FinNode Smart Grid Russia and NW Russia Heat and Power


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FinNode project presentation on Russian Smart Grid and NW Heat and Power on ECORussia seminar on 1.11.2012 at Finpro

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FinNode Smart Grid Russia and NW Russia Heat and Power

  1. 1. Smart Grids Russia and NW Russia Heat and Power: FinNode project results availableEco-Russia Seminar 1.11.2012Hannu Kivelä, Leading Consultant 1.11.2012
  2. 2. FinNode • FinNode is a global network of Finnish innovation organisations. • Operating via nodes in global innovation activity, FinNode actively reveals new openings for Finnish business and research organisations and supports their internationalisation. • It connects Finnish and international experts and the know-how required to promote innovation. • As FinNode represents the Finnish innovation system in the countries where it operates, foreign partners can engage with Finland’s central public innovation organisations. • The FinNode network operates in the United States, China, Russia, Japan and India.1/11/2012 © Finpro 3
  3. 3. Introduction • FinNode published during the spring 2012 two major environment and energy related projects on Russia: • Smart Grids Russia • NW Russia Heat and Power • These projects were prepared by Finpro Russian offices • This presentation concentrates on the main findings of the two reports. The report summaries are available for free on request.1/11/2012 © Finpro 4
  4. 4. Russian SmartGrids
  5. 5. Energy Consumption in Federal Districts (FDs) of Russia Unified National (All-Russia) Electric Grid is synchronized with Ukrainian, Kazakh, Belorussian, Baltic countries Electric Grids North-Western FD Center FD Legend: Industry Southern FD Communal/Population Services Others Volga FD Ural FD Siberian FD Far-Eastern FD North-Caucasus FD Power consumption in the principal economic sectors by Federal districts of the Russian Federation (pie charts scaling reflects the power consumption by each federal district respectively), %1/11/2012 © Finpro 6
  6. 6. Pricing policy • Electricity prices for private and public category users offered by the electricity supplier can not exceed the tariff limits prescribed annually by the Regional Energy Commission. The latter pricing is based on the average prices of wholesale market and middle-income of regional population. o Currently, two tariffs are used all over the country - day and night rates (4 times for Moscow). o In the future, more than two types of tariffs will be applied, such as day-time tariff range between 10 -18, peak 18 -22, reduced tariff 2 - 5 and the rest time would be charged by night tariff* (*the electricity provider does not want to use such a gradation because it would reduce his profit • 1 – price zone 1 – European part and Ural and because electricity consumers cannot change suppliers, only the Government • 2 – price zone 2 – Siberia can set up one or another tariff system) • A-1 – 1st non-pricing zone North-West and Kaliningrad Region • Wholesale market prices • A-2 – 2nd non-pricing zone Far East o Price (Cost) estimated Zones • B – areas in which the price of electricity  Short Term Contracts based (defined) on demand and supply is set by regional energy companies,  Long Term Contracts between Supplier and Consumer combining generation, distribution and sale o Non-price Zones  Short and Long term Contracts based on price forecast or the previous year pricing and costs• This brings up the question how big the share of the regulated market is. According to the slide 8, less than 30% of all consumed energy is sold at regulated prices. In other words, most sales are carried out in the free market. 1/11/2012 © Finpro 7
  7. 7. Structure of Russian Grids After the reform of Russian UES, power grids were divided into two categories – main grids (wide area grids) and distribution grids. Federal Grid Company is responsible System Operator of the for normal operation, development and 1 2 4 5 6 7 8 Centralized Dispatching maintenance of the Unified National Administration Electric Grid (Wide Area Grids). The Company includes 7 branches, i.e. 3 • Real-time monitoring and control of Inter-systems electric grids of North- all components of the Unified West (1), Center (2), South (3), Volga State Company National Electric Grid; (4), Ural (5), Western Siberia(6), • Frequency and voltage (power) Siberia (7) and East (8) (U>110 kV) control; • Relay protection; • Dispatching of generation and consumption Electricity distribution is realized by RAO UES two companies: the first one is the State Company Vostoka Set of JSCs MRSK holding covering about 60% of Russian territory and 96% of population and RAO UES Vostoka MRSK (40% territory and 4% of population). U = 0.4 … 110 kV Set of JSCsAnalyzing the application of Smart Grids Concept in Russia, the following will be taken into account: structure of energy transmission and structure of ownership of three main players 1/11/2012 © Finpro 8
  8. 8. Russian Grids – Challenges and Problems Electrical grids as a “bottleneck” between supplier and consumer Above Stand-by (more 35 years permitted Operation time** for substations and 40 standards (25 years for overheads) years) Substations 47% 17% Overhead lines 67% 26% Equipment** Domestic Western Gas Insulated Obsolete design of Dimensions and weight Switchgears actuators, large are 20-30% lower, cost of dimensions and maintenance is 20% less weight, Transformers, Low quality of Magnetic losses are 20% shunt-reactors magnetic cores, oil lower, good gaskets and leakages, high seals no leakages, vibrations and galvanized tanks According to the most pessimistic corrosions of tanks estimates, both generation and consumption 50% growth in Russia is Average losses in electric networks in Russia are about 14% compared expected by 2030* with the usual 4-9% in Europe*** *Taras Kupchikov, 2009 , **Yuri Dementyev, Federal Grid Company, 2010*** Elena Petrova, Russian Business Newspaper 03-20111/11/2012 © Finpro 9
  9. 9. Map of the Smart Grids projects New equipment and software based on the Smart Grid Platform (digital substations, reactive power control) Intellectual Grid allow to increase reliability and capacity of the West of grids Intellectual Grid of the East Saint Petersburg’s Energy Clusters: the Small Ring (2012) and the BigRing (2014) “Elga Ugol” “Vanino” Energy Cluster Energy Cluster “Kola” Energy (2012) (2013) Cluster (2013) “Vanino” Energy Cluster Goals of North-Western Projects Goals of Eastern Projects (2013) • Increased reliability of power • Increased energy supply quality supply to Megalopolis “Komi” Energy for new mineral deposits • Improvement of power Cluster (2014) • Reservation transmission system • Reliable power supply for South Intellectual Grid of and Vladivostok the Russkiy Island By: Oleg Budargin, FSK UES Chairman, 16.06.20111/11/2012 © Finpro 10
  10. 10. Smart Grids for “East” interconnected power system – the integrated pilot projectThe “Eastern” project includes several separate smart grids projects to test hard-and software for large projects in all-Russian dimensions 1/11/2012 © Finpro 11
  11. 11. Pilot Projects for the North-Western Energy Clusters The Western Smart Grids Projects includes organization of 3 energy clusters1/11/2012 © Finpro 12
  12. 12. Potential customers for Finnish companies • The most attractive customers for Finnish (and other foreign) companies are the two largest players in the Russian market: • FGC UES • MRSK Holding. • Federal authorities with a strong link to Smart Grid o Commission for Modernization under the President of Russia o Ministry of Regional Development and o Ministry of Energy However, the Federal authorities are much more difficult to do business with.1/11/2012 © Finpro 13
  13. 13. Main differences compared to the development in the West o The unified energy system of Russia covers 8 time zones and unites approximately 230 GW of generating capacity o The share of renewable electricity is less than 0.5% and even in 2020 it won’t exceed 4%. o Consumption of electricity by population – one of the key target groups of smart grids programs is on average only 14% of total consumption - much lower than in the western countries. o Russian legislation on energy is controversial and disconnected. o Existing Russian laws side-step an issue of obligatory connection of generating capacities (facilities) to grids. However, in reality a private power plant can connect to the grids of the Unified Energy System (and sell electricity) only upon agreement with the System Operator. The minimum capacity where such an agreement is not necessary is only 5 MW.1/11/2012 © Finpro 14
  14. 14. Opportunities in Russian Smart Grid We can certainly conclude that elements of smart grids technology will be actively used in Russia. As estimated by the Institute for Energy Strategy, consumption of electric energy in Russia will increase about 2.5 times by 2050. FGC UES is implementing the concept of active and adaptive grids. The company interest lies in: • Application of equipment on modern technological principles e.g. FACTS (Flexible AC Transmission System) • Automatics • Software MRSK is actively developing projects connected with introduction of Smart Metering concept and with the possibility to widen equipment functions • Intellectual metering = equipment and technologies1/11/2012 © Finpro 15
  15. 15. Power andHeat in Russia
  16. 16. Power generation in the North-Western Federal District • The market of high power is well structured. In the study area are working • two Territorial Generation Company - TGC-1 1 and 2, 2 • Electricity company InterRAO UES i • Wholesale generating companies OGK-2, 2 2 OGK-6 6 • and one nuclear power station owned by state FINLAND company Rosatom. • All other power plant (less than 25 MW) are owned by companies that use electricity produced mainly to meet their own needs. • The market (wholesale) price of electricity is based on the equilibrium of supply and demand. However, i 1 the Arkhangelsk region is an exception because the 1 2 existing electrical grids can not provide the free flowing of energy to the consumers of the Arkhangelsk region from other ones, 6 2 • Power plants over 25 MW can sell energy on the wholesale market. All other can sell electricity only Nuclear Power Plants Companies CHP plants for retail contracts. State District Power Station 1 Territorial Generation Company TGK-1 Hydropower plants 2 Territorial Generation Company TGK-2 Small CHP-plants i InterRAO UES Small Hydro-power plants 2 6 Wholesale Generation Companies OGK-2, OGK-61/11/2012 © Finpro 17
  17. 17. Small CHP in the study area  The investigated region is very heterogeneous in industrial capacity and population. The map shows that the main power plants and power stations are grouped into industrial zones.  The most developed region is Leningradskaya Oblast with 19 small CHP plants between 5 – 55 MW of installed power. The main consumer of electricity is St. Petersburg city. Other industrial centers are Pikalyovo, Boksitogorsk, Volkhov, Tikhvin and Vyborg.  In the Vologodskaya Oblast there are 17 small CHP plants with installed power from 0,5 – 10 MWh. In Vologodskaya region there are three mani industrial areas - Cherepovets, Vologda and Sokol . The Severstal in the town of Cherepovets generates a prevalent share of the Oblast’s economy.  The least amount of power sources is in the Arkhangelskaya Oblast with 6 small CHP varying from 6 – 353 MW. These include two large CHP boilers, one in Arkhangelsk PPM / Severodvinsk and another in Kotlas PPM / Korjazhma.  The total number of stations operating in the wholesale market is 20; number of block stations is 42, some of them have rather large power capacity.  Most of the power plants use other fuels than fuel oil (mazut) as the main fuel.1/11/2012 © Finpro 18
  18. 18. Statistical base of the study – heat boilers• 3 initial data sources were in use: Number of Number of Number of Total number • An official State Statistics Oblast studied companies got boiling houses of boilers information ; according to companies info about BHs (replies) replies Finland • Industrial directories • Results of previous studies carried Arkhangelskaya 380 149 381 1231 out by Finpro and special agencies• Data from different sources is a bit Vologodskaya 768 180 388 1178 contradictory. However, it gives clear indication of the number and level of heat Leningradskaya 811 199 782 2149 generation capacity Total 1959 528 1551 4558• Total 1959 companies in 3 studied oblasts were found• Interviewing them we got information from 528 companies with about 1551 boiling houses (66.5% of the official data)Thus, we have received quite a representative sample for the search for the mostattractive projects1/11/2012 © Finpro 19
  19. 19. Fuel mix in heating Consolidated data Share of companies using boilers on Total Number of companies using boilers running on: different types of fuel number of Other Oblast companies 6% (boilers’ Diesel/ Firewood, operators) Gas Fuel Oil Coal chips Other Gas Wood/chips 36% Arkhangelskaya 149 16 6 23 54 10 30% Vologodskaya 180 32 3 19 63 1 Leningradskaya 199 105 39 32 11 13 Diesel/fuel Coal oil Total 528 153 48 74 128 24 17% 11%Fuel mix is different in the studied areas: for Vologodskaya and Arkhangelskaya Oblasts leading position haswood/chips, for Leningradskaya Oblast the leader is gas Arkhangelskaya Oblast Vologodskaya Oblast Leningradskaya Oblast Other Gas Wood/C 9% 15% Other Other hips Diesel/ 1% Gas 6% 7% Fuel Oil 5% 27% Coal 16% Wood/C Diesel/F Gas Coal hips uel Oil 52% Wood/ 21% 53% 3% Diesel/F Chips 50% Coal uel Oil 16% 19%1/11/2012 © Finpro 20
  20. 20. Companies planning boiler investmentsFurther operations in existing boiler houses (based on the processing of interviews’ memos) Replacem Further Replacem Further Oblast ent operation Repair Total ent operation Repair Total 50%Arkhangelskaya 34 29 10 73 47% 40% 14% 40% 30%Vologodskaya 33 33 16 82 40% 40% 20% 20%Leningradskaya 44 42 50 136 32% 31% 37% 10% 0%Total 111 104 76 291 38% 36% 26% Replacement Further Repair operation Arkhangelskaya Vologodskaya Leningradskaya50%40%30% • Share of companies that are planning to replace20% existing boilers is rather big (about 40%). • These companies are candidates for the opportunities10% study0% Replacement Further operation Repair 1/11/2012 © Finpro 21
  21. 21. Search for opportunities – potential companies planning investments 3 groups of potential end-users that are in interest to improve existing power/heat supply system and could be the customers of Finnish products and services in power and heat supply. Group 1 – owners of CHP Group 2 – owners of boiling Group 3 – Regional and plants, both large and small houses municipal authorities They need to decrease cost of They need to decrease cost of • They are responsible for power/heat supplied heat reliable heat supply to the voters and Federal Government All of them were identified above • All of them should be identified and • They have to spend budgets for prioritized during desk-study and subsidies for heating • We carried out the desk-study interviews • They are actual owners of • Excluded companies having • Then the most interesting hundreds of municipal boilers boilers running on natural gas companies should be interviewed • Interviewed to identify interest • Responsible persons were in details to identify interest to to Finnish technologies or identified and interviewed Finnish technologies or services services during field study and financial resources1/11/2012 © Finpro 22
  22. 22. Summary of identified opportunities The study focused to identify projects which substitutes oil with wood and peat, reconstruction of old wood and peat plants as well as building of new wood and peat firing plants in NW Russia The study identified and described the following projects: • 5 projects with existing financing to be realised in 2012 – 2014 • 12 projects, which should be financed during 2012 • 3 case studies • Upgrade of district heating of the City of Arkhangelsk • Upgrade of district heating system in several districts of the Arkhangelskaya region • Building of a new peat power plant and reconstruction of boiling houses in the Chadoga district • The opportunities are described in detail in the report, which is available on request1/11/2012 © Finpro 23
  23. 23. Conclusions • The NW Russian heating facilities are obsolete and in need for major investments. • The heat reform has not been finished and, thus, the applicable heat tariff levels do not yet support wide scale commercial investments to the municipal sector • Thus, still the most lucrative clients for Finnish technology are the private companies, sawmills, pulp and paper mills and other industrial producers • However, the municipal sector represents huge potential with hundreds of boiler houses and DH networks in desperate need for replacement and / or renovation1/11/2012 © Finpro 24
  24. 24. Thank you!Contact:Hannu KiveläLeading Consultant,Energy, Environment and ForestryPorkkalankatu 1, FI-00180 HelsinkiMobile: +358 40 343