Russia pauses after wind tender flop

The date of the next stage of Russia’s wind-power tender is uncertain, as officials ponder whether to include the type of local-content requirements (LCR) that were blamed for causing the first phase to flop.

Russia was expected to hold a tender for projects in the smaller “retail market” – 25MW and below – by the end of this month.

But after the first-phase auction for the larger “wholesale” market ended with just one 51MW project vying for the 1.6GW on offer, officials are apparently yet to decide how to proceed regarding LCR – the strict nature of which were widely blamed for the lack of takers.

"We hope that there won't be any LCR," Maxim Gridasov, CEO of Russia Wind Energy Association (RWEA) told Recharge.

"Now we see that the main reason for the limited participation in this tender was the uncertainty with LCR for turbine manufacturers," he says.

According to Gridasov, major foreign suppliers such as Gamesa and GE would consider siting production in Russia.

But with uncertainty surrounding the tender process, developers will pause rather than risk their money in an uncertain market, said Gridasov.

"Now the ball is the court of turbine manufacturers, but they need time to decide if it would be profitable to manufacture in Russia or not," he added.

The Russian-Czech developer Alten – a unit of the Czech investment fund Falcon Capital – was the sole taker for the supply deals on offer, planning the construction and commissioning of the 51MW project in 2015, with an additional 150MW in 2017.

Plans for Russia's emerging wind-power market are currently dependent on local-content rules set out in the country's federal energy law, with 55% of content required in 2015 and 65% in 2016-2018.

The underperforming results of the tender apparently come as no surprise to industry officials. Patrick Willems, IFC Russia Renewable Energy Program Manager said that it only confirms "limited expectations".

"We cannot help to notice that the limitations imposed by CAPEX and local content requirements have not provided for an equal level playing field for wind and small hydro generation," he added.