INTERVIEW: Russia allocates 504 MW of cleantech capacity to kick-start domestic manufacturing

editor, 05 October 2013

George Kekelidze, board Chairman at trade association Eurosolar Russia, gave an interview to Clean Energy Pipeline, the online daily news and data service.

The race is on for Russia to establish a domestic renewable energy manufacturing industry from scratch over the next four years after 504 MW of projects were secured under its first clean energy auction last week.

Developers that install clean energy projects of over 5 MW will be entitled to a subsidy under a decree issued by the government in May.

“It’s a bit different from the feed-in tariff in Germany,” George Kekelidze told Clean Energy Pipeline. “The biggest chunk an investor receives is for installed power [rather than electricity generated].”

Clean energy projects can also benefit from additional subsidies on offer from regional governments in Russia, with six economic regions either providing or due to provide sector-specific tax breaks for equipment and certain related investments, Kekelidze added.

Solar outstrips wind in bidding.

Russia’s inaugural clean energy tender attracted 999 MW of solar bids and 105 MW of wind bids by the September 10 deadline, Eurosolar told Clean Energy Pipeline. A total of 399.2 MW solar projects and 105 MW of wind won subsidy agreements, and almost all of the bidders were local players.

Solar was the most successful technology in the auction, which set quotas for solar, wind and hydro procurement. This was the case despite the comparatively high average capex of RUB 112,000 per kilowatt ($3,480/kW) for solar projects bid in the auction, though the average capex of winning solar projects reduced each year, falling to RUB 109,000 per kW ($3,387/kW) by 2017.

Selected wind projects weighed in at nearly half the capex of the winning solar bids, averaging at RUB 65,000/kW ($2,019/kW).

Wind farm bids fell far short of the country’s quota due to the short window for entries, the comparative complexity of wind projects, and Russia’s new localisation rules, according to Kekelidze. Russia had hoped to procure 100 MW of wind for 2014 and 250 MW for 2015, but received no bids for wind projects that would be completed in time. The country consequently accepted all of the bids lodged for wind farms in 2016 and 2017, with 15 MW planned for 2016 and 90 MW for 2017.

Given the relative low capex of bidding projects, Russia may be tempted to procure more wind capacity through a separate tender.

“It depends on overall economic situation of the country, and how much the budget will be,” said Kekelidz. “The Budget has to be approved by the end of October.”

Russia also set a 294 MW quota for hydro power, but received no bids at all. Part of the problem is Russia’s localisation rules, which will get stricter over the next few years, forcing companies to source more specific local components and equipment. With no established manufacturing industry as yet, developers will struggle to meet the requirements.

“As you get to 2015 and 2016, you have to make sure [PV] cells are manufactured locally,” Kekelidz said. “In solar, there is only one factory [planned] in Russia, a thin-film factory they are going to start sometime soon.

“There is not a single cell manufacturing station in the country at the moment. Most likely, they will start up here in 2015 and 2016. We don’t have good inverter manufacturers, but to fulfil localisation rules in future, these companies will be coming here and starting production. The same will happen for wind.”

Kekelidze said he is confident that the projects secured under the tender will be realised with the help of European companies coming into the market.

“It’s possible for western companies, especially for European companies that were [affected by the] downturn, to find a market in Russia now,” said Kekelidze. “Russia will need the technology transfer from solar and wind.”

Russia hopes enforcing localisation rules will help it avoid the problems in Europe associated with cheap Chinese PV equipment harming local manufacturers.

“Cheap Chinese products will not be able to enter the market and dump low prices here because the investors will be buying the products from localised companies,” said Kekelidze.

Russia will unveil new subsidy details in coming months

Uncertainty still remains over which projects will be built in 2014 and exactly how they will be supported, according to Kekelidze.

Russia’s Ministry of Energy is engaged in meetings to clarify subsidy and procurement details and will announce the new clarifications in the next two or three months.

It is still unclear, for example, whether the 35 MW of solar projects selected for 2014 will be ready to produce energy by the end of next year. Kekelidze said: “Within a day or two, it will be known which projects get accepted.”

Russia plans to hold another tender for clean energy in April 2015, although whether the government will try to procure more clean energy capacity before then is unclear.

The world’s biggest oil and gas exporter hopes to boost its renewable energy capacity from 0.8% to 2.5% by 2020, which, though a modest target, will “pave the way to growth”, said Kekelidz. He predicted it “will be clear by the end of the year” whether the country is on track to meet its renewable energy targets.

For more information, George Kekelidze, Chairman of the board at trade association Eurosolar Russia, can be reached at


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