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OVERVIEW - Only big players join Russia's solar-dominated tender

Solar panels. Author: John S. Quarterman. License: Creative Commons, Attribution 2.0 Generic.

January 27 (SeeNews) - Amid the troubles of Russian currency, the ruble, only big names have participated in Russia’s 365-MW renewable energy tender last year, with Finland’s Fortum being the only new player in competition.

In extended procurement, lasting from mid-December to mid-January, state support-guaranteed renewable energy capacity was contracted with completion planned for 2016-2019.

“Fortum decided to join the tender, because it believes that the right moment for such an investment has come, i.e. that the project can be viable,” Denis Litoshik, Communications and PR Director of Fortum's Russia Division, told SeeNews.

Fortum was the only bidder for wind and was successful in its bid for 35 MW of capacity. “The value of the investment is approximately EUR 65 million [USD 70.5m]. The wind farm is expected to start production in 2017, serving the city of Ulyanovsk and its vicinities,” Litoshik said.

THE TENDER

Bidders competed for 365 MW of total capacity. Most of the applications, 20, were for solar energy, two for hydro generation, and Fortum's was the only project harnessing Russian wind. The lack of interest in the latter two technologies can be explained by Russia’s new obligation to ensure 70% local content from 2017. Most hydro and wind power developers say the requirement is too high to meet.

Over the next four years, the tender winners are expected to invest RUB 48 billion (USD 597m/EUR 550m) into renewables in Russia. For the selected projects, Russian Government guarantees a 15-year payback period, with 14% rate-of-return for projects commissioned before 2017, and 12% for renewable facilities launched after 2017.

THE WORRY

Most of the participants are worried about the ruble’s dismal performance, as a result of tensions with the West, so they participated in the tender with smaller-than-usual capacities. Addressing the bidders’ concerns, Russia’s power market trading system administrator (ATS) asked the Russian government to adjust the auction’s terms.

With the tender already in progress, participants were allowed to make the necessary adjustments to their projects between December 7 and December 15. Participating companies are anxious to mitigate the higher costs of imported equipment to Russia while the ruble is weak. Using more local content is one option to do that.

THE WINNERS

Solar projects of 280 MW emerged as winners in the tender. T Plus, part of asset management group Renova, bid for 135 MW of solar capacity for the period 2016-2020 and won it all. The firm will add to its 25-MW Orsk solar park in Orenburg region another three solar power plants of 24 MW, 30 MW and 60 MW.

Avelar Solar Technology, a subsidiary of Hevel Solar, which in turn is a unit of Renova and nanotechnology firm Rosnano, won 95 MW. This includes 10 MW to be built in 2016, and an 85-MW solar plant to be erected by 2019.

After being awarded 175 MW of solar capacity in the previous tender, Solar Systems now got only 50 MW, to be completed by 2018.

On the hydropower front, Nord Gidro-Belyj Porog will be building two small hydro power dams in the republic of Karelia, each of 25 MW.

(RUB 100 = USD 1.243/EUR 1.147)

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Linas Jegelevicius is editor of a regional newspaper in Lithuania, author of three books and an active freelance journalist. Apart from the domestic market, he is also following the energy developments in all Baltic states and Russia.

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