Improving approaches to attracting private investment in off-grid generation in Russian Eastern and Arctic territories

• Main Authors: Gulidov, Ruslan, Kopylov, Anatoliy, Vikhansky, Alexander
• Format: Conference Proceeding
• Language: English
• Subjects: Electricity generation; Energy costs; Financing; Grid generation (mathematics); Modernization; Power plants; Subnational government
• ISSN: 0094-243X; 1551-7616
• DOI: 10.1063/5.0111527

A distinctive feature of the Russian Far East energy supply is the vast decentralized zone, also known as isolated and remote areas (IRAs). The power supply of these territories is carried out mainly by diesel power plants, which are characterized by low efficiency. The purpose of this work is to determine the institutional conditions in the retail electricity markets of IRAs that contribute to reducing the cost of electricity for end-users and the burden on budgets. Based on a survey and interviews conducted, the estimates of the present funding scheme of the electricity generation modernization in IRAs were obtained. Preferred measures of state support to stimulate the implementation of generation modernization projects in IRAs have been identified. It is shown that the current practice of implementing these projects is characterized by low efficiency. The author's mechanism for attracting financing for the modernization of IRAs generation projects is proposed. It is based on a set of principles such as the competitive character of the project selection for the modernization and replacement of equipment in IRAs (the minimum price criterion, the new price is lower than the current tariff); technologically neutral competitive selection by regional government; participation of only legal entities that are ready to ensure the financial security of the project. The methodology proposed by the authors will make it possible to stop the current reproduction of growth in electricity costs for the population and governmental subsidies for electricity generation in IRAs.