Russia has yet not grown into small scale power engineering

02.04.2010 — Analysis

Russia started the implementation of pilot projects in the sphere of small scale power engineering. The Sverdlovsk oblast became one of the experimental sites where in April 2010 a first mini-HPP will be started up. The programme is designed for three years and envisages the construction of thirty combined heat and electricity power generating units. The RusBusinessNews observer established, however, that not all of this programme will be implemented as the Russian industry so far is not ready to work in conformity with European standards.

The first 500 kW unit will be started up at Hermes-Ural Ltd. The metal working company instead of paying for the connection to the national power grid decided to invest 50 million roubles into small scale power engineering. The Wilson power plant itself costs no more than 18 million roubles but the company had to build a gas pipeline, carry out the electric network layout, and design the second train, all of which determined the investment project's cost.

According to experts the mini-HPP will pay for itself in three years and will enable the company to save 10 million roubles on electricity per year. Small scale power generation is much more efficient than large scale - coefficient of efficiency, counting the heat energy, reaches 90% and only reduces by 2-3% if the unit is only half-loaded. However, for the metal works that owns state of the art equipment it was more important not to save money but to ensure high quality energy supply. Experts call electricity coming through the grid from large power stations "dirty" and unsafe for today's electronics.

The obvious advantages notwithstanding, says Mikhail Shulyov, the Director General of CJSC Small Scale Power Engineering Development Agency, the number of small stations in the Sverdlovsk Oblast in 2010 will not exceed two-three, and by 2012 - at most ten. It is interesting that in 2006 the Sverdlovsk Oblast government announced the construction of 60 sites of small scale power engineering with the total output of 200 megawatt. It was planned to supply cogeneration plans to both industrial companies and budget-funded institutions. It was planned to allocate 50 million roubles a year for three years for this.

In 2009 the Union of Industrialists and Entrepreneurs of the Sverdlovsk Oblast admitted that the money for the implementation of the projects has not been found. The then Head of the Union Vladimir Semyonov told the journalists that only one station will be commissioned. An alternative programme has been adopted for the period of 1009-2012; it envisages the commissioning of 30 units of combined heat and electricity power generating units with the total output of 60 MW. According to Mr Shulyov these were the projects which have been actually announced by industrial companies. Most of them, it turned out, have not withstood the test of time.

The governmental decree on the construction of small scale hydro power plants has not been fulfilled either. According to the data provided by Yelena Ilyina, the Press Secretary of the Ministry for Energy and Housing & Utilities of the Sverdlovsk Oblast, in 2009 the commissioning of mini hydropower plant at Nizhneirghinskiy hydroelectric installation (Krasnoufimsk okrug) and small power plant at Verkhnesysertskiy hydroelectric installation, as well as the development od projects for the construction of small hydropower plants at Verkhnemakarovskiy, Kashinskiy, and Lenevskiy hydroelectric installations. However, instead of the planned 40 million roubles for this work the budget allocated only 27.5 million which determined an indefinite delay in the construction of the hydropower plant in Verkhnyaya Sysert. There is no spending on hydropower engineering planned for 2010 which makes the construction of the remaining 13 mini hydropower plants envisaged by the Sverdlovsk Oblast government decree in 2004.

Experts list several reasons for the decline in interest to small scale power engineering. Firstly, having massive debts many companies in the Sverdlovsk Oblast do not have any contracts for 2010 or even plans for the production of goods currently in demand. Secondly, some proprietors of plants are not interested in transparent efficient work focusing their efforts on sales of resources and getting the capital out of the country. Thirdly, banks, having accumulated serious resources in the 2009 crisis, are not prepared to invest it into the real sector of economy under acceptable conditions referring to the difficulties in credit assessment of projects in power engineering sector.

Mikhail Shulyov sees the key cause of the lack of interest in the small scale power engineering in the structure of industry that has formed in the soviet era. Perestroika and the reforms of the nineties have not changed the technological model of production; inflexible and inefficient enterprises have been built in 30-50s to match the soviet economy mould and they remain like that now. Small scale power engineering would not give them anything as it is not suited for plugging holes. Autonomous energy sources are in demand primarily in oil industry sector and by certain proprietors who are developing the production, master break through technology, build state of the art plants. Judging by the number of power engineering projects in the Sverdlovsk Oblast, there are not that many of those in Russia.

Aleksandr Yevplanov, the Head of Electrical Engineering Department at the Urals State Mining University, reckons that many industrialists are apprehensive of the transition form the centralised power supply due to simply being conservative. They still have faith in its stability while the generating resource, according to the data provided by the Regional Dispatch Control (RDC) of the Urals has been used up by 160% and the average wear of the grid, according to the reports from the Interregional Distributing Grid Company (IDGC) of the Urals, is 67% and this figure is growing by several percent every year.

In this connection experts point out that the restructuring of RAO UES of Russia has not given the sector the needed investment resources for which it has been initially organised. The reform has resolved just one issue - many businesses have mushroomed in the electric power engineering sector. However, it turns out that getting money from selling electricity is meaningless without taking the interests of consumers into account as the accumulated billions do not give business the stability because the weak Russian industry is unable to ensure the reproduction of capital.

Banks having the money and the lack of projects tells us that the modernization announced by the Russian President Dmitry Medvedev is needed not because there is nothing left to steal in the industry sector but because the capitals stolen in years past are threatening to turn into dust.

Vladimir Terletski