Actuality February 29, 2008

   The Russian government approved the general scheme of location of electric power objects by 2020. The final version turned out more loyal in relation to investors: it foresees the opportunity of option of fuel type which power plant will operate on. Analysts consider that as a result the position earlier lobbied by Gazrom will appear, in practice, more profitable for all market participants.

   As the director of electric energy department of the Ministry of Industry and Energy Vyacheslav Kravchenko told, the general scheme of location of electric power objects by 2020 is approved by the order of the government 215-R as of February, 22. According to the official, the primary aim of the document, which was prepared for about two years, is to show all energy objects of the federal level, their characteristics and terms of putting into operation. Taking into account that the consumption forecasts, as well as terms of putting objects into operation, can change, the general scheme will be corrected once every three years.

   According to Mr. Kravchenko, the general scheme foresees growth of demand for installed capacity from the current 215-220 GW up to 246 GW in 2010, 298 GW – in 2015, 347 GW – in 2020. Thus, the aggregate installed capacity of nuclear and coal power plants will increase twice. "If until now there was the sag towards the gas plants, now their stake in fuel balance will decrease", says Vyacheslav Kravchenko. As explained in the Ministry of Industry and Energy, by 2020 the gas stake in fuel balance should decrease from 68 to 56% at growth of coal stake from 25 to 40%. At the same time, the absolute volume of gas consumed by power energies should increase by 20%, coal volume – by 2,2 times. However, the market participants doubt these numbers. "It seems that in connection with tightening of environmental standards the stake of gas generation will be inevitably more", says the head of IES Holding Mikhail Slobodin. "Not always, especially in the European part of Russia, the realization of coal projects is effective".

   Mr. Kravchenko considers that the scheme approved by the government does not contain any fundamental changes in the field of construction of generation objects as compared to the version of spring the last year. Nevertheless, the scheme turned out more flexible in relation to investors, than it was assumed. "It is determined on what types of fuels will operate the specific power plants, but the invariability is foreseen everywhere. Judging by the economy, investor can use different types of fuels at his choice", says the official.

   In 2007 Gazprom that participated in preparation of the general scheme as supplier of fuel for power plants, already tried to make similar adjustments. Then the monopoly insisted on conversion of some power plants from gas into coal, and the Ministry of Industry and Energy consented. However, in RAO UES of Russia confirmed that there are still disagreements with Gazprom on the general scheme. "On the North-West there indeed were disagreements with Gazprom over a few objects, but the general scheme is approved and on account of it those who are engaged in this process will ground the investment program. "Gaprom will not avoid this also", Mr. Kravchenko assures. So, gas is chosen as the basic type of fuel for "controversial objects", to stop the peak load – fuel oil, specify in the Ministry of Industry and Energy.

   Analysts mark that Gazprom will scarcely oppose to "flexibility" of the general scheme. "If earlier the monopoly was interested in the greater release of gas volumes for its realization in Europe at high prices, so now the situation has changed", considers Dmitry Skvortsov, the analyst of Bank of Moscow. He explains it by liberalization of internal gas market that will result in the increase of monopoly profits in Russia, and also that Gazprom became the owner of approximately 30 Russian energy powers. "Moreover, to take decision about the choice fuel type by the investor the situation with coal could compel the authors of the general scheme: only for a few last months its price grew more than by 50%, and construction of coal TPP costs 50% more than gas ones", adds Mr. Skvortsov.

   But the director of Energy Expansion Fund Sergey Pikin considers that in the future the stake of coal generation will still grow. "The task of Gazprom – is to optimize the consumption of gas on its power plants: more than half of generation powers of its joint ventures and Siberian Coal Energy Company (SUEK) operate on coal, and their increase is advantageous for both parties", Mr. Pikin says. According to his opinion, the choice of fuel type is the right decision, because the power plants have their owners and are not the objects of the state regulation. Dmitry Skvortsov marks that new position of the general scheme is positive for investors, but is scarcely able to promote strongly the attractiveness of unsold energy assets of RAO UES.