The Russian Federation power market is expected to grow at a CAGR of more than 1% in the forecast period of 2020 - 2025. With a growing population, the demand for power is increasing tremendously. Adding to this, factors such as rapid urbanization, technical advancement, and industrialization is increasing the demand for electricity. With the acceptance of renewable energy sources, a robust grid development is required, which is expanding the distribution and transmission sector of the power market. On the other hand, the high initial investment required for the grid development and installation of renewable sources is very high which can hinder the growth of the market in the forecast period.
- The thermal power generation is expected to dominate the power generation in the country, in 2019. With vast reserves of oil and natural gas, the share of hydrocarbons, especially natural gas, is increasing in power generation of the Russian Federation, whereas a decline in usage of coal has been observed, till 2019.
- With 36 successfully operating nuclear reactors, in 2019, Russia is one of the significant leaders in nuclear power generation. Nuclear power generated more than 18% of total electricity, in 2018, holding a substantial share in clean energy.
- Although, in 2018, the renewable energy generation has a very minimal share in net power generation of the Russian Federation, renewables are expected to show robust growth in the forecast period.
Key Market Trends
Thermal Power Generation a Major Source of Energy
- Power generation uses a variety of sources ranging from fossil fuels like coal and oil to renewable sources like wind and solar. The energy mix for electricity generation is dominated by fossil fuels like coal, oil, and natural gas, with the three constituting over 75% of the global energy mix.
- The power generation mix is heavily skewed toward natural gas with a significant contribution because of cheaper domestic fuel availability and vast reserves present in Russia itself. Its share in the mix has increased over the years due to constraints in adding other conventional generation sources—hydro, solar, and oil.
- With the second-largest coal reserves globally, Russia is accounting for approximately 12% of the world's thermal coal trade. Although coal share has increased slightly from 2017 to 2018, the government is planning to reduce the share in the forecast period.
- The dynamic power market of the Russian Federation is going to reduce oil share gradually, but natural gas and oil with vast reserves will remain the primary energy source in the forecast period.
Renewables and Nuclear to Increase Significantly in the Forecast Period
- With a target share of 4.5% in total electricity from renewables by 2024, Russia is planning to shift towards renewables. Under the Russian Energy Strategy, Russia had planned to install 25 GW of renewable energy by 2030.
- With 5% of the global nuclear market and 8% of the world production of natural uranium, Nuclear Energy is one of the significant sources of power in Russia contributing 18% of electricity in 2018 and is expected to grow further in the forecast period.
- In 2019, Rosatom nuclear agency successfully developed Akademik Lomonosov Nuclear Plant, the world's first floating nuclear plant with two reactors with a capacity of 35 MW for each. The plant can supply power to 1,00,000 people and nearby oil platforms.
- With less than 200 MW of wind energy, Russia is lagging in the Renewable market, but with more than 400 MW under construction of wind farms in 2019, significant growth is expected in the forecast period reaching more than 3000 MW, by 2025.
- Russia is highly dependent on its hydrocarbon reserves for energy requirement, which is an additional factor apart from the massive cost involved in the development of renewable energy sources. Bold steps and policies are expected to be taken with the upcoming Energy Strategy for 2030 in implementation.
The Russian Federation power market is moderately fragmented. The major companies include RusHydro PJSC ADR, Rosatom Corp., Gazprom PJSC, Rosseti PJSC, Inter RAO UES PJSC, and others.
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