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BMI View: Our ten-year forecast for the Russian power sector remains muted -
despite the country's rich resource endowment and size of its market. As a
contracting economy, a weakened ruble and prolonged geopolitical uncertainty
keep a hold of the country, development projects of Russia's power sector
encounter increasing financial and political headwinds.
Latest Updates And Structural Trends
■ The broader economic and political backdrop frames our views on the
Russian power sector in 2016. The annexation of Crimea and perceived Russian
belligerence towards the West has shattered investor confidence and will deter
significant foreign investment. Meanwhile, global oil prices of below USD30/ bbl
in early 2016 (expected to remain around USD40/bbl for 2016) have made the
government's budget assumptions untenable, which will necessitate further
spending cuts. At the same time, tight credit conditions - exacerbated by
international sanctions - will drag on economic growth.
■ Weak electricity demand will result in overcapacity and feed into lower
capacity payments in some of Russia's wholesale electricity pricing zones -
weighing on the margins of utilities. Russia awards capacity payments to
existing power plants - through competitive auctions to ensure plants remain
capable of dispatch during periods of high electricity demand. Capacity auction
payments for 2016 in Russia's first pricing zone (spanning European Russia and
the Urals) fell 15.3% y-o-y on account of overcapacity amid weak demand.
■ Providing electricity supply to the annexed Crimea region will remain high on
Russia's agenda, as Moscow looks to integrate the peninsula. Russian President
Vladimir Putin switched on two power lines in late December 2015, with plans to
turn on another two in 2016. In November and December 2015, Crimea was facing
serious electricity shortages as a result of bomb blasts - carried out by
unidentified assailants - which destroyed two pylons in Ukraine on November 22
■ Georgia, Iran, Armenia and Russia agreed in April 2016 to create a joint
electricity market by 2019. The market will initially be open for large-scale
users who use high-voltage networks. Following a successful first stage, the
market may be liberalised for small and medium power users.
BMI Industry View ... 7
Table: Headline Power Forecasts (Russia 2015-2021) . . 7
SWOT ...... 9
Industry Forecast .. 11
Russia Snapshot ........ 11
Table: Country Snapshot: Economic and Demographic Data (Russia 2015-2019) . . .
Table: Country Snapshot: Economic and Demographic Data (Russia 2020-2025) . . .
Table: Country Snapshot: Power Sector . . 11
Russia Power Forecast Scenario .... 12
Gas Generation And Capacity Forecast ... 15
Table: Russia's Energy Strategy 2030 . . . . 17
Electricity Generation And Power Generating Capacity ........ 25
Table: Total Electricity Generation Data And Forecasts (Russia 2014-2019) . . .
Table: Total Electricity Generation Data And Forecasts (Russia 2020-2025) . . .
Table: Electricity Generating Capacity Data And Forecasts (Russia 2014-2019) . .
. . 27
Table: Electricity Generating Capacity Data And Forecasts (Russia 2020-2025) . .
. . 28
Electricity Consumption ..... 28
Table: Total Electricity Consumption Data And Forecasts (Russia 2014-2019) 29
Table: Total Electricity Consumption Data And Forecasts (Russia 2020-2025) 29
Transmission & Distribution, Import And Export ........ 30
Table: Electric Power T&D Losses Data And Forecasts (Russia 2014-2019) . . . 33
Table: Electric Power T&D Losses Data And Forecasts (Russia 2020-2025) . . . 33
Table: Trade Data And Forecasts (Russia 2014-2019) . 33
Table: Trade Data And Forecasts (Russia 2020-2025) . 33
Industry Risk/Reward Index ... 34
CEE Power Risk/Reward Index ...... 34
Table: CEE Risk/Reward Index . 40
Russia Power Risk/Reward Index .... 40
Rewards ........ 40
Risks .... 41
Market Overview ... 42
Key Policies And Market Structure .. 42
Regulation And Competition 42
Sustainable Energy Policies 43
Pricing . 44
Russia Power Projects Database .... 46
Competitive Landscape . 50
Federal Grid Company (FGC) ...... 50
Inter RAO UES ........ 51
Gazprom Energoholding .... 51
E.ON ... 52
Enel ..... 52
Company Profile .... 54
Inter RAO ....... 54
E.ON ..... 58
Regional Overview 67
CEE Power Regional Overview ...... 67
Glossary ........ 74
Table: Glossary Of Terms . 74
Methodology . 75
Methodology And Sources .... 75
Industry Forecast Methodology .... 75
Risk/Reward Index Methodology ... 78
Table: Power Risk/Reward Index Indicators . . 79
Table: Weighting Of Indicators . 80