Alisher Kalanov: The Fall in Price of Renewables Calls for a Rethink of the Road Map for Energy Development

20 March 2018

Alisher Kalanov, Head of RUSNANO Management Company’s Perspective Energy Projects Unit

Alisher Kalanov, Head of RUSNANO Management Company’s Perspective Energy Projects Unit

On 20 March, Alisher Kalanov, head of RUSNANO Management Company’s Perspective Energy Projects Unit, spoke at the Energy 2.0: Digital Transformation and Green Energy Development conference organized by the Kommersant Publishing house in Moscow.  Top managers of energy companies, leading experts in the field of energy and representatives of conglomerates in the sector discussed the possible future of the electricity sector, the introduction of new technologies and the potential of renewable energy sources (RES) in Russia.

In his speech, Alisher Kalanov talked about how to determine a long-term balance between RES and conventional sources in Russia’s energy mix. In his opinion, economic feasibility is the key factor when determining the proportion of RES in the energy mix.  “RES do in fact have relatively low indicators for use of installed capacity, but, worldwide, the main indicator relied on when choosing technical solutions is LCOE (the levelized cost of electrical energy throughout the whole life cycle), a unified indicator of the cost of electricity for any type of generation facility,” he explained. “In accordance with that indicator, IRENA predicts that throughout the world, the LCOE of RES will achieve parity with conventional sources of energy by 2020.  We can see that 6-8 countries have already achieved parity for solar energy, and the same number for wind energy. This means that, in these countries, the market already provides an economic stimulus for the development of RES.”

Alisher Kalanov added that, apart from the cost of capital expenditure, and the efficient operation of equipment, the LCOE is also affected by macroeconomic factors such as the cost of raising capital. “In many countries, and this is true for Russia, RES are provided with support until their LCOE achieves parity with that of conventional sources.” He pointed out that, according to conservative estimates RES will achieve parity with coal and nuclear energy in this country by 2027-2029 and with gas by 2035. “As for the number of new facilities, we rely, first and foremost, on the General Plan for the Introduction of Electricity Generation Facilities in the Russian Federation up to 2035, which provides for the introduction of 11.6 GW of RES, thus providing a base guide for the share of RES in the energy system.  But it is important to take into account international tendencies in the  generation of RES. Foreign countries continually increase their targets for the share of RES in their energy mix, since the sector’s potential has turned out higher than expected.  This may also be true for Russia, which will soon need to revise the program documentation to take into account international trends.” Thus, in the 2017 competitive selection process, the capital cost per unit of certain wind energy projects was at the same level as in European countries.

In addition, Alisher Kalanov said, the onerous technical requirements that currently apply to RES could be removed by amending the Russian Urban Construction and Land Codes, and also the rules for operational management and technological annexation and various other documents, in order to reflect the realities of the RES sector. This would speed up construction and reduce the cost of projects, which in turn would reduce the LCOE of RES.

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RUSNANO Joint-Stock Company was founded in March 2011 through reorganization of state corporation Russian Corporation of Nanotechnologies. JSC RUSNANO contributes to implementation of the state policy on the development of the nanotechnology industry by investing directly and through investment funds of nanotechnology in financially effective high-technology projects providing the development of new production facilities in the Russian Federation. Its primary investment focus is in electronics, optoelectronics and telecommunications, healthcare and biotechnology, metallurgy and metalwork, energy, mechanical engineering and instrument making, construction and industrial materials, chemicals and petrochemicals. 100 percent of RUSNANO’s shares are state owned. Thanks to RUSNANO’s investments, there are currently 95 factories and R&D Centers opened in 37 regions in Russia. JSC RUSNANO has profit for the last 4 years.

Management of assets of RUSNANO JSC is carried out by Limited Liability Company established in December 2013, RUSNANO Management Company. Anatoly Chubais is the Chairman of its Executive Board.

Work to establish nanotechnology infrastructure and carry out educational programs is fulfilled by RUSNANO’s Fund for Infrastructure and Educational Programs, which was also established during the reorganization of the Russian Corporation of Nanotechnologies.