Perspectives of the development power markets in Nordic countries and the Nortwest region of Russia'

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Perspectives of the development power markets in
Nordic countries and the Nortwest region of
Russia. Opportunities for integration

• Jouko Helenius, strategy manager, VANTAAN ENERGIA
  OY (Vantaa, Finland),
• Dr. Vladimir Zakrzhevsky, senior researcher,
• St Petersburg State University for
  Engineering and Economics (Russia),
• Gennady Klochkov, project leader, Baltauditexpert
  (St Petersburg , Russia)
• Materials from Soldinvest (Russia) are also used
  in the report

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A PAN-EUROPEAN MARKET
Population, 1999 estimation (million)
Power production, TWh (1998)
2489
374
EU 15
3177
555
EU 30
796
4275
Europe
USA Canada
273
3681
Including EU15NOCH13 accession countries
Including Europe30 Russia Moldova
Belarus Ukraine Albania Croatia
Yugoslavia FYROM Bosnia
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Russia has about 145 million of people (about 3
of the total population of the world) and in the
same time 1/3 of world gas resources, 1/10 of
oil resource, 1/5 of coal and 14 of Uranium.
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Optimistic forecast for Russian energy sources
(GDP growth 2.8 2.9 times in comparison with
2000)
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Pessimistic forecast for Russian energy sources
(GDP growth 1.85 2.2 times in comparison with
2000)
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Forecast for annual comsumption (TWh) in Russia
   
Domestic consumption Export
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Forecast for generation capacity in Northwest
Russia, ?W
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Power capacity in Northwest Russia (2000)Total
capacity 19,685 MW
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NW Russia Power Generation vs Companies
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Power Generation and Demand in NW Russia
(Forecast)
Export of 25 30 TWh/a is possible. It is needed
transmission lines with total capacity up
4,500 MW for this purpose
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Power consumption in areas of NWR (per
capita)
Total Kaliningrad area Pskov area Novgorod
area Vologda area Republic of Komi Arkhangelsk
area Murmansk area Republic of Karelia St.
Petersburg and Leningrad area
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Negative factors for the development energy in
Russia

• Low investment and high level of equipment.
  Installation of new capacities 2-6 times less in
  comparison with 80s.
• Non-appropriate pricing policy for fuel,
  especially after 1998, leaded to too high share
  of gas in fuel balance.
• Rather low efficiency of capacity.
• High energy consumption in Russian economy (3-4
  times higher than i industrial countries). It
  prevents introducing more appropriate tariffs
  for energy and fuel.
• Reducing rate of reforms in power.
• Property disputes between local authorities and
  regional energy companies.

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• Future opportunities of Russian power depend
  strongly on a series of necessary measures
•  Construction of new transmission lines,
  providing reliable and sustainable operating of
  the whole power system and excluding technical
  restrictions for the development competitive
  power market in Russia
•   Establishing of the connection between the
  East and European parts of the unified energy
  system
•   Strengthening intra-system connections in the
  European part

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Demand for additional electricity production in
the Nordic countries
(source Pekka Tiusanen, Manager,
CommunicationsFinnish Energy Industries
Federation FINERGY)
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Russian export to Finland
2001 - 7.32 bln. KWh( 41 of total Russian
export). Export is provided by the two energy
surplus systems, Lenenergo and Kolenergo.
Perspectives Finland and Nordic countries will
stay main importers of Russian electricity under
the condition of synergy of the two grids
involved and establishing a single energy market,
as well as on the need to elaborate and implement
a new strategy, to be based on the improved
competitiveness of the Russian energy export and
aggressive capturing of new markets, rather than
on the plans aimed to compensate the energy
shortages expected in the West
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Prevents for Russian export to Nordic countries

• The lack of synchronization between the two
  grids and necessity to use direct current links,
  that makes transmission quite expensive
• Using of different standards for technological
  processes, environmental protection, sales and
  also for management (decentralized grid
  management in Nordic countries whereas Russia is
  planning to continue its centralised grid
  management also in the future
• Possible generation reducing first because of
  shutting down capacities in nuclear power )in the
  most non-favorable case export should be changed
  by import)

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Case of the last winter

• Summer of 2002 with low precipitations and cold
  winter of 2003 (a little bit similar to
  California in 2000)
• Sharp increase of power consumption in Northwest
  Russia and Nordic countries
• Sharp increase of prices in Nord Pool
• Difficulties in energy supply in Northwest Russia

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Development of cooperation between RAO UES and
Nordic countries

• Permission for derivatives trade of RAO in Nord
  Pool spot market
• Forthcoming internships of mangers and
  technicians from Russian energy companies in
  Finland to study operating of free electricity
  market