The Russian Ministry of Energy has approved a RUB1,900bn (US$29bn) programme for the modernisation of the domestic thermal power plants for the 2022-2031 period. Approximately 41 GW of power generation capacity - i.e. around 1/4 of the total thermal power capacity in Russia - is concerned, of which 2 GW in the Far East region.
The modernisation projects will be selected through auctions, with the first one for 11 GW expected in April-May 2019 to start power supply in 2022-2024. The main criterion that will determine what kind of equipment falls into the modernisation programme is the lowest cost of kWh. Winners will sign 16-year agreements; they will receive increased payments from the energy market for 15 years, with a guaranteed rate of return on investment of 14% in the first stage. The costs will pass on to customers, arousing fears from large electricity consumers such as steel plants.
Even though the selection of applicants for modernisation plan will be conducted on a competitive basis, the government will prioritise domestic equipment and a 100% "local content" rate is targeted in order to avoid potential sanctions on the Russian economy and decrease the reliance on foreign imports.
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