Page 1 - Russia Power Report Q2 2012 Published: June 2012

No. of Pages: 58

Price: US $ 1175

Russia’s power sector faces a host of challenges. There is no disputing the size of the market and the potential for domestic and foreign companies alike to invest. However, infrastructure is old and inefficient, meaning a mountain of capital is required to develop the sector. Furthermore, the liberalisation process has faltered. State gas monopoly Gazprom has strengthened its grip on the power industry and this is not seen as a positive move by many outside Russia, while price controls could persist in the retail segment. It will be some time before renewables make a meaningful contribution to capacity, leaving Russia dependent on a potent mix of fossil fuels, nuclear and conventional large-scale hydro-power. The nuclear disaster in Japan is unlikely to influence Russian energy policy, while an abundance of gas and coal resources point to these two sources maintaining a strong role in the overall electricity generation mix. In fact, efforts by the state to maximise the export potential of its natural resources suggest there will be an increased focus on nuclear energy and hydro generation over the next decade. Large-scale foreign involvement in such projects seems unlikely and higher power prices may be needed to justify the necessary investment. Key trends and recent developments in the Russian electricity market include: During the period 2012-2021, Russian power generation is expected to increase by an annual average of 2.05%, reaching 1,198 terawatt hours (TWh). Driving this growth is an annual 3.0% gain in nuclear and a 3.44% rise in renewables generation, offsetting a 0.88% average decline in oil-fired electricity supply. Coal- and gas-fired power are each expected to increase by 1.18% and 2.54% per annum. Following an assumed 3.3% increase in real GDP in 2011, BMI forecasts average annual growth of 3.95% between 2012 and 2021. The population is expected to fall slightly from the current level of 142.8mn to 140.7mn during the period, but net power consumption looks set to increase from 858TWh to 1,051TWh in 2021. During the period 2012-2021, the average annual growth rate for electricity demand is forecast at 2.05%. Thanks partly to the forecast rise in net generation, growth of which matches the underlying demand trend, Russia’s power supply surplus is expected to edge higher over the medium term. A broadly stable percentage of transmission and distribution (T&D) losses of around 11.5% will slow the rate of build-up in export capability. The theoretical net export potential is expected to peak at around 12.6TWh in 2020, before slipping back below 10.0TWh in 2021.

Power Industry Report of Russia 2012 Table of Contents Executive Summary . 5 SWOT Analysis . 6 Russia Power SWOT .. 6 Global Industry Overview 7

Regional Industry Overview .. 11 Industry Forecast Scenario ... 15 Russia Snapshot (Macro) .. 15 Russia Forecast Scenario.. 16 Electricity Generation and Power Generating Capacity ... 16 Electricity Consumption 28 Transmission & Distribution, Imports & Exports . 30 Key Policies/Market Structure .. 32 Regulation And Competition 32 Pricing . 33 Key Projects Database . 34 Business Environment .. 38 CEE Power Regional Risk/Reward Ratings . 38 Russia Power Risk/Reward Ratings . 41 Rewards ... 41 Risks 42 Competitive Landscape . 43 FGC . 44 Inter RAO UES 44 Gazprom/Mosenergo ... 45 E.ON 46 Enel .. 46 Company Profiles ... 47 Inter RAO UES 47 Glossary of Terms .. 50 Methodology and Sources 51 Industry Forecasts ... 51 Power Industry – Data Methodology ... 52 Generation and Consumption Data . 52 Electricity Generation Capacity Data .. 53 Power Risk/Reward Ratings Methodology ... 54 Sources 57 - Russia Power Report Q2 2012  

Russia’s power sector faces a host of challenges. There is no disputing the size of the market and the potential for domestic and foreign co...