Rethink plea over Russia wind content

The Kremlin passed a law to spur renewables last year

The Kremlin passed a law to spur renewables last year

Russia is being urged to ease its local-content requirements for wind projects to avoid its June tender process ending as a flop, with multilateral body the IFC saying it is “not optimistic” over the outcome . 

Russia plans to hold a second tender in June as part of its ambition to spur 5.9GW of renewables by 2020 – 3.6GW of it from wind power – by awarding contracts linked to installed capacity.

The renewables drive, prompted by a May 2013 amendment to Russia’s federal power law, was welcomed by wind power’s supporters in the gas-rich country, where progress on clean-energy has been slow.

It was the first real “confirmation of a support system for investors in renewables in Russia”, Maxim Gridasov, CEO of the Russian Wind Energy Association (RWEA) told Recharge.

However, the plan is dependent on equipment used at projects satisfying local-content rules contained in the amendment – defined as 55% content for those built in 2015 and 65% in 2016 – which apply to larger plants serving Russia’s regulated wholesale power market.

Support is also available in relation to the unregulated retail market, where smaller projects under 25MW can opt to feed into regional grids to cover network losses, or help supply isolated energy zones. The rules relating to those projects, however, are still being discussed and no decision has been made.

According to Gridasov, big turbine manufacturers such as Siemens and Vestas have examined options for sourcing or producing components in Russia.

“Unfortunately, no one has been able to meet the current requirements or has been able to make an offer for a Russian project,” Gridasov said.

And the immediate prospects of a significant customer base emerging look remote. Little more than 100MW of wind was awarded in the first tender round last year, with the bulk of contracts going to solar.

The IFC – part of the World Bank group, which is offering assistance to the Russian government in an effort to kick-start renewables in the country – claimed officials need to rethink.

Patrick Willems, project manager for the IFC’s Russia Renewable Energy Programme said: “The question we are asking now is whether or not Russia really wants to develop a wind industry.

“The signs so far, leave room for doubt. By setting high local-content requirements, they believe that production will come to Russia, but that is unlikely to happen given the low expected volumes.”

So far “the current set up does not work,” said Willems. “I am not optimistic about the outcome of the second tender for wind in June.”

“The IFC does not favour local content ever, as it distorts the market leading to higher prices,” he added.

Dutch company Windlife Renewables and its German JV partner WSB are planning to construct and operate a 200MW plant in the Murmansk Oblast region of northeast Russia.

The CEO of Windlife recently told Recharge the JV would prefer going to tender this summer with no local-content regulations under the smaller, retail market system.

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