Strategic Development of Power Generation in the Context of

“Energy Strategy of Russia for the Year 2030”

11th Prague International Energy ConferencePrague, 24-26 September 2009

Alexey GromovPhD

Deputy DirectorInstitute for Energy Strategy

Energy Strategy 2030 in the System of Documents of the Strategic Development

Program of long-term

development of the fuel and

energy complex of the

Russian Far East

Conception of the long-term development of the Russian Federation for

the year 2020

Strategy of development of

the power generation in

the Russian Far East

Long-term forecast of the development of Russian economy for the years

2009-2030

Eastern Gas

Program

General scheme of allocation of power generating facilities

for the year 2020

General scheme of development of the oil industry for the year

2030

General scheme of development of the gas industry for the year 2030

Conception of the state program for exploration and exploitation of the continental shelf of the

Russian Federation

ES-2030

State program of energy saving

Investment programs of energy companies

Aim and Goals of the ES-2030

Efficiency of reproduction, extraction and processing of energy resources

Modernization and construction of new energy infrastructure

Energy and ecological efficiency of the national economy and energy sector

Stable institutional environment in the energy sector

Further integration of the Russian energy sector into the global energy system

Aim

Goals

Innovative and efficient energy development

Aim of the ES-2030 remains stable despite consequences of the global economic crisis

Energy Saving as Priority Direction of State Energy Policy

Saving of 240 bln. cub. m of natural gas, 340 bln. kilowatt-hour of electric power, 90 mln t of coal

and 45 mln t of oil and oil products1

2

3

4

5

Expected results of energy saving and increase in energy efficiency in Russia

Improvement in competitiveness of national economy under conditions of growing tariffs for

energy resources

Increase in revenues from extra export of oil and natural gas: 84-112 bln. USD

Decrease in governmental expanses: 3-5 bln. USD

Reduction in CO2 –emissions: 790 mln t/yImprovement in ecological situation in the country

Consumption of energy resources can be reduced by:

20% in heat supply

30% in power generation

40% in industry and transportation

50% in living apartments

Potential of energy saving in Russia is estimated at level

of 45% of the current consumption of energy

resources

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

1000 1050 1100 1150 1200 1250 1300 1350 1400 1450 1500 1550 1600 1650

basic variant innovative variant

Electricity consumption

bln. kilowatt-hour

1073

1315

1520

1065

1245

1415

1590

year

s

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

1000 1050 1100 1150 1200 1250 1300 1350 1400 1450 1500 1550 1600 1650

basic variant innovative variant

Electricity production

bln. kilowatt-hour

1094

1350

1640

1090

1280

1460

year

s

Basic Forecasted Characteristics of the ES-2030(Electricity Production and Consumption)

Power Generation

Completion of the structural reform of the Russian power generation

Shift of electric power consumption into Eastern

regions of Russia and cities of the Central part of the

country

Increase in seasonal and daily peak loads in the UES

of Russia

Creation of the wholesale competitive market of electric power and capacity

Deficit of generative and circuit capacities in some regions

Lack of peak and semi-peak capacities

High runout of basic production assets

Low energy and economic efficiency of power generation

High dependency on natural gas

Absence of retail market of electric power and capacity

Tendencies

Lack of investment resources

Cross-funding between different groups of consumers and between electric power and heat in domestic market

ProblemsResults of ES-2020

Energy security of the country

Balanced development of generative and circuit capacities

Modernization of the basic production assets

Development of environmental friendly technologies of coal burning, steam-to-gas plants with high coefficient of efficiency, power circuits of new generation, etc.

Development of “small power generation” in regions with decentralized power supply

Development of Power Generation

Complete satisfaction of country’s needs in energy (capacity) at reasonable prices

Safe and secure work of power supply system under normal conditions and in case of emergency

Further development and enlargement of the UES of Russia

Containment of prices by means of reduction of costs in construction of generative and circuit capacities, encouragement of competition and creation of state system supervising power generation

Accelerated development of nuclear, coal power generation and renewable energy; diversification of the fuel and energy balance of the country

Innovative renovation

Development of competitive markets of electric energy and capacity

Reliability and controllability of power supply systems

Reduction of negative environmental impact of power generation

Strategic aims

Principles and mechanisms of realization

Power Generation and Consumption

Prospective levels of power generation will be determined by growth of domestic demand, which

will substantially exceed the growth rate of demand for primary energy

352,0

277,0

175,0

149,0

478-505

441-447

385-403

620-873

432-592299-

423

181-199

319-422

224-240

194-220

356-437

247-282

953,1

1059-1245

1350-1555

1800-2210

0

500

1000

1500

2000

2005 1st Stage 2nd Stage 3rd Stage

bln

. kW

h

Termal (heat) CondensationHydro & Renewable Nuclear

Power generation Power consumption and export

941

1800-2210

1350-1555

1059-1245

45-60

18-25

35

12

1041-1218

1740-2164

1315-1518

953

0

500

1000

1500

2000

2005 1st Stage 2nd Stage 3rd Stage

bln

. k

Wh

Power consumption Net export

Power Consumption and Specific Electro-capacity of GDP

By 2030 power consumption will increase 1,9-2,3 fold, compared with the level of 2005, while specific electro-capacity of GDP will decrease 1,6-1,7 fold.

2164

1518

1020

1218

941 1041

1315

1740

100

87

72

61

89

81

71

59

900

1200

1500

1800

2100

2005 2008 1st Stage 2nd Stage 3rd Stage

Po

wer

co

nsu

mp

tio

n,

bln

. kW

h

50

60

70

80

90

100

Sp

ecif

ic E

lect

ro C

apac

ity

of

GD

P,

% o

f th

e 20

05

leve

l

Power Consumption

Specific Electro-capacity of GDP

Installed Capacity of Power Plants

45,9

23,7

78,3

106-11298-9989-92

67,4

123-181

83-11772-90

68-96

56-59

50-52

28-33

52-62

37-41

355-445

275-315

239-267

215,2

0,0

50,0

100,0

150,0

200,0

250,0

300,0

350,0

400,0

450,0

2005 1st Stage 2nd Stage 3rd Stage

mln

. kW

Termal (heat) Condensate Hydro Nuclear Renewable

By 2030 total installed capacity of Russian power plans will increase 1.6-2 fold, compared to

2005 level (mostly due to condensate plants)

Investment in Power Generation

217-334

130-211

43-7844-45

200-290

122-145

46-112

32-33

100-139

58-81

29-30

13-28

55-125

30-92

17-18

8-15122-126

110-233

340-529

572-888

0

100

200

300

400

500

600

700

800

1st Stage 2nd Stage 3rd Stage Total 2008-2030

bln

. US

D (

at 2

007c

on

stan

t p

rice

s)

Power Circuit Thermal + Condensate Nuclear Hydro

Power generation demands 572-888 bln USD investment for the year 2030. Share of the industry

in total investment in Russian FEC equals 24-32%

Long-term State Tariff Policy

Expansion of market principles of pricing and mechanisms of self-regulation

Improvement in quality of life of the Russian population and competitiveness of Russian industry

Investment attractiveness of projects in power generation and transmission

Basic Principles

Predictability and transparency of long-term state tariff policy and its coordination with other components of the state energy policy

Till 2030 average selling price for electric power (at 2007 constant prices) won’t

increase more than 2-fold and won’t exceed 9-10 US cent/kW

Stages of Realization

1st Stage

Modernization of gas-fired power plants Decommissioning of old-fashioned and depreciated equipment Creation of legal frameworks for attraction of investment in power generation Realization of state program for construction of nuclear and hydro power plants Creation of domestic competitive market of electric power and capacity Development of public assistance in supplying electric power at social norms

2nd Stage

3rd Stage

Large-scale renovation of basic production assets Development of power circuits and proper infrastructure in the Eastern Siberia and Far East Putting into operation new nuclear power plants Development of renewable energy

Active development of non-hydrocarbon power generation (nuclear, renewable, etc.) Technological improvements in coal-fired power generation Construction of major hydroelectric power stations in Eastern parts of Russia Development of “small nuclear power generation” in the Russian North and Far East Development of modular high-temperature nuclear reactors, able to produce electric power, heat

and hydrogen

Development of Non-fuel Energy

Priority development:

Nuclear

Hydro

Renewable

POWER GENERATION

Putting into operation installed capacity of 23-33 GWt will increase the share of renewable energy in power generation from 0,5 to 4,5%

18

61

5

87

25

9

0,50

5

10

15

20

25

30

35

2005 1st stage 2nd stage 3rd stage

mln

. kilo

wat

t

0

10

20

30

40

50

60

70

80

90

100

bln

. ki

low

att-

ho

ur

Installed capacity, mln. Kilowatt

Power generation on the basis of renewable energyresources, bln. kilowatt-hour

Forecasted development of renewable power generation

State Policy in the Sphere of Renewable Energy and Local Power Supply

Support of utilization of local power supply in remote regions

Support of small service enterprises, operating in the sphere of renewable energy

Informational support

Technical and technological control of security of renewable energy

Support of utilization of industrial and communal waste for the purpose of power generation

Sate support of Russian industry and science supplying power generation on the basis of renewable energy with equipment and technologies

Attraction of investment, creation of special venture funds

Indicators 2008 1st Stage 2nd Stage 3rd Stage

Power generation

Share of non-fuel power supply, % 32,5 no more than 34 no more than 35 no more than 38

Fuel supply of thermoelectric power plants

Share of gas, % 70,3 70-71 65-66 60-62

Share of coal, % 26 25-26 29-30 34-36

Energy security and reliability of power supply

Probability of non-deficit functioning of energy systems

0,996 0,9990 0,9991 0,9997

Efficiency of power generation

Coefficient of efficiency of coal-fired power plants, %

34 no less than 35 no less than 38 no less than 41

Coefficient of efficiency of gas-fired power plants,%

38 no less than 45 no less than 50 no less than 53

Coefficient of efficiency of nuclear power plants,%

32 no less than 32 no less than 34 no less than 36

Specific fuel consumption for power generation at heat and power plants, g c.e./kWt-h (by the level of 2005)

333(99%)

no more than 315 (94%)

no more than 300 (90%)

no more than 270 (81%)

Loss in power circuits, %13 no more than 12 no more than 10 no more than 8

Strategic Indicators of Development

Heat Supply

Power consumption for transportation of heat carrier increased substantially (up to 40 kWt-h/hcal)

Lack of investment and necessity to restrain the growth of tariffs

Organizational disconnection of objects and systems of heat supply

Urgent necessity of institutional reform in the system of heat supply

Extension of heat distribution network decreased by 5% (more than 10 000 km)

Coefficient of utilization of installed heat capacity of power plants decreased to the level below 50%

Runout of basic production assets increased up to 65-70%

Loss rate in heat distribution increased from 14% to 20%

Lack of reliability of heat supplying systems

High loss rate

High negative impact on environment

ProblemsResults of ES-2020

High level of comfort in residential and industrial buildings, increase in quality of service of heat supply, provided at reasonable prices

Priority development of cogeneration-based heat supply

Optimization of regimes of thermoelectric plants

Utilization of geothermal energy

Decrease of unproductive loss of heat and fuel consumption

Development of heat supply on the basis of steam-turbine, gas-turbine, gas-piston and diesel plants in the sphere of middle and small heat load

Rational combination of system and elemental reservation, transition to independent scheme of connection to heat supply and closed system of hot water supply

Optimal combination of centralized and decentralized heat supply

Controllability, reliability, security and economy of heat supply

Decrease of negative impact on environment

Combined operation of different sources of heat for a common heat transporting network and optimization of their functioning

Creation of legal framework, guaranteeing effective interaction between producers, distributors and consumers of heat

Modernization of heat supply systems on the basis of innovative high-efficient technologies and equipment

Heat SupplyStrategic aims

Principles and mechanisms of realization

Technological Structure of Heat Supply

Main growth will be provided by power plantsShare of geothermal, solar and biomass sources of heat will be increased Share of boiler-houses by 2030 will be decreased

628

103192

349

785-830680-690601-620

701640-654

659-686661-688

136-185117-134

106-118

140-150150-160

180-190

370-390360-370350-360

2130-21501975-20301977 1899-1975

0

500

1000

1500

2000

2500

2005 1 этап 2 этап 3 этап

mln

h-c

al

Power plants Boiler-houses Others Boiler-houses Autonomous

Centralized Decentralizedsources of heat

Heat Consumption and Loss

Loss of heat will decrease 2-3 fold (equivalent to economy of fuel of no less than 40 mln t c.e.)

1622

355

1950-1960

1745-1760

1589-1655

180-190230-270310-320

2130-21501975-20301899-1975

1977

0

500

1000

1500

2000

2500

2005 1 этап 2 этап 3 этап

mln

h-c

al

Consumption Loss

Investment in Heat Supply

150-153

71-72

38-39

41-42

0

20

40

60

80

100

120

140

160

1st Stage 2nd Stage 3rd Stage Total 2008-2030

bln

. US

D (

at 2

007

con

stan

t p

rice

s)

Heat supply demands 150-153 bln USD investment for the year 2030. Share of the industry in

total investment in Russian FEC equals 5-6%

Optimization of centralized and decentralized systems of heat supply

Modernization of basic productive assets and transport network

Equipping of heat consumers with systems of control and regulation

Attraction of private investment

Optimization of tariffs (transition to two-part tariff)

Increase in energy efficiency of buildings

Large-scale modernization of basic productive assets and transport network Rapid development of decentralized heat supply and heat supply on the basis of renewable energy

Creation of market of heat

Further increase in energy efficiency of heat supply

High level of comfort in residential and industrial buildings

Utilization of non-fuel sources of heat

Spread of high-tech automatic systems of heat supply

Stages of Realization

1st Stage

2nd Stage

3rd Stage

Indicators 2008 1st Stage 2nd Stage 3rd Stage

Energy security and reliability of heat supply

Failure rate, 1/year 0,27no more than 0,25

no more than 0,20 no more than 0,15

Failure rate because of source of heat, 1/(source-year)

0,06no more than 0,05

no more than 0,03 no more than 0,01

Renewal of heat network, % of total extension

2 no less than 10 no less than 40 no less than 90

Innovative development of heat supply

Share of systems, equipped with modern tools of exploitation, %

10 no less than 40 no less than 80 100

Efficiency of heat supply

Coefficient of effective use of heating power at heat and power plant, % of the 2005 level

5 no less than 15 no less than 40 no less than 50

Mean specific fuel consumption, % of the 2005 level

99 no more than 98 no more than 94 no more than 90

Increase in energy efficiency of buildings, % to the 2005 level

5 no less than 10 no less than 30 no less than 50

Heat loss, % of heat production 19 no more than 16 no more than 13 no more than 8-10

Strategic Indicators of Development

Thank you for your attention!