Tendencies in power industry

In 2016 the Russian power industry thanks to a number of favorable processes in national economy showed the best results in comparison with 2015. Expeditious connection to the Power Pool System of the Republic of Crimea and the city of Sevastopol became an important event. The planned net profit of Gazprom Energoholding for 65% exceeded the indicator of 2015. It is expected that for the first time in nine years lack of loss following the results of a year will show PAO MOEK. For the end of 2016 the general rated capacity of power plants of UES of Russia exceeded 236.3 GW. Thereof 39 GW is the rated capacity of power plants of Gazprom Energoholding.

To destroy borders

Let’s start our material with the fluent review of power branch of the European Union. The matter is that 2016 was the year of the proceeding crisis in the market of hydrocarbons, and for the EU it appeared the extremely difficult in respect of power. The Russian power supply system is connected with power supply systems of a number of the European countries, besides Europe is one of the main buyers of our hydrocarbons. Power problems and a number of the shown processes which the EU faces now allow better understanding of prospects of Russia in foreign markets and saving our country from the mistakes made by neighbors.

Strategic objective of the European Union is creation of «homogeneous» power space — national borders for electricity and gas have to be destroyed, the markets are integrated, and energy security is increased. On this way of the EU faces a number of problems, main of which is different level of development of the countries entering supranational education. The question of financing is also important — who will pay necessary changes in infrastructure. On this background in the separate line pass forecasting errors.

For the last six years the electric power output not only did not grow in the EU but, on the contrary, decreased a little. According to Eurostat, in 2010 it was made from all sources 3364 Terawatt hours, and in the 2015th — 3234 Terawatt hours (though the volume of 2015 is a little more than a volume of 2014). Unfortunately, Eurostat has no data for 2016 so far.

We should address to statistics of other organization — the International Power Agency. However at once we will make a reservation that the International Power Agency groups the countries of Europe in the principle of entry into the Organization for Economic Cooperation and Development. However, these data all the same will help to make general idea about the processes which were taking place in 2016 in power industry of Europe.

According to the International Power Agency, during the period from January to November, 2016, it was made about 3140 Terawatt hours the electric power in the countries of Europe. It is on 0.9% (28.4 Terawatt hours) more than for the same period of 2015. However, we will not forget that last year was leap that is the statistics includes one more day. Where is more remarkable that fact that in November by this group of the countries was made 304.3 Terawatt hours that is on 3.8% more than in November, 2015 (is on 5.9% more than in October, 2016). It is more remarkable first of all that growth was provided by fossil types of fuels.

Growth of minerals

Electricity generation in a segment of fossil types of fuel increased on 4.6% in relation to last month and on 1.9% by 11 months of 2015. Thus, the production gain from January to November made 27.8 Terawatt hours. This increase cannot be explained with additional day in a year. The thing is not even that average daily consumption makes about 9.36 Terawatt hours. After all, maybe, February 29 was cold and dark and it was required significantly more electricity than average value. But, according to the data of the International Power Agency, in February, 2016 fossil types of fuel gave 20.1 Terawatt hours less than a month earlier and if to compare indicators of January-February, 2015 and 2016, we will see decrease on 3.7%. Besides at that time fossil types of fuel provided 44.6% of total amount of produced electric power. For 11 months 2016 this share grew to 46.7%.

These figures are reflection of increase in demand for natural gas in the countries of Europe. Thus the actual stagnation in electric generation did not get to anywhere. It is evident reflection of economic recession against which the European Union fights for several years. However, according to European Commission point of view, published in February, 2017, the given situation is fine. After all Europe is on the way to achievement of the purpose of 2020 — increase in energy efficiency on 20% (a part of Strategy 20-20-20). And the less is consumed energy (primary), the closer is the purpose.

However, for some reason while all EU in a uniform rush fights for an embodiment in life Strategy 20-20-20, the European companies should close the highly effective gas power plants constructed this decade and brown coal is alive and well in electric generation. Probably, all is for the sake of achievement of the purpose — to reduce import of natural gas on 12% by 2030. It is an important question as this purpose is combined with tasks of decrease in harmful emissions.

Gas after Fukushima

Here we come to a sore subject about destiny of gas generation in the European Union which was touched on more than once on pages of our magazine. If the power consumption grew in the EU, it would be enough of place for all sources of the electric power. It is possible to follow an example of China where gas successfully coexists with the renewables. But under the circumstances Europeans since 2011 should play game on elimination.

There was an accident on the Japanese NPP Fukushima-1 in 2011. It strengthened positions of critics of nuclear power. The real anti-nuclear hysteria was developed in Europe. Being for Europeans already sore subject which was frayed for years by various political forces, nuclear generation turned suddenly into quite specific enemy. Germany within a year reduced the rated capacity of the NPPs from 20.43 GW to 12.07 GW and today this indicator decreased to 10.8 GW. Certainly, not all countries followed an example of Germany. But the main thing is that supporters of RES developed rough activity against anti-nuclear hysteria.

If till 2011 money, following forecasts about increase in demand for natural gas, went generally towards gas generation (new power plants were under construction), now the financial stream replaced the direction. If in 2010, according to WindEurope (the former European Wind Energy Association), the European solar power stations (SES) grew on 12 GW, in 2011 against the launched anti-nuclear campaign this indicator reached 21 GW. But next years volumes of input decreased. Wind power for the same period showed big stability.

Solar power, input of new capacities (GW)
2010 12
2011 21
2012 16,75
2013 11
2014 8
2015 8,5
2016 6,7

Data of WindEurope

Wind power, input of new capacities (GW)
2010 9,9
2011 9,8
2012 12,1
2013 11,4
2014 12,1
2015 12,8
2016 12,49

Data of WindEurope

In 2015 investments into renewables in the European Union fell to the minimum indicators over the last ten years (in 2014 — 62 billion euros, in 2015 – 48.8 billion euros). It happened because of falling of the prices of hydrocarbons — appeal of investments into renewable energy sources sharply decreased. In 2016 falling proceeded — investments in renewable power fell to 44 billion euros.

Besides, there was an interesting, though expected situation in this branch. As we also predicted, first of all money «ran» from solar power. Input volume, according to WindEurope, on solar power stations decreased to 6.7 GW (according to SolarPower Europe — to 6.9 GW). A priori more effective wind power showed sufficient stability – 12.49 GW were entered. That is decrease happened but insignificant and only relatively to very successful 2015. Thus investments in wind power grew on 5% — to 27.5 billion euros. Against the background of reasons that the renewable power becomes cheaper every year and demands less investment for its development, it looks at least funny.

We already spoke about the reasons of growth of specific costs of wind farms in last materials on a subject of renewable power. Development of coastal wind farms is accelerated. And construction of wind-driven generators in the sea is more expensive action than construction on the land. Laying of cables, accounting of interests of navigation and fishery. And simply it is necessary to use the materials capable to maintain continuous contacts with hostile environment. These are other requirements to anticorrosive properties of the applied materials. The volume of input of new coastal capacities in Europe in 2016 grew in comparison with 2015 on 39%.

Thus, 2016 became for the EU year of return of natural gas to power industry. Demand for gas of dews promptly, by a number of estimates — on 6% in comparison with 2015. And ahead interesting and therefore for hard times wait for the European power industry. It is expected that in the closest ten years the EU will begin refusal of coal. It will allow increasing a share of renewed energy sources and gas in an energy balance. As it was told in one of messages of the Eurogas organization, the green energy market needs a reliable gas network. And 2016 showed that only Russia can provide the most reliable supply of gas in volumes necessary to Europe.

The industry needs electricity

For the Russian power industry 2016 was much more successful than 2015, including due to deliveries to a foreign market. Let’s remind that in 2015 the Russian power industry increased power generation on 0.2%. Rather low indicator of growth was caused by both quite warm weather and the crisis phenomena in economy. However even in 2015 demand was maintained by power-consuming industries as their production due to decrease in dollar energy costs and devaluation of ruble was strongly demanded outside our country. Besides, import substitution process plays its role. Thus we are talking not only about programs of the separate companies and the states in general and about import substitution as a process caused by the objective reasons. A number of foreign producers were compelled to reduce deliveries of the production to the Russian market because of an exchange difference. And the Russian companies, on the contrary, increased deliveries to domestic market.

In 2016 the improvement of economy objectively noticeable by increase of industrial activity began. Demand for the Russian production grew. In October, 2016 rates of production growth reached maximum in 67 months. By that moment outputs grew six months in a row.

Power generation of the Integrated Power Grid of Russia by power plants, according to the System operator of EEC, in 2016 made 1048.5 billion kilowatt-hours, and consumption – 1026.9 billion kilowatt-hours. For comparison, in 2015 the general development reached 1026.88 kilowatt-hours and consumption – 1008.25 kilowatt-hours. In general, according to the System operator, it is possible to say that in 2016 energy consumption in Russia at last broke a record of 1991 (1017.6 kilowatt-hours).

The maximum of consumption of electric power in UES of Russia (and with it and loading of power plants) in 2016 is recorded in December and made 151.1 GW that is 5.1% more than maximum of 2015, however this indicator is lower than historical maximum of 2012 (157.4 GW). According to the System operator, in 2016 new values of a historical maximum of consumption of power were established in six power supply systems: Belgorod, Dagestan, Krasnoyarsk, Kuban, Tyumen and Tyvinsky.

If at the beginning of 2016 the general rated capacity of power plants of the Power pool system of Russia made 235.3 GW, by the beginning of 2017 it reached 236.34 GW. The difference of indicators does not reflect dynamics of input of new capacities as in parallel there is a conclusion from operation of old power plants. In total in 2016 the generating equipment with a total power of 4.6 GW was entered (and it is modernized), and taken out of service — about 3.75 GW.

The Efficiency of Rated Capacity (ERC) in 2016 made 50.51% that is higher than an indicator of 2015 (50.25%). If to look at The Efficiency of Rated Capacity on generation types, we will notice some decrease at nuclear power plants — from 84.65% to 81.38% and also in power system — from 47.21% to 46.66%. But hydroelectric power stations showed growth — from 38.29% to 42.39%.

Shortage of consumers

Unfortunately, the problem of surplus of network power still is not solved in Russia. Many networks are laid where there is no consumer. It aggravates a financial position of the network companies. Besides, they are influenced negatively by non-payments — both direct consumers and the guaranteeing suppliers. According to JSC Mezhregionenergosbyt, for 2016 the cumulative debt of the guaranteeing suppliers to the electro network organizations grew on 6.4 billion rubles — to 92.8 billion. There is also a counter debt of the network organizations for the electric power for compensation of losses. As of the end of 2016 it made 50.9 billion rubles.

To cope with the arisen situation, the Government of the Russian Federation adopted the resolution changing fee terms on transfer of the electric power for the guaranteeing suppliers and the power marketing organizations in December, 2016. The duty to pay 70% of the volume of services in transfer current month and not later is entered.

Except surplus of network power a certain problem is represented by surplus of generation. Power plants were under construction proceeding from forecasts of the middle of the 2000s for electricity consumption growth but the forecasts were too optimistic.

At the end of 2015 the model of the competitive selection of power assuming long-term selection on price zones with application of a curve «elastic demand» was started. In 2016 selection was made for 2020. If earlier it was expected that the volume of not declared capacities for 2020 can make about 20 GW, actually the situation was significantly better. In competitive selection of power -2020 9.6 GW were unselected. However, as the CEO of JSC Mezhregionenergosbyt Stanislav Ashirov notes taking into account already removed capacities during action of the new model of competitive selection of power it makes more than 12 GW.

The received result can be considered as very significant improvement of the situation connected with new model of conclusion of excess low effective capacities. There is no mass conclusion of generation and danger of deficiency of power and sharp growth of surpluses observed earlier stopped. According to JSC Mezhregionenergosbyt, now the size of surpluses was stabilized at the level of about 18.5 GW. And inputs of new capacities are compensated by eliminations of inefficient generation.

Power Bridge

Commissioning in May, 2016 at full capacity of the power bridge Kuban-Crimea which first stage was started personally by the Russian President Vladimir Putin in December, 2015 was a noticeable event in the Russian power industry. The power bridge consists of four threads on 200 MW. Commissioning of this object not simply allowed connecting the peninsula to the integrated power grid of Russia but also solved a many months problem of shortage of the electric power.

The matter is that in November, 2015 «unknown» persons blew up support of power lines on which the Republic of Crimea and the city of federal value Sevastopol received the electric power bought in Ukraine. Because of an event the peninsula was compelled to live about six months in conditions of economy of the electric power.

Thanks to that project works on the power bridge began in April, 2014 and were conducted extremely quickly and also thanks to dedicated work of builders the Crimea came to a resort season completely provided with the electric power. Now in the Crimea some new power plants which will satisfy the growing needs of the region are under construction.

1 GW more

Since entry of Gazprom Group into electrical power sector in 2007 on the present moment within contracts on granting the power about 8.6 GW of the new generating capacities are entered by the Group. Thereof about 1 GW was entered in 2016.

Following the results of 2016 the established electric power of stations of Gazprom Energoholding practically did not change and made about 39 GW. Yes, last year 660 MW on Troitskaya State District Power Station and 330 MW on Novocherkassk State District Power Station were entered. But at the same time the company took the old inefficient generating equipment with a total power of 1.5 GW out of service. It is about State District Power Station -22 of Mosenergo, the Ryazan and Troitskaya State District Power Station of OGK-2. The company plans to withdraw from operation about 0.7 more GW for 2017-2018.

Totally in 2016 stations of Gazprom Energoholding developed about 154 billion kilowatt-hours of electric energy and 119 million Gcal of thermal energy. For comparison, in 2015 development of electric energy made about 145 billion kilowatt-hours.

About 80% of the generating capacities of Gazprom Energoholding make gas power units. Average Efficiency of Rated Capacity of power plants of the Holding, which makes about 45%, in general corresponds to an average on the market.


«The generating capacities of Gazprom Energoholding Group historically are in slightly best state concerning our colleagues on branch. Denis Fyodorov notes that it was a lot of investments. “In general we feel quite confident. Development of our stations grows. Economic results show growth. The main loading according to the DPM investment program is passed. Let’s reduce, whenever possible, debt loading and to increase payment of dividends if our shareholder Gazprom makes such a decision».

Following the results of 2016 Gazprom Energoholding expects receiving total net profit of 19.3 billion rubles. It is on 65% more than in 2015. Not least excellent financial results are the result of measures for increase of operational efficiency and optimization of expenses. Besides, the holding continues to modernize system of heat supply of Moscow. For the first time since 2007 PAO MOEK shows net profit.

PAO MOEK is the enterprise, which is extremely important for the capital region. It supplies consumers of Moscow and a number of the cities of the next Moscow area with heat and hot water. At the end of 2013 it started being integrated into Gazprom Group. Following the results of 2014 its loss exceeded 6.8 billion rubles and in 2015 — 0.65 billion rubles. It is expected that following the results of 2016 the enterprise will show net profit of 0.9 billion rubles.

New capacities

In 2017 Gazprom Energoholding started construction of the Grozny thermal power plant. The project is realized within the DPM program. It is planned to finish construction in 2019.

This year the festive event is planned to the meeting of shareholders of PAO Gazprom in St. Petersburg. It is devoted to commissioning of the new generating equipment at the 100 MW Central Heat Station TGC-1 (two installations on 50 MW) in the center of St. Petersburg, near the Obvodnoy Channel.

Besides, works outside the country are also conducted. PAO Tsentrenergoholding (100% JSC Gazprom Energoholding subsidiary) together with NIS J.S.C. Novi Sad which is included into Group PAO Gazprom Neft realizes construction project of power plant with a rated capacity up to 208 MW in the city of Panchevo (Serbia). The project purpose is to provide an oil refinery with electric and thermal energy (belongs to subsidiary of Gazprom Neft) and HIP Petrohemija plant. Now the land plot under building of object is chosen and prepared, pre-project documentation is developed. Following the results of consideration of final proposals of participants of the tender «Construction of combined heat and power plant in of Panchevo (Serbia)» the contest committee made a decision on definition of the winner and the conclusion of the EPC contract with Metka S.A (Greece). The beginning of construction of combined heat and power plant is planned for the second — the third quarter 2017. Commissioning is expected at the end of 2019.

At the moment Gazprom Energoholding studies construction projects of stations for objects of processing of PAO Gazprom. Among them is the Astrakhan GAS-Turbine Power Plant-Heat Station (for the Astrakhan Gas Processing Plant) and thermal power plant Force of Siberia (for the Amur Gas Processing Plant).