Renewable energy companies from three EU member nations — Finland, Germany, and the Netherlands — have just announced they will finance and build a total of 735 megawatts of wind power in Russia, the most dangerous petro-state on NATO’s border.
Finland, which shares a long land border with Russia, has repeatedly been the target of Russian jets into its airspace, and all three have been victims of Putin-backed Kremlin psy-ops campaigns boosting anti-democratic candidates in an attempt to split and weaken the European Union.
Russia is the Ultimate “Red State” — With its Extraction Economy
The biggest, emptiest, and most fossil-dependent “red state” on the planet — Russia had a mere 15 megawatts (MW) of wind power as of the end of 2015 — whereas Europe is a clean energy leader. Europe has a clear interest in reducing the friction at the Baltic border between a petrostate and Europe, marked by the incompatibility of the energy markets of Europe and Russia.
Russia occupies much of the old land mass of the long-gone actual Red state, the USSR, back when it was under Communist rule. Russia is no longer a Communist nation.
Under the multi-term rule of Putin, now it is a kleptocracy run by and for a few mob-connected billionaires. As Senator McCain put it, now Russia is really just “a gas station run by a mafia that is masquerading as a country.”
Its mafia-friendly energy policy has been to bestow its antiquated and massive oil companies on a few Russian mob-connected cronies to ensure fealty, in a political system openly run by and for these few corrupt billionaires. With no technical education or expertise, the result is predictable. Russia has devolved into a backward petro-state with no options but to endanger EU member states on its borders in order to grow its oil-based economy.
It is on Europe to change that with a “hearts and minds campaign for Russia,” suggests Foreign Policy Magazine:
“The continent does not have the luxury of distance that the United States enjoys. Europe’s economy and politics have for centuries been inextricably intertwined with Russia, not always comfortably. Russia seems committed to undermining faith in European democracy through partnerships with the EU’s own internal spoilers like Hungary’s Viktor Orban and more covert interventions in the continent’s elections. Meanwhile, the escalating conflict in Ukraine — directly on the EU’s doorstep — suggests that Russia’s military poses a threat not just to European values but to the most basic idea of European security.”
Russian Renewables are Crippled by Technical and Legislative Ineptitude
Russia’s small coterie of ruling oligarchs merely clung to their legacy Soviet-era energy infrastructure (nuclear, coal, oil, gas, and hydro), essentially stolen after the collapse of the Soviet Union. Russia’s few energy firms lack the technical expertise to develop or innovate renewable industries.
Russia’s clean energy policy has been crippled by a completely unrealistic 65% domestic content requirement in a country with absolutely no wind manufacturing sector at all.
Given this background, Russia’s stringent local-content requirements for clean energy development — 65% of the equipment at wind farms must be sourced in Russia — make a mockery of any clean energy targets.
No nation with absolutely no wind energy manufacturing industry could source 65% of the components of its wind generation from the country. While the concrete foundations and steel or concrete towers used to support wind turbines (as well as building road access) comprise part of the cost of developing and constructing a wind farm, this doesn’t amount to 65%. (Solar presents the same problem.)
The results are predictable. By the end of 2015, Russia had only 15 MW of wind. According to the IEA, the energy intensity of the Russian economy is twice the average of the EU. It is very different from Europe, according to the Renewable Energy Report.
The Three EU Renewable Energy Firms “Invading” Russia
That may now be about to change, thanks to a giant Finnish clean energy developer, a small German wind developer, and a relatively unknown Netherlands-based wind turbine manufacturer.
The giant Finnish renewables developer Fortum is no stranger to developing renewables in new — and therefore more risky — markets. It has big investments in India’s new renewable generation, part of efforts to achieve fast changes in that formerly fossil-dependent energy market. Fortum is developing a 35 MW wind project in Russia under a Capacity Supply Agreement (CSA) that will guarantee a return on the investment for 15 years.
German developer SoWiTec is building a $173 million, 90 MW wind project through its local unit Azov VES. The wind farm was granted a 10-year permit.
Netherlands-based Lagerwey has arranged to build 610 MW of wind — in a joint partnership with the Russian nuclear group Rosatom. Lagerwey has found a solution to what has too often stymied Russian clean energy development — lack of local manufacturing to meet the 65% domestic content requirement. It will build a factory locally and manufacture right in Russia. The financing for all three projects comes from the EU.
It’s Risky Going into an Antiquated System “Held Together by Spit and Grit”
In Russia, developers don’t need to participate in a tender, as regional law supports construction of large-scale projects even on a no-bid basis, which is pretty unusual. Connecting to the grid can be risky, as both legally and technically Russia’s grid is not operated at a Western level according to E&E News, but “held together with spit and grit.”
The technical specifications to feed solar electricity onto the grid have never been written, for example, and neither have the regulations to govern it, which means that any energy developer in Russia can face real regulatory risk.
Developing renewables in undeveloped nations that have no electricity grid at all can hold similar kinds of risks, except that there at least local officials “know what they don’t know” and are amenable to outsiders providing the basic means to build an entire renewable energy system from scratch.
But Here’s Why We Need Renewables to Penetrate Petro-states
Unlike fossil fuels, which are finite, renewable energy is infinite. A fossil-energy-based economy leads to a very different foreign policy. It precludes peace.
Here’s why. If any energy source is finite, it leads to zero-sum thinking. Once I dig up and burn energy, it is gone from the planet’s supply of energy for good. You can’t burn it again after me. It’s me or you. For me to win, you must lose. Zero-sum. Short-term gain / long-term loss. The future can’t matter. So we must deny climate risks and grab it for ourselves while we can.
By contrast, if an energy source is renewable, that allows for win-win scenarios. I don’t use up the global supply of sun or wind when I use sun or wind energy. The same solar and wind resources will be available again and again through the centuries to our descendants. We can afford to care about the future. We can admit we want good things for future generations again. We don’t need to grab our energy from our neighbors before it’s gone. This means we can envision a truly long-term civilization again.
So this is why advancing renewable energy creates safer foreign policy. And so, European firms are doing the right thing, even if it’s a risky market, by penetrating the giant, aging petro-state bully on their doorstep with renewables.
This is true on a national as well as international level. US red states now also have thriving wind industries that saw billions in clean energy manufacturing investment during the Obama administration, like the world-class Clemson University wind testing center now able to test wind turbines up to 15 MW.
More stories on Russia: