,418MWp. Previously, high local content requirements for renewable energy projects were the main deterrent for developers. However, the biggest barrier for entering the market is the current instability generated by the Russia-Ukraine war. The sanctions drastically impact ability to do business in the country, and offtaker risk is extremely high.

EV market

Electric cars remain more expensive than internal combustion engine (ICE) vehicles in Russia and are bought by wealthy individuals who place value on the status of owning the technology, rather than on the lifetime cost savings. EV sales in 2021 reached over 1,000 units for the first time. Importers will have to pay as much as 15% of the customs value of the vehicles by 2022, which will likely be passed on to EV consumers.

EV policy

Russia’s electric vehicle (EV) market is in its infancy. The country recently drafted a "Concept for the promotion of electric transport to 2030" which includes two targets: production of 217,000 electric vehicles domestically by 2030 (28,000 by 2024), and a 10% EV share of total vehicle production in the country. Charging infrastructure is also included in this draft, with Russia proposing to install 73,900 charging stations by 2030. This program has yet to be approved. Russia has no national public transportation target. Only Moscow introduced a target in 2021, aiming for all buses to be electric by 2030.

Electric vehicle owners enjoy certain incentives such as free parking and exemption from road taxes in certain cities.

Buildings market

The country doesn't have a low carbon heat target or roadmap, but it does have some legislation targeting energy efficiency. A roadmap for improving energy efficiency in housing and communal services was implemented in 2017. An updated roadmap was introduced in 2021. However, experts say the new plan is inadequate, as it doesn't provide proper economic incentives for energy efficiency measures to be implemented. Previous goals set out in 2009 were postponed by 10 years.

Buildings policy

Russia implemented energy performance standards in 2018. These are part of an overall effort to improve the efficiency of Russia's infrastructure, and incorporate better materials etc. New sets of building codes and standards have also come into force in 2021, with energy efficiency stipulations.