Russian energy sector forecasting. - ERI RAS · 2018. 11. 26. · Russian energy sector forecasting. ERI-ENEL meeting Moscow, February 18, 2014 ... «SCANER» is a tool for the system

LOGO

Russian energy sector forecasting.

ERI-ENEL meeting

Moscow, February 18, 2014

Energy Research Institute

Russian Academy of Sciences

LOGO

2

ERI RAS – experience in system energy studies

Energy Research Institute RAS

Energy Research Institute of the Russian Academy of Sciences (ERI RAS) was

established in 1985 for the fundamental studies in the area of national energy

policy development and implementation:

state level - methodological, modeling and analytical support for the energy

policy priorities and implementation mechanisms (incl. macroeconomic,

technological, pricing, environmental and other aspects), quantitative

elaboration of the economy and energy sector scenarios in the context of

Energy Strategy

Ministry of Energy, Ministry of Economic Development, Ministry of Natural

Resources, Federal Antimonopoly Service

corporate level – capacity building, modeling and information support of the

strategic planning system of leading energy companies, justification of

investment and market policy under the energy markets transformation

processes

Gazprom, Gazexport, NovaTEK, Mezhregiongas, Wintershall, Roneft, TNK-

ВР, SUEK, RAO EES Rossii, SO-UPS, Rosenergoatom, Fortum,

Gazenergoholding

LOGO

3Energy Research Institute RAS

1. Addition and revision of the USSR ENERGY PROGRAM – 1986-1989

2. Integrated USSR SCIENTIFIC AND TECHNICAL PROGRESS PROGRAM – 1985-1989

3. CONCEPT OF RUSSIAN ENERGY POLICY under the new economic conditions – RF Government resolution 10.09.1992 №26.

4. ENERGY STRATEGY of Russia – RF Government resolution 13.10.1995 №1006.

5. ENERGY STRATEGY of Russia to 2020 - RF Government resolution 28.09.2003 №1234-р.6. ENERGY STRATEGY of Russia to 2030 – RF Government resolution 13.11.2009 № 1715-р. 7. New revision of Russian ENERGY STRATEGY TO 2035 – under development,

2013-2014

ERI RAS – experience in system energy studies

8. Reform of the Russian ELECTRIC POWER SECTOR. World Bank-RF Ministry of economy –RF President decree 28.04.1997 № 426.

9. Reform of GAS DISTRIBUTION sector in Russian Federation. World Bank – RF Ministry of fuel and energy – 1999-2001

10. GENERAL PLAN for power sector development and distribution to 2020 - RF Government resolution от 22.02.2008 г. 215-р.

11. GENERAL PLAN for power sector development and distribution to 2020 and for 2030 prospect – RF Government protocol 3.06.2010

12. Russian power sector modernization program to 2020 – will be considered by RF Government 27.09.2012

13. GLOBAL AND RUSSIAN ENERGY OUTLOOK to 2035 – yearly forecast since 2012

LOGO

4

Actual problems of the energy sector forecasting


At present the understanding and proper accounting of the diversity and

dynamics of internal and external relationships of energy industries

became more and more important and complicated

global energy markets

macroeconomic trends and solvent demand

new technologies in energy sector and energy consumption

energy balances

domestic energy markets: competition and regulation

financial balances of energy companies and investment resources

long-term (after-) effects from implementation of investment decisions

in energy sector

environmental and social externalities

LOGO

5

Key actors at the energy markets must have their own strategic

vision of the through the modeling of “energy future”


National

Energy

Modeling

System

GEM +

PRIMES

SCANER

System for

Analysis of

Global

Energy Markets Times

Integrated

Assessment

Model

LOGO

6

SCANER – multi-functional system of models for the investigation

of the global and Russian energy sector development


«SCANER» is a tool for the system analysis of the

Russian energy sector development for the mid-

and long-term prospects (to 2030-50) as an

important part of national economy and global

energy markets. Integrating the powerful modeling

and informational resources, SCANER provides:

Unique informational support to the analysis and

forecasts (regularly updated databases on the

national and regional economy, energy sector,

energy balances and markets)

Multi-level co-ordination system of energy

forecasts focused on the formulation of rational

variants of the economy, energy sector and energy

companies’ development

Huge flexibility and fast adaptation of the

models and their calculation modes under the

separate forecasting requirements

RU&EN versions are available at www.eriras.ru

LOGO

7

Forecast of the financial feasibility by energy

industries and companies

Parameters of the global economy and energy sector

development scenarios

Parameters of the Russian economy and

energy sector development scenarios

Forecast of global energy

markets development and

regulation environment

Formulation of integrated

target parameters for the

economy and energy sector

development

National and regional

forecast of the economic and

technological development

National and regional fuel

and energy demand forecast

with estimation of energy

saving and efficiency

improvements

Estimation of

resources and

reserves for

fuel supply

industries

Forecast of

energy demand

and prices by

countries

Power sectorOil and gas

sectorCoal sector

Forecast of production and financial programs

by energy industries

Forecasted investment

programs by energy

industries and

companies

Domestic fuel and energy

prices’ forecast


energy balances

Estimation of

priorities for

new

technologies

Estimation of the

impact of pricing

and investment

policy in energy

sector on the

economy

Recommendations

for the national

energy policy

improvements

SCANER – multi-level co-ordination of energy forecasts


At the global level –

co-ordination of the export capabilities of

Russian energy industries with global

energy markets trends (on the basis of

energy resources’ supply/demand

balances by regions and countries)

At the economy level –co-ordination of national and regional


development forecasts in terms of

domestic energy demand, fuel and

energy prices, taxes, investments (on

the basis of input-output and financial

balances)

LOGO

8

Forecast of the financial feasibility by energy

industries and companies

Parameters of the global economy and energy sector

development scenarios

Parameters of the Russian economy and

energy sector development scenarios

Forecast of global energy

markets development and

regulation environment

Formulation of integrated

target parameters for the


development


forecast of the economic and

technological development

National and regional fuel

and energy demand forecast

with estimation of energy

saving and efficiency

improvements

Estimation of

resources and

reserves for

fuel supply

industries

Forecast of

energy demand

and prices by

countries

Power sectorOil and gas

sectorCoal sector

Forecast of production and financial programs

by energy industries

Forecasted investment

programs by energy

industries and

companies

Domestic fuel and energy

prices’ forecast


energy balances

Estimation of

priorities for

new

technologies

Estimation of the

impact of pricing

and investment

policy in energy

sector on the

economy

Recommendations

for the national

energy policy

improvements

SCANER – multi-level co-ordination of energy forecasts


At the energy sector level –

co-ordination of the power sector and

fuel supply industries development

forecasts (on the basis of national and

regional energy balances)

At the energy industry level –

co-ordination of the production and

investment programs with financial stability

requirements for the industries and separate

energy companies (on the basis of financial

balances)

LOGO

9


Russian energy sector to 2050.

Economy and energy demand growth

0

50

100

150

200

250

300

350

400

2010 2015 2020 2025 2030 2035 2040 2045 2050

0

50

100

150

200

250

300

350

400

Total primary energy consumption (% to 2010)

Electricity demand (% to 2010)

GDP (% to 2010)

Innovative scenario of the Russian economy assumes 2,5 times GDP growth to 2035 and 4 times to

2050. External and internal threatens may slow this growth at 20-25% (2 times to 2035 and 2,9 to 2050)

Energy efficiency decrease twice to 2035 and 3 times to 2050 and will suppress domestic energy

growth at 22-27% to 2035 and 29-37% to 2050. Electricity consumption will rise faster (at 43-54% to

2035 and in 1,7-2 times to 2050) due to the increased substitution of other energy carriers

LOGO

10



The role of energy sector

0

1000

2000

3000

4000

5000

6000

2010 2015 2020 2025 2030 2035 2040 2045 2050

Energy sector Resources (excl fuels)Manufacturing InfrastructureServices

GDP by sectors, $ 2010 bln

Energy sector will not remain the key driver of the

economic growth but it will play the infrastructural

role stimulating the development of other sectors

providing secure energy supply at prices that

ensure the global competitiveness as well as

create the domestic market for innovations. Its

share in GDP will decrease from 29% in 2010 to

17% in 2035 and 13% in 2050

Domestic and export demand of

energy resources, Mtoe

0

500

1000

1500

2000

2500

2010 2015 2020 2025 2030 2035 2040 2045 2050

Power plants and boilers Other domestic Export

Stabilization of energy export since 2030 will

decrease its share from 50% of total energy

production to ~45% to 2035 and to ~40% to 2050.

Power plants and boilers will remain the greatest

and increasing domestic consumer that will require

27-29% of produced energy resources in 2035 and

32% in 2050

LOGO

11



Resource mix and effect on GHG emissions

0

200

400

600

800

1000

1200

1400

2010 2015 2020 2025 2030 2035 2040 2045 2050

gas liquid fuels solid fuels hydro nuclear renewables

Domestic primary energy consumption, Mtoe

Natural gas will remain the key energy resource providing 51-53% of TPEC to 2035 and 45-46% to 2050;

liquid fuel will stabilize at 18-19% to 2035 and decrease to 13-14 to 2050. The total share of non-carbon

resources will increase from 13% to 15-16% to 2035 and 24% mainly by the nuclear power. GHG

emissions will continue to grow up to 2035 (although will remain 12-15% lower 1990) and begin to

decrease in the next 15 years.

Energy-related GHG emissions, mln t CO2

0

500

1000

1500

2000

2500

3000

19902010 2015 2020 2025 2030 2035 2040 2045 2050

Power sector and boilers Industry

Transport Public and households

Other

LOGO

12


0

100

200

300

400

500

600

700

800

900

1000

2006

-10

2011

-15

2016

-20

2021

-25

2026

-30

2031

-35

2036

-40

2041

-45

2046

-50

Oil Gas Coal

Power sector Heating sector Energy saving

Capital requirements, $ 2010 bln

Increase of production capacities

together with wide-scale modernization

of existing energy production and

transportation infrastructure already

resulted to the growth of capital needs

Capital requirements in energy sector

will increase 1,5-2 times to 2035. More

than 60% of all energy-related

investments will be concentrated in the

gas and oil industries

Energy infrastructure will maintain

decreasing but still high investment

pressure in the Russian economy - 6%

of GDP in the short-term, 4% near 2035

and 3% near 2050.


Investment requirements

LOGO

13



Gas sector development

0

200

400

600

800

1000

2010 2015 2020 2025 2030 2035 2040 2045 2050

East Siberia Far East

Nadym-Pur-Taz New in Tymen region

Yamal, Gydan Shtokman

Other regions

Gas production will stable after 2035 reaching the limit of traditional resources. Impact of existing

Tyumen areas will be twice lower with the increase of production at the Far East, Yamal, East Siberia.

Gas export will stabilize after 2035 at 320-360 bcm. Export routes will be more diversifies and LNG

supplies will reach up to 22-30%. Demand of the domestic power sector will increase at ~20% also will

stabilized at 250-260 bcm since 2035

Gas production, bln cubic meters Domestic gas consumption, bln cubic meters

0

100

200

300

400

500

600

2010 2015 2020 2025 2030 2035 2040 2045 2050

Power plants Boilers

Technologies Raw materials

Transportation Public services and households

LOGO

14



Power sector development

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2010 2015 2020 2025 2030 2035 2040 2045 2050

Hydro Nuclear Renewable Thermal CPP Thermal CHP

0

100

200

300

400

500

600

700

2010 2015 2020 2025 2030 2035 2040 2045 2050

gas liquid fuels solid fuels nuclear hydro renewables

Electricity production, TWh Primary energy consumption by power plants, Mtoe

Power sector will remain the main area of inter-fuel (resources) competition increasing the share of non-

carbon generation from 33% to 36-39% to 2035 and 38-50% to 2050. Nuclear plants will generate 1,7-2,2

times higher in 2035 and 2,2-4 times in 2050. RES will play a marginal role (2% in 2035 and 3,6-5% in

2050). Nuclear and RES generation together with the efficiency improvements in gas generation will

decrease existing 50% gas share in power sector resource mix (47-48% to 2035 and 46-38% to 2050)

LOGO

15


Russian power sector.

How to create the strong bridges to the future

State level of

strategic planning

ENERGY

STRATEGY

GENERAL PLAN

for power sector

development and

distribution

Long-term economy

forecast

Corporate level of

planning of existing

and new actors

(GenCos, GridCos

Consumers, IPPs)

Corporate strategy

Feasibility studies

Financial plans

Implementation mechanisms

• general legislation

• market rules and antimonopoly control

• technical regulation and control

• environmental regulation and control

• competitive pricing mechanisms

• tariff regulation area and methods

• direct and indirect financial support

The key problem – is to find the most effective mix of administrative and economic

implementation mechanisms balancing the economy-driven priorities of the power

sector development formulated at the state level with the business-driven priorities

in the corporate strategies. At this, quantification of the effects, estimation of the

consequences becomes inevitably required

LOGO

16



Prospects and problems. Nuclear power

Intensified development of nuclear sector will double the capacity of nuclear plants from 2025 to 2050. It

will increase the investments by 50%, creating the increasing domestic market for innovations and

providing 3-4 times higher cumulative effects in the economy. But nuclear plants are still expensive and

will competitive with gas and coal generation under the lower cost of capital or with carbon costs (at least

$15/t)

200

250

300

350

400

450

2010 2015 2020 2025 2030 2035 2040 2045 2050

ГВт

Годы

Инновационный

Атомный

-25

0

25

50

75

100

2010 2015 2020 2025 2030 2035 2040 2045 2050

ГВт

Годы

Инновационный

Атомный

Демонтаж

б)а)Total installed capacity, GW

Innovative

Nuclear-based

Innovative

Nuclear-based

Innovative

Nuclear-based

Decommissioning of NPP

Capacity of nuclear plants, GW

LOGO

17



Prospects and problems. Smart “bottom-up” retail competition

Active consumers/prosumers/distributed generators will form new competitive conditions for the traditional

generation and grid suppliers. Smart grid approach provides opportunities to create the real competitive

environment at the retail level and efficient alternative to the traditional supply of final consumers.

Pilot projects are required to test technical and market solutions as well as to make proper

changes in legislation, forming technical and economic regulation basis for new market area.

Active

consumer

(Prosumer)

Electricity market

Ancillary

services market

Grid companies

Additional supply of

frequency and voltage

regulation services

Reliable operation in an

‘islanding’ mode during

system accidents

Additional supply of generating

capacities to the market

Reduction capacity

requirements due to lower

peak demand

Impact on the optimization

of grid operation modes and

T&D capacity loads

Elasticity of grid services

demand

Controlled electric loads

• industrial machines and facilities

• lighting/heating/cooling

• household appliances

Distributed generating

sources

• co-generation

• small and micro turbines

• RES plants

Electricity storage

technoligies

Active

consumer

(Prosumer)

Electricity market

Ancillary

services market

Grid companies

Additional supply of

frequency and voltage

regulation services

Reliable operation in an

‘islanding’ mode during

system accidents

Additional supply of generating

capacities to the market

Reduction capacity

requirements due to lower

peak demand

Impact on the optimization

of grid operation modes and

T&D capacity loads

Elasticity of grid services

demand

Controlled electric loads

• industrial machines and facilities

• lighting/heating/cooling

• household appliances

Distributed generating

sources

• co-generation

• small and micro turbines

• RES plants

Electricity storage

technoligies

LOGO

18



Prospects and problems. Lack of signals for investments

Required and planned decommissioning of existing

thermal plants to 2020, GW

-80

-70

-60

-50

-40

-30

-20

-10

0

Retirement

age (in 2011)

Retirement

age (in 2020)

Proposed by

the Program

of

Modernization

to 2020

Proposed by

the

companies to

2020

coal-fired

gas-fired

Capacity additions, GW

0

2000

4000

6000

8000

10000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Thermal plants

Total

The market reform was not focused on the

investments and long-term options. As a

result, regulated approach to the investment

decisions (DPM) led to the overinvestment

and excessive price pressure to the

consumer.

Post-DPM future is a grey area. The market-

driven mechanisms are required to maintain

the investment activity and implement the

Energy Strategy declarations concerning the

power sector modernization.

LOGO

19



Prospects and problems. Lack of signals for investments

Приведеная стоимость типовых решений по газовым ТЭС и АЭС в 1 ЦЗ,

коп. 12 г./кВтч

0 50 100 150 200 250 300 350

АЭС

новая ПГУ

замена на ПГУ

продление ПСУ

цена ОРЭМ 1 ЦЗ (2020)

новая ПГУ

замена на ПГУ

продление ПСУ

цена ОРЭМ 1 ЦЗ (2012) затраты на топливо

постоянные затраты

возврат капитала

по прогнозу МЭР РФ

рост цены газа за

2012-2020 в реальном

выражении не выше

50%

Fuel costs

Fixed O&M costs

Capital-related costs

Wholesale price (2012)

Life extension Steam Gas

Substitution to CCGT

New CCGT

Wholesale price (2020)

Life extension Steam Gas

Substitution to CCGT

New CCGT

New Nuclear

Generation costs of projects for gas-fired and nuclear plants in comparison with the wholesale

market price (RSV+KOM) in 2012 and 2020 (kop 12/kWh

Even based on the 2012 gas price

forecast, the generation costs of

any investment decisions in the

European Russia are higher than

wholesale prices under existing

competitive mechanisms (RSV and

KOM)

LOGO

20


Key uncertainty at the wholesale level is the future of capacity payments:

Scenario 1 – centralized common competitive bidding and optimization procedure for existing and new capacities with unified marginal pricing

Scenario 2 (final state under the current Market Rules) – separate competitive bidding and optimization procedure for existing and new capacities (+ consumers with active load or DG and grid projects for congestions etc.). Marginal pricing for existing capacities only, new capacities obtain their bid price or cap (RAB-based)

Scenario 3 – decentralized (what-term?) market based on the bilateral contracts with centralized balancing (peak) capacity market

Risks of double

marginal pricing and

excess revenues for

the existing capacities

Risks of inadequate (by

time and price) signals for

investments

Key criterion – price for

the consumer at required

reliability level


Prospects and problems. The prices/investments balance

LOGO

21




0

20

40

60

80

100

120

140

160

2008 2009 2010 2011 2012

Generation average

OGK

TGK

Hydro

Nuclear

T&D average

Transmission

Distribution

Profitability pattern by types of generation

and grid

0

5

10

15

20

25

2001 2003 2005 2007 2009 2011 2013

Russia USA Germany EU-27

Electricity prices for industry, cent/kWh

LOGO

22




-300

-250

-200

-150

-100

-50

0

50

100

2014 2015 2016 2017 2018 2019 2020

- Cap for profitability of

Distribution services

based on revenue

requirement


Transmission services

based on revenue

requirement


Nuclear based on

revenue requirement


Hydro based on revenue

requirement

- Impact of modernization

on the spot (RSV)

electricity prices

+ Additional revenue

requirements for

modernization of thermal

generation

Analysis of additional costs and potential savings

for consumers with complex changes of the market

and regulation rules (Roubles billion)

LOGO

23

Energy Research Institute of RASwww.eriras.ru

[email protected]

http://www.eriras.ru/

mailto:[email protected]

Documents

Russian energy sector forecasting. - ERI RAS · 2018. 11. 26. · Russian energy sector forecasting. ERI-ENEL meeting Moscow, February 18, 2014 ... «SCANER» is a tool for the system