Neither “RusHydro” nor “RAO ES of the East” deal with direct exports of power, as this sphere is the competence of another state-run holding – “InterRAO”, which sells the excesses of power that are not in demand on the domestic market, to China. According to the company’s data as of 2014, the total power exports from Russia have decreased by 19.9% with a bit more than 14 bln kWt/hour in total. Exports to China decreased by 3.4% to 3.37 bln kWt/hour, and to Mongolia – by 5.6% to 390 mln kWtt/hour. The state Holding explains these data as resulting from the prolonged period of major grids equipment repairs.
As a result of the first period of 2014, the overall situation has changed drastically: exports from Russia amplified by 42.2% up to 9.1 bln kWtt/hour (primarily because of exports to Ukraine, with sales increasing 70 times). Meantime, exports to China and Mongolia continued to decline: by 12.2% in the former case and by 28% in the latter case. “RusHydro ” explains these trends by a low water availability that was characteristic of the second period of the last year, which affected the water volumes in reservoirs of Zeyskaya and Burejskaya HPSs by the beginning of 2015. As a result, it was necessary to radically decrease the HPSs’ water discharges, which led to the decrease of power production. The additional load was transferred on other thermal power stations within the Unified energy systems of the East. Nonetheless these could not fully substitute for the lack of power production resulting from the low water capacity. Thus, a decision was made in the Unified energy systems’ managing company to decrease exports primarily to satisfy demand from domestic customers.. Even though, it is expected that by the end of 2015, even given a positive hydrologic situation, power production of two largest HPSs of the Far East will decrease by 8-11% as compared to 2014.
HPSs as well as TPSs
Before 2013, the whole volume of power production of “RusHydro” group (both thermal and hydro power) was sold on the domestic wholesale market by a state-established system of tariffs, applicable for the Unified Energy Systems of the East. The excesses were sold to InterRAO in accordance with bilateral agreements that limited the price as prescribed in the order of the government of the Russian Federation (not more than two tariffs of the whole power production of the Unified Systems of the East). October 1, 2013, saw the introduction of amendments to the federal regulation of energy markets, that enabled signing a package of bilateral agreements (these envisage exact volume share of total supply of hydro and thermal power that are unanimous for the whole package), that facilitated obtaining average pricing for the entire package - which is more attractive for the customer, and the “RusHydro” was thus capable to conclude bilateral agreements not only on hydro power supplies that have the lowest tariff deals in the Unified energy systems of the East, but for thermal power supplies that have the tariffs which are twice as high, or more. Since then the subsidiary of RAO ES of the East, which is the main producer of power on thermal power stations in the Unified Energy systems of the East started receiving additional revenue that is channeled to maintain the safety of energy supplies, renovation and modernization of the thermal power producing facilities, that has a high level of equipment deterioration.
According to “RusHydro”, in 2014 the volume of export supplies for the whole package of bilateral agreements accounted for 1.745 bln kWt/hour (the rest of supplies were bought by InterRAO on the domestic market from a sole supplier – joint stock company of DEC, which is a subsidiary of RAO ES of the East – with regular tariff rules applied). In the current year, “RusHydro” planned increasing of exports on the whole package of bilateral agreements up to 2.5 bln kWtt/hour if the level of water flows remains normal. However, the final volumes will prove lower than the estimated ones.
Exports to Japan
Notwithstanding all the information mentioned above, it is still possible to increase the power exports in the Far East region up to 6 bln kWt/hour in annual supplies, even given the current condition of grids infrastructure in the region. The top managers of “RusHydro” estimated the Russian power supply needs of China alone at 10GWt. For example, there is ample power export potential of anti-flood HPSs on the Amur River tributaries. “RusHydro” group sets high expectations upon large-scale projects that are oriented solely on power supply export. Here, the focus is on the energy supply bridge between Sakhalin and Japan.
After the accident at Fukushima nuclear power station and the ban on nuclear power production within the energy industry of Japan that followed, the power supply tariffs in Japan increased significantly. In the nearest future, these are not set to change drastically, even if the “shut down” nuclear power stations resume operations.. In this case, importing cheap energy from Sakhalin presents a rational alternative. However, the legislation of Japan does not envisage imports, although some changes may be expected. The export supplies to Japan are planned to be supplied with the aid of the energy bridge from Sakhalin-based stations, i.e. the Sakhalin SDPS-2 (currently under construction), as well as from the Yuzhno-Sakhalinskaya TPS-1. “Exports to Japan can be supplied via an underwater cable from Sakhalin. The island has a high coefficient of reserving. This capacity could be additionally loaded with export-oriented supplies”, - notes Sergey Tolstoguzov, CEO of RAO ES of the East.
If there is successful implementation of the project, the energy sector of economy of the Far East will receive at least 1 bln USD, and the infrastructure created to support it will help to maintain supply volumes at the expected level both under basic and peak regimes. Currently, “RAO ES of the East” is developing a preliminary technical and economic endorsement for the energy bridge project based on its own funds. This work involves two separate phases:: analysis of the project of construction and reconstruction of the objects of power generation and electricity grids, that are necessary for the power supply exports to Japan; and the development of technologies for laying an underwater cable from Sakhalin, along with construction of a coastal transforming substation and grid infrastructure facilities in Japan. A unified financial model of the project that takes into account the data on the Japanese part of export line is also under consideration.
To unite the island with the continent
“RusHydro” has an added interest in this project, since its implementation enables further transformation of a closed energy system in Sakhalin. First of all, it will allow constructing two more stages on the new Sakhalin SDPS-2 with total capacity of 240 MWtt (currently the construction of the first stage of power facilities accounting for 120 MWtt is underway with the employment of the state funds that were earlier earmarked for these purposes) and renovating the grid infrastructure of the island. It is quite likely that in this case it will be possible to save and reconstruct the outdated Sakhalin SDPS – under present configuration it is ineffective, but in case of growing export to Japan the facilities of the station may become of high demand once again.
However, the implementation of these projects would only allow increasing exports to 400-500 Mwtt, which is certainly quite modest in terms of planned supplies. “Still, it is quite sufficient for the first stage, - says Sergey Tolstoguzov, CEO of RAO ES of the East – Afterwards, judging on the results of such work, we may see the prospect of constructing a special export-oriented power station with power capacity of about 600-700 MWtt on Sakhalin, and even further – connecting the continental energy system with the island system, which will allow increasing exports as a result of the increase of power supplies from the Far-Eastern HPSs”. The amount of the proposed export could amount to2-4 GWtt.