Russia’s energy ministry has proposed to shift the allocation of support for renewable energy projects away from a current system of remuneration based on capacity and return on investment towards a scheme where support is mostly paid per kilowatt hour of electricity produced.

A first tendering round for projects to be built from 2025 to 2035 could be held early next year under the new programme that would make 400 billion roubles ($5.09bn) available for the entire period, Russian newspaper Kommersant said, citing a Russian government regulation website.

While the proposed new scheme would align Russia’s support system more with that of most other countries, investors would continue to close long-term power supply contracts with consumers. Part of the payments to investors would come from the wholesale electricity day-ahead market, and remaining remuneration from consumers’ payments for capacity, the newspaper said.

High localisation requirement

The new scheme would also raise the local content requirement for wind power (and small hydro) to 75%, and to 85% for solar power, with fines for insufficient localisation or the failure to meet a 20% export target.

An already high local content requirement of 65% for projects commissioned in the 2018-24 period has pushed foreign wind energy manufacturers and developers to team up with Russian partners in tenders, and has succeeded in luring foreign manufacturing capacity (for example from Vestas and Siemens Gamesa) to Russia.

Oil and gas-rich Russia has embarked on the renewable energy train relatively late. The world's largest country under the current scheme that will run out in 2024 targets to build 5.4GW in renewable energy capacity, 3.35GW of which in wind power.

Russia’s association for the development of renewable energy (ARVE) told Kommersant that the new system would significantly increase risks for investors, in particular due to the proposed fines for non-compliance with its criteria.

Wind

Russia plans change to renewables support in $5bn scheme for 2025-35: report