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International Conference on Innovative Applied Energy    

E-Proceedings ISBN: 978-1-912532-05-6

St Cross College, University of Oxford, United Kingdom

  


 

Distributed Energy Resources in Russia: threat or opportunity?

 


 

Alexey Khokhlov, Yuriy Melnikov and Tatiana Mitrova 

 

Moscow School of Management SKOLKOVO, Energy Center, Russia

 

  

Paper Abstract

Distributed Energy Resources (DER) are key elements of the global Energy Transition. Russian power sector remains aside from the large-scale development of DER. In fact, deployment of DER was limited to distributed generation driven by economic interests of electricity consumers and lack of climate priorities in the national energy policies.

This study attempts to assess potential of DER in response to dozens of old fossil fuel power plants commissioned 40-50 years ago. During 2025-2035 it will be necessary to decommission, upgrade or replace the most worn-out plants with total capacity of ~70 GW. At the same time, forecasts show additional electricity demand of 35-47 GW by 2035. This demand will be partially covered by new nuclear and hydro power plants, as well as renewables (up to 14.4 GW). Several new thermal power plants are currently under construction (6,1 GW). Taking into account excess capacity (~32 GW), the remaining gap in power generating capacity is estimated at 54-66 GW by 2035.

Most of national regulators and industry players consider refurbishment if existing power plants as the only viable option for closing this gap. Contrary to this view, our study showed that DER have significant potential in Russia. Only part of this potential is sufficient to cover over half of the power capacity gap (~36 GW by 2035). The most promising type of DER in Russia is distributed cogeneration (~17 GW). On-site generation units of consumers are able to additionally provide ~13 GW, demand response - up to 4 GW, energy efficiency technologies - 1.5 GW and rooftop PV systems - 0.6 GW. Full use of DER scenario shows possibility of covering the entire gap by 2035. While DER have been widely analyzed in the international literature, in Russia there was no integrated assessment of their potential in response to future development needs of the national power system.

In order to stimulate the maximum usage of DER technologies systemic changes are necessary in the architecture and policy of the Russian power sector, balancing interests of new players with existing model. A consistent reasonable combination of centralized generation and DER seems the most effective approach. In order to implement such a combination, it is necessary to develop principles and market mechanisms for integration of centralized and decentralized parts and to ensure their reliable joint operation.

Optimal scenario for DER development in Russia will enable numerous benefits, such as reduction of power system development costs, competition enablement, energy efficiency improvement, emissions of greenhouse gases reduction and acceleration of economic development. Otherwise, the choice of "business as usual" strategy will create long-term problems for the majority of "passive" consumers, traditional power companies and regulators.

Opponents of DER argue that existing power plants refurbishment is significantly cheaper than new DER deployment and by developing DER consumers avoid grid payments thus shifting financial load to others. Therefore, future work shall provide comparative cost analysis for various DER and centralized technologies showing economic benefits of DER not only to specific consumers, but to the overall power system

Paper Keywords
Russian power sector, distributed generation, demand response, cogeneration, energy efficiency, distributed energy resources, power sector policy, repowering, fossil fuel power plants.
Corresponding author Biography

Alexey Khokhlov, Head of Power & Utilities Research, SKOLKOVO Moscow School of Management, Energy Centre

With more than 12 years of experience in strategic consulting, Alexey is an expert in the fields of strategy development, organizational design, and optimization of business processes. He has advised both Russian and international companies in the electric power, oil & gas, and nuclear energy sectors.

At Moscow School of Management SKOLKOVO Alexey plays dual role of Head of Power & Utilities Research and Organizational Development Director for the School.

Alexey’s research interests include:

  • Current conditions, potential, and barriers for the development of renewable energy in Russia,
  • Operational efficiency in the electric power industry,
  • New energy technologies and the prospects for their practical application,
  • Changing business models of companies in the electric power industry.

Before joining the SKOLKOVO Business School team in 2009, Alexey worked for the Russian branch of Booz & Co (which changed its name to Strategy& after merging with PwC), where he was promoted from a principal to partner. Prior to his tenure at Booz & Co he worked at Accenture, an international consulting company.

He has implemented numerous consulting projects, including a strategy and governance model for the global expansion of one of Russia’s largest energy companies, a process model for a large vertically-integrated company, as well as long-term development strategies for leading companies in the electric power and engineering fields.

Alexey is a graduate of the Department of Applied Mathematics at Saratov State University, and holds an MBA from the University of Wyoming (USA).

Alexey is the co-author of several publications, including:

  • Market liberalization and decarbonization of the Russian electricity industry: perpetuum pendulum.
  • The Restoration of the Russian Electro-power Industry – Approaches to Intelligent Cost Reduction, Capacity Expansion, and Profit Growth.

The Changing Roles of Newcomer-countries embarking on the development of nuclear energy on the global market after the accident at the Fukushima-1 Nuclear Power Plant.

The International Conference on Innovative Applied Energy (IAPE’18)