Russia approves launch of $29bn plan to modernise power plants

25 January 2019 (Last Updated January 27th, 2019 13:48)

Russia has given its approval to begin the RUR1.9tn ($29bn) modernisation plan for its domestic power facilities.

Russia approves launch of $29bn plan to modernise power plants
The upgrade programme will involve the selected company to replace turbines and boilers. Credit: Matt Artz on Unsplash.

Russia has given its approval to begin the RUR1.9tn ($29bn) modernisation plan for its domestic power facilities.

Power is considered to be a highly competitive sector in the country with presence of state players, private investors and overseas companies such as Italy’s Enel and Finland’s Fortum, reported Reuters.

Under the 2022-2031 modernisation plan, the country plans to upgrade 41GW, which is a sixth of its existing generation capacity.

Investors will have to bid to participate in the upgrade programmes. Once selected, they will be granted 16-year agreements with customers who commit to paying higher prices to access power generation capacity.

Russia now requires investors to make use of domestically produced equipment under the upgrade programme.

The programme requires the selected company to replace turbines, boilers and steam-power units.

Reuters reported that using locally developed equipment may be a challenge for the selected companies.

“Russia expects the modernisation plan to serve as a catalyst for local producers and subsidiaries of overseas firms to create local versions of the power equipment available.”

Russia commenced construction of two power stations in Crimea for power supply to the peninsula, which it annexed from Ukraine in 2014. However, in the conflict with Ukraine, these stations were caught up in a row over Western sanctions.

Siemens alleged that Moscow had secretly supplied many of its turbines to Crimea, even as sanctions were in place banning power transfer technology to the peninsula.

In December, the engineering firm responsible for the construction of these facilities had sought the full launch date to be pushed back until the second quarter of this year. This is due to subcontractor and equipment supply issues.

Russia expects the modernisation plan to serve as a catalyst for local producers and subsidiaries of overseas firms to create local versions of the power equipment available on the global market as this will reduce the country’s dependence on Western suppliers.