Sverdlovsk Power Engineering: Operation Consolidation

- The energy sector of the region today fully covers the needs of the economy and the population in electric energy. The total installed capacity of electric power stations as of 1 January 2010 amounts to 9.2 thousand megawatts. By 2015 this might grow to 12 thousand megawatt, by 2020 - to 14 thousand megawatts.

More than a half of all the capacity of the power system (4.9 megawatt) is located at the two power plants - Reftinskaya and Sredneuralskaya SDPPs which are owned by OJSC Enel WGC-5.

As far as the grid facilities are concerned there are electric lines with the voltage of 500, 220, 110 kV and less in the Mid Urals. The total length of electric power lines with the voltage from 0.4 to 500 kV exceeds 44 thousand kilometres. There also are 423 substations with the voltage of 35 to 500 kV and 7 thousand substations with the voltage of 6 to 10 kV in the Oblast.

The largest grid companies are MES Urals (a branch of OAO FGC EES) and Sverdlovenergo (a branch of OJSC MRSK of the Urals). Some of the 110 kV equipment belongs to consumer organisations. Moreover, there are more than a hundred organisations working in the Oblast that specialize in electric power distribution. The largest players in the sales market are OJSC Sverdlovsk Energy Sales, OJSC Ekaterinburg Energy Sales, and OJSC Sverdlovsk Energy and Gas Company.

- More than 96% of electricity in the Mid Urals is produced with the use of fuel brought from outside the region. We also have our own fuel and energy resources but they are insignificant. For instance in the North East of the region there are explored oil reserves. There also are small coal deposits the extraction of which is being reduced gradually. In the Krasnoufimsk district, in the West of the Oblast a gas field is being developed with the annual yield of about a billion cubic metres. Moreover, we have a decent peat reserve, more than 3 billion equivalent tons. Small rivers are used as hydro power resources.

It has to be said that more than 56% of all heating energy in the Mid Urals is produced by the electric power stations (36 million gigacalories). To generate heat HPP's use 83% of gas, 12% of coal, 2% of petroleum processing products, and 3% of other fuels. Boiler houses produce 28 million gigacalories of heat.

- FGC EES in the end of 2010 will complete the construction of the 500 kV powerline Severnaya-BAZ. The cost of the project amounts to 6.4 billion roubles, 3.5 out of which has already been spent.

The construction of the state of the art 400 megawatt combined-cycle plant is being completed at Sredneuralskaya SDPP. The unit includes the General Electric PG9371 gas turbine, the Nooter/Ericsen waste-heat boiler, and the Scoda MTD 60CR steam turbine. The efficiency of the new power unit will be 58%. The estimated project cost is 12.8 billion roubles, in fact 9.8 billion roubles has already been spent, out of which 4.6 billion - in 2009. The construction of the unit will make it possible to reduce the shortage of the power system in the Sverdlovsk Oblast and the Urals region. This will be the first generating capacity commissioned in almost 30 years.

The construction of the fourth unit with the capacity of 800 megawatt at the Beloyarsk Nuclear Power Station is also in progress. In 2009, the investment in the project amounted to 13 billion roubles. The power generating unit will be started up in 2013. For 2020 it is planned to start up an energy generating unit with the capacity of 1200 megawatt at BNPS.

A project is being developed for the construction of dry ash and cinder removal system at Reftinskaya SDPP. This will resolve several problems. First of all the impact of ash dumping will be reduced by the factor of five and the water waste will be reduced by the factor of 10. Secondly, the reliability of hydrotechnic facilities will be increased. Moreover, the construction sector companies will be able to increase the volumes of cinder they purchase.

According to the agreement with RAO UES 5,500 megawatt of generating capacities has to be commissioned in the Mid Urals by 2015. However, even today due to the fast aging of the equipment the region is in need of the replacement of 5,000 megawatt of worn out capacities.

- After the protracted period of being underfunded the investments have grown considerably. In 2009 more than 19 billion roubles has been invested into the energy sector of the Mid Urals from all sources of funding. In 2008 there was more, 22.9 billion roubles.

Two years ago we completed the construction of the 500 kV substation "Emelino". The cost of the project amounted to 3 billion roubles. The substation gives electricity to new metal making facilities in Polevskoy and Pervouralsk. In November 2009 yet another 200 kV substation "Anna" has been completed. Thanks to that OAO Sukholozhskcement has started up its fifth production line. 1.5 billion roubles was invested into the construction of the substation.

- In 2009 the consumption of electricity in the Mid Urals amounted to about 42 billion kilowatt-hours which is 12% lower compared to 2008. However, in late 2009 - early 2010 the curve of energy consumption went up which is due to the cold winter and livening up of the industry. So the energy sector has not sustained substantial losses.

In reality the energy consumption in the Sverdlovsk Oblast has reduced considerably in the nineties. In the Soviet times it amounted to 52 billion kilowatt-hours per year. Then a gradual reduction ensued. In 2005-2007 a little growth has been observed, to 47.4 billion kilowatt-hours. In 2008 the growth has stopped again. In a years time this indicator dropped down to 41.9 billion kilowatt-hours. We are planning to return to the level of 50 billion in about 8 to 10 years time.

The industrial production dominated the structure of energy consumption, according to the 2008 results, amounting to 52.6%. Housing and services consumed 14.7%, private individuals - 8.52%, transport and communications companies - 6.58%.

- The considerable physical wear of the grid really is one of the main threats of the reliable power supply to towns and villages of the Sverdlovsk Oblast. Two years ago the need for investments in the housing and services was assessed at 53 billion roubles. It is even higher now.

In the nearest 5 to 10 years the construction and reconstruction of the grids will be carried out along the seven directions taking into account the requirements of large consumers and generating capacities being constructed.

- The consolidation of the grid assets might become one of the efficient mechanisms for the resolution of the grid modernisation problem. This would enable us to get rid of the over-the-tariff losses and reduce by 3-4% the nominal losses in the grid. Due to the reduction of losses the investment component of the power transmission tariff can be increased and, naturally, the replacement of the worn out equipment would be accelerated.

There are 102 grid companies in the Sverdlovsk Oblast today. OJSC MRSK of the Urals is the largest, it takes 76% of the market. The remaining 24% are shared between 101 enterprises. This fragmentation leads to waste and loss of quality of electric power supply. The response speed in rectifying failures also suffers.

We are also considering the possibility of merging the heating grid assets on the basis of Oblkommunenergo.

- Sverdlovenergo will make the transition to the new tariff calculation system on 1 January 2011. The production programmes of the grid companies funding of which will be done in accordance to RAB-regulation will be reviewed and approved by our Ministry jointly with REC.

In my opinion the implementation of the new tariff calculation system will not result in considerable tariff increase for the transmission of electric energy due to the two reasons. The first is that the grid component in the final tariff is not that large, about 20%. The second is that the increase in tariffs will happen gradually over a long period, at the first stage the method of "smoothening" will be employed.

At the same time RAB-regulation makes the tariff predictable for the consumer and opens the way for the large scale reconstruction of power installations. As well as the predictability of the tariff the consumer would get the so much needed reliability of power supply.

- The Programme is designed for the period until 2020. It is divided into several sector blocks. For instance, by 2020 energy saving in the housing sector should amount to at least 5.2 million tons of equivalent fuel per year.

The planned result for the housing and utilities is at least 9.9 million tons of equivalent fuel per year. In order to achieve this we are planning to build new highly efficient boiler houses to replace worn out ones or those with excessive capacities.

Using mini-HPP will also yield savings; they generate heat and electric energy employing combined cycle units with waste-heat boilers, and gas piston units. In large cities it is planned to use heat pump systems and renewable energy sources of low-grade heat (trigeneration). All this combined will enable us in 10 years' time to reduce the energy consumed per unit of the gross regional product by 27.8%.

- In the Sverdlovsk Oblast natural gas is supplied to almost all large and small towns with the exception of five. The situation with supplying gas to rural areas is much more complicated. At the moment the blue fuel is supplied only to 14.7% of villages with the population of at least 5 people.

In 2006-2009 2,180 kilometres of pipelines has been built, this includes 690 kilometres of lines between villages and more than 1490 kilometres of distribution lines; the construction of these lines has been funded by all available sources of funding. Last year we fulfilled only 82.6% of the financial plan for the design and construction of gas lines.

In the first quarter of 2010, according to the data provided by Uralsevergaz, the consumption of the blue fuel amounted to 5.5 billion cubic metres in the Sverdlovsk Oblast. In the second quarter the planned consumption is 3.4 billion cubic metres.

By 2020 we are hoping to drive the amount of people with gas connection from 53.4 to 72.5%. In rural areas this indicator should reach 43%. We already have projects for the construction of large pipelines between villages. It is true, however, that there is no money in the 2010 budget for their implementation due to the general reduction of capital spending. Due to the lack of money this year will leave us with about 30 investment projects for the gas supply which have already been approved by the State but not implemented.

- UGDO will be established during 2010. The region will own the controlling interest in the new venture. Due to the consolidation of gas assets all consumers in the Sverdlovsk Oblast will have a single tariff for the transportation of natural gas. The establishment of UGDO will enable the reduction of costs and rational use of resources for the repair and construction of gas pipelines attracting cheaper investments. We will also be able to coordinate the activities of the gas companies more efficiently.