System approach to the Russian energy sector forecasting. · of the global and Russian energy sector development Energy Research Institute RAS «SCANER» is a tool for the system

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System approach to the Russian energysector forecasting.

Alexei MakarovFedor Veselov

RAS-IIASA meeting

Moscow, September 10, 2012

Energy Research InstituteRussian Academy of Sciences

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ERI RAS – experience in system energy studies

Energy Research Institute RAS

Energy Research Institute of the Russian Academy of Sciences (ERI RAS) wasestablished in 1985 for the fundamental studies in the area of national energypolicy development and implementation:

üstate level - methodological, modeling and analytical support for the energypolicy priorities and implementation mechanisms (incl. macroeconomic,technological, pricing, environmental and other aspects), quantitativeelaboration of the economy and energy sector scenarios in the context ofEnergy Strategy

v Ministry of Energy, Ministry of economic development, Ministry of naturalresources, Federal Antimonopoly Service

ücorporate level – capacity building, modeling and information support of thestrategic planning system of leading energy companies, justification ofinvestment and market policy under the energy markets transformationprocesses

v Gazprom, Gazexport, NovaTEK, Mezhregiongas, Wintershall, Roneft, TNK-ВР, SUEK, RAO EES Rossii, Rosenergoatom, Fortum

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3Energy Research Institute RAS

1. Addition and revision of the USSR ENERGY PROGRAM – 1986-19892. Integrated USSR SCIENTIFIC AND TECHNICAL PROGRESS PROGRAM – 1985-

19893. 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.

ERI RAS – experience in system energy studies

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

8. Reform of GAS DISTRIBUTION sector in Russian Federation. World Bank – RFMinistry of fuel and energy – 1999-2001

9. GENERAL PLAN for power sector development and distribution to 2020 - RFGovernment resolution от 22.02.2008 г. 215-р.

10. GENERAL PLAN for power sector development and distribution to 2020 and for2030 prospect – RF Government protocol 3.06.2010

11. Russian power sector modernization program to 2020 – will be considered byRF Government 27.09.2012

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Actual problems of the energy sector forecasting


At present the understanding and proper accounting of the diversity anddynamics of internal and external relationships of energy industriesbecame more and more important and complicated

üglobal energy markets

ümacroeconomic trends and solvent demand

ünew technologies in energy sector and energy consumption

üenergy balances

üdomestic energy markets: competition and regulation

üfinancial balances of energy companies and investment resources

ülong-term (after-) effects from implementation of investment decisionsin energy sector

üenvironmental and social externalities

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SCANER – multi-functional system of models for the investigationof the global and Russian energy sector development


«SCANER» is a tool for the system analysis of theRussian energy sector development for the mid-and long-term prospects (to 2030-50) as animportant part of national economy and globalenergy markets. Integrating the powerful modelingand informational resources, SCANER provides:

üUnique informational support to the analysis andforecasts (regularly updated databases on thenational and regional economy, energy sector,energy balances and markets)

üMulti-level co-ordination system of energyforecasts focused on the formulation of rationalvariants of the economy, energy sector and energycompanies’ development

üHuge flexibility and fast adaptation of the modelsand their calculation modes under the separateforecasting requirements

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

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Forecast of the financial feasibility by energyindustries and companies


Parameters of the global economy and energy sectordevelopment scenarios


Parameters of the Russian economy andenergy sector development scenarios


Forecast of global energymarkets development and

regulation environment



Formulation of integratedtarget parameters for the

economy and energy sectordevelopment



National and regionalforecast of the economic andtechnological development


National and regional fueland energy demand forecast

with estimation of energysaving and efficiency

improvements



improvements

Estimation ofresources andreserves forfuel supplyindustries


Forecast ofenergy demandand prices by

countries


countries

Power sectorPower sector Oil and gassector

Oil and gassector Coal sectorCoal sector

Forecast of production and financial programsby energy industries


Forecasted investmentprograms by energy

industries andcompanies



Domestic fuel and energyprices’ forecast


National and regionalenergy balances


Estimation ofpriorities for

newtechnologies


newtechnologies

Estimation of theimpact of pricingand investmentpolicy in energy

sector on theeconomy



Recommendationsfor the nationalenergy policyimprovements


SCANER – multi-level co-ordination of energy forecasts


At the global level –co-ordination of the export capabilities

of Russian energy industries with globalenergy markets trends (on the basis of

energy resources’ supply/demandbalances by regions and countries)

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improvements



improvements




countries


countries














newtechnologies


newtechnologies









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

economy and energy sectordevelopment forecasts in terms ofdomestic energy demand, fuel and

energy prices, taxes, investments (onthe basis of input-output and financial

balances)

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improvements



improvements




countries


countries














newtechnologies


newtechnologies









At the energy sector level –co-ordination of the power sector and

fuel supply industries developmentforecasts (on the basis of national and

regional energy balances)

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improvements



improvements




countries


countries














newtechnologies


newtechnologies









At the energy industry level –co-ordination of the production andinvestment programs with financial

stability requirements for the industriesand separate energy companies (on the

basis of financial balances)

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Gas (natural and accompanying gas)Oil, incl. gas condensateGasolineDiesel fuelFuel oilRefinery gasLPGOther oil productsCoal – totalCokeGas cokeOther solid fuel and waste (wood, peat, shale and solidwaste)Other secondary (coke oven gas, other gases frommetallurgy and other gaseous and liquid waste of energyproduction and processingи)Nuclear powerHydropowerOther renewable resources (solar, wind and geothermalenergy)Secondary heat resourcesElectricityCentralized heat

RESO

UR

CES

Indigenous ProductionImportExportIntl. Marine BunkersStock ChangesStatistical differencesTotal Primary Energy Supply

PRO

CE

SSING

Gas WorksOil RefineriesStabilization of oil and gas condensateCoal transformationCoke ovensPower plants – totalSmall and distributed generation – totalBoilersOther heat plantsOwn use and losses in energy resources produstionOwn use and losses in energy resources processingOwn use and losses in energy resources T&DSecondary energy carriers production – totalConsumption for energy resources processing – totalFIN

AL C

ON

SUM

PTION

Minerals production (С)Manufacturing (D)Constuction (F)Agriculture and forestry (А)Transportation and communication (I)Other types of economic activityResidentalRaw materials and non-fuel useTotal

Final form of the energy balance contains all data about production-processing-transportation-final consumption chain for 19 energy carriers

System of the integrated energy balance forming


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ERI RAS/REA outlook 2012Global energy markets – looking from Russia with your own eyes

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The primary energy consumption in developing Asia will amount to about 65% (5 billion toe) ofthe increase of the world consumption in 2010-2035, that will be equal at the 7.6 billion toe

It will affect on the main energy export routes in the world. By 2035 net import of oil, gas andcoal in the North America will be lower at 50%, but European net import will increase at near50%. Developing Asia will double net import.

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The growth of CO2 emissions will continue and itwill be driven by the developing countries (mainlyin Asia). Although developed countries will be ableto stabilize or even reduce their own emissions, itwill not change the global trend

Fossil fuels and hydrocarbons will remaindominate in the global energy mix, although RESwill grow intensively


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Developing countries will form the mainincrease of gas demand

Except Europe, all regions will increasegas production and by 2035unconventional gas will amount to 10% ofglobal supply.


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Russian energy sector outlook.Economy and energy demand growth and structure

02040

6080

100120140

160180200220240

260280300

1990 1995 2000 2005 2010 2015 2020 2025 20300

20

40

60

80

100

120

140

160

180

200

220

240

260

280

Энергопотребление (% к 1990)Электропотребление (% к 1990)ВВП (% к 1990)

0

200

400

600

800

1000

2005 2010 2015 2020 2025 2030

power plants boilers industry

raw materials transport residental

0

200

400

600

800

1000

2005 2010 2015 2020 2025 2030Center N.West South N.Caucasus

Volga Ural Siberia Far East

Multi-linear optimization models provides detailedforecast of Russian economy development by sectorsand regions and forma the strong basis for the energydemand projections

To 2030 GDP may increase in 2.1-2.5 times (to 1990).Efficiency improvements will limit energy demandgrowth within 0.9-1.1 to 1990. Power plants willremain to consume near 50% of energy resources.

Total primary energy consumption bysectors of economy, Mtoe

Total primary energy consumption byregions, Mtoe

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Russian energy sector outlook.Approach to the energy supply and demand balances

The forecast for each energy industry provides the consistencybetween the investment and production plans and financial resourcesand requirements of separate energy companies taking into accountevolution of market rules and pricing mechanisms

EPOS model is used forjoint optimization of theregional gas, coal,electricity and centralizedheat balances thatprovides the consistencyof the key energyindustries’ development.

At this, optimizationallows to obtain thesystem of equilibriumwholesale energy pricesby the regions of Russiaon the basis of long-termfuel and electricity supplycosts

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Russian energy sector outlook.Hydrocarbon development forecast

0

200

400

600

800

1000

2005 2010 2015 2020 2025 2030

East Siberia Far EastNadym-Pur-Taz New in Tymen regionYamal, Gydan Shtokman (???)Other regions

0

100

200

300

400

500

2005 2010 2015 2020 2025 2030

Far East East Siberia West Siberia

Ural N.Caucasus South

Volga N.West

Efficient gas production will grow by 25-30%due to the development of fields in the Yamal-Gydan area, East Siberia and the Far East. Atthe same time, gas output in the developedregions will decrease at 35%.

Efficient oil production will stabilize in thenext 2 decades. Oil from eastern Russia willcompensate the -25% decrease in developedregions (Ural and Volga)

Oil production, mln tonsGas production, blm cubic meters

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Russian energy sector outlook.Power sector development forecast

0

200

400

600

800

1000

1200

1400

1600

2005 2010 2015 2020 2025 2030

Hydro Nuclear Renewable Thermal CPP Thermal CHP

0

50

100

150

200

250

300

350

400

2005 2010 2015 2020 2025 2030

gas liquid fuels solid fuels nuclear hydro renewables

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

Power sector will ensure the domestic energy needs and increase the electricity production at 57-65%. The sector will remain the main area of inter-fuel (resources) competition and may stabilizethe gas share in the energy demand for electricity and heat at 50% due to the modernization ofgas-fired generation and involvement of nuclear and RES (+35-50%)

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Russian energy sector outlook.Energy consumption and GHG emission

0

100

200

300

400

500

600

700

800

900

1000

2005 2010 2015 2020 2025 2030

gas liquid fuels solid fuels hydro nuclear renewables

Domestic primary energy consumption, Mtoe

The share of natural gas in TPEC will fall from 52% to 50-51% in 2030; liquid fuel will increasefrom 17% to 19-20%. The total share of non-carbon resources will not exceed 14%. With theseenergy consumption trends GHG emissions will continue to grow up to 2030, although willremain 10-12% lower 1990. Stabilization is expected after 2035-40.

Energy-related GHG emissions, mln t CO2

0

200400600

800

1000

120014001600

1800

20002200

24002600

28003000

1990 2005 2010 2015 2020 2025 2030

CO2 gas CO2 liquid CO2 coal methane other

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0

50

100

150

200

250

300

350

400

450

500

550

600

650

2001

-05

2006

-10

2011

-15

2016

-20

2021

-25

2026

-30

Oil Gas Coal

Power sector Heating sector Energy saving

Capital requirements, $ bln Increase of production capacitiestogether with substitution or wide-scale modernization of existingenergy infrastructure alreadyresulted to the growth of capitalneeds

More than 60% of all energy-relatedinvestments will be concentrated inthe gas and oil industries (70-73%nowadays)

Energy infrastructure will maintainan extremely high investmentpressure in the Russian economy -up to 5% of GDP before 2020 andwith decrease to 3,5-4% in 2030.

However, worldwide the burden ofthe energy sector on the economy(1.5% of GDP) will be 2.5 times less

Russian energy sector outlook.Investment requirements

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Russian energy sector outlook.Harmonization of the economy and energy sector development

Russian economy and energy sector development indicators must beiteratively harmonized in the context of Energy Strategy elaboration

Integrated economy-energydevelopment forecast simulation model

Regional final energy demandsimulation model

Energy industries’ development forecastingsystems (production and financial models of

industries and energy companies)

Economy and energy sector interrelationsforecasting system (MENEK)

Initial scenario of theeconomy development

Adjustments of initial scenarioof the economy development

• solvent energy demand• fuel and energy wholesaleprices growth rates• world energy prices tends• limits for the investmentburden of energy sector• GHG penalties of carbon prices

•taxes and duties•investments

• fixed assets dynamics• external financing

requirements•budget subsidies and

investments• GHG emission in

energy industries

Fuel and energyprices growth rates Fuel and energy

prices forecast


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Energy Research Institute of [email protected]

Acad. Alexei Makarov, [email protected]

Dr. Fedor Veselov, Head of the Electric Power Sector Development &Reform [email protected], [email protected]

Documents

System approach to the Russian energy sector forecasting. · of the global and Russian energy sector development Energy Research Institute RAS «SCANER» is a tool for the system