The first ever renewable energy auction within the borders of the world’s largest oil producer — Russia — was recently completed. As a result, the fossil fuel giant has now committed to subsidize 504 MW of new renewable energy projects — including 399 MW of solar and about 110 MW of wind.
As it stands currently, solar and wind energy only account for about 0.8% of the country’s energy mix. Though, the country does possess an impressive hydroelectric capacity — currently supplying about 16% of the country’s electricity. The other ~83% is, as of now, supplied by fossil fuels and nuclear energy.
In recent years, the oil giant has made its goals with regard to renewable energy clear — and while they aren’t particularly ambitious goals, they are definitely worth noting. And now, with this first ever renewable energy auction — which saw 39 ventures secure government subsidies — the country certainly seems to be moving towards the realization of those goals.
“The tender has been quite successful for solar energy, showing that the Russian market can attract developers,” Anton Usachev, the head of the Russian Solar Industry Association, stated in an interview with Bloomberg. He added that the reason for the majority of projects being solar rather than generally cheaper wind was probably the result of a requirement that developers source at least 50% of the materials from local contractors.
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The winning bids were those that pledged the lowest capital costs, with final solar bids coming in at around $3,451 per KW. Avelar Energy Ltd. – a unit of Russian holding company Renova Group – won the majority of the bids. RusEnergoInvest also secured a number of projects.
This new subsidy program will mirror that used for Russia’s regular power plants: the plant must have a minimum 5 MW output and developers can receive payments for 15 years so long as they agree to provide power during peak demand hours.
There are just a handful of renewable energy plants in the entire country, with installed solar capacity standing at a meager 3 MW. In Russia’s remote far east, which is not connected to the grid, the Russian Solar Industry Association calculate that solar PV can be three- to four-times cheaper than conventional fuel, which has to be transported across vast distances at considerable cost.
There are currently plans for a second renewable energy auction next June — which is expected to see a further 1,645 MW of wind and 496 MW of solar up for grabs.