Russia: Kremlin thawing on wind


December 12, 2016

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The reception for wind developers in Russia has historically been colder than a chilly day in Moscow – which is currently hovering at around -11oC. Invigorating!

The country has installed wind capacity of 15MW, which is only slightly larger than the wind capacity of the Pacific Islands – and with a population 62 times larger. Instead, Russia gets most of its power from fossil fuels (82%), with a minority share of nuclear and an even smaller slice of geothermal, solar and – finally – wind.

So far, we have seen little desire from president Vladimir Putin to change that. To be fair, backing far-right parties in other countriesis a time-consuming business. That US election won’t fix itself.

But we are hurtling towards 2017 and the hostility to wind power in the Kremlin appears to be thawing, just a little. Maybe this is due to the fact that 2017 has been designated as Russia’s Year of the Environment, which is ironic seeing as it is one of the largest nations that has not ratified last year’s Paris climate change deal.

The government is considering replacing oil-fired generation with wind in Siberia and the Urals region; and awarded developers the right to build wind schemes of 35MW in an auction in late 2015. Neither of these amounts to much, but they are a start.

Businesses have been making significant commitments too.

Last month, the republic of Karelia in the northwest of the country agreed a deal with Chinese energy company Sinomec to develop the 60MW Kem offshore wind farm in the White Sea. The partners have said they are due to start construction in 2017 and complete it in 2020, with two-thirds of the equipment used on the project to be made in Russia and mainly by local contractors.

We don’t know how they expect this to work using inexperienced contractors building on a sea that is frozen in winter – but one benefit of local firms is that they will be used to the conditions.

And they will not be alone. This year, state-owned Russian nuclear group Rosatom submitted plans to develop 26 wind farms with total capacity of 610MW in the years 2018-2020. It is due to invest $1.3bn in the projects, which are set to be located in the regions of Adygea, Krasnodar, Rostov and Stavropol.

Intriguingly, Rosatom said this 610MW would only account for 17% of the wind capacity projected to be built in Russia in 2024. This means that Russia could have 3.6GW of wind in eight years.

Rosatom has also said it is due to select a foreign technology partner for its projects by the end of this year. We think the intention is a good one, as it makes sense for it to bring in a foreign partner with experience of building wind farms, particularly in very cold climates. There is no substitute for that experience.

We will watch this deal with interest as it would give whoever wins a golden chance to establish itself in the fledgling Russian market. This is particularly important given that one of the main barriers for overseas companies looking to do business in the nation is that the government has imposed strict local content requirements: 65% of equipment used at wind projects must be made locally.

So far, there has been no reason for wind manufacturers to move into Russia but, in the next few years, they may find the reception a bit warmer. Like the reception Putin would enjoy at Donald Trump’s Christmas party. Vodkas all round!

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