Kommersant: the cost of electricity in Russia has grown to a maximum in five years

MOSCOW, 8 Feb – RIA Novosti . Wholesale prices for electricity in Russia have reached their maximum values over the past five years, the Kommersant newspaper reports, citing a review by Market Council. The Ministry of Energy explained that this does not in any way affect the tariffs for the population.

Thus, single-rate prices in the European part of the country and in the Urals (the first price zone) increased by 3.4 percent and reached 2.54 thousand rubles per megawatt-hour, and in Siberia (the second price zone) – by 0.6 percent, to 1.78 thousand rubles per megawatt-hour. The one-part price includes the day-ahead market price for electricity (DCS) and capacity (willingness to supply energy to the grid).

As the newspaper notes, over the year, electricity has fallen in price, while capacity, on the contrary, has risen in price. The RVS indicator in the European part of Russia and the Urals decreased in price by six percent – to 1,199 thousand rubles per megawatt-hour, and in Siberia – by 3.9 percent, to 859.5 rubles. Vasily Savin, a partner of KPMG in Russia and the CIS, explained to the newspaper that this was due to a drop in demand in the Unified Energy System, as well as an increase in price acceptance due to the commissioning of new nuclear power plants and an increase in the generation of hydroelectric power plants by an average of 2-2.2 gigawatts per year.

At the same time, prices for capacity increased above inflation: in the first zone – by 14.3 percent, in the second – by 7.1 percent (the payment includes mandatory non-market markups – for the construction of power plants under the mechanism of a capacity supply agreement). The reason for the growth was that due to the decrease in demand, the total payment was distributed to a smaller number of consumers.

The Energy Consumers Community noted that the price hike amid falling demand outraged the industry.

According to the forecast of the Market Council, this year the one-part wholesale price will grow by 5.6 percent (by 3.8 percent in the first price zone and by 13.4 percent in the second). Final electricity prices could rise by 5.5 percent on average, warned Vladimir Sklyar of VTB Capital.

According to Deputy Energy Minister Yevgeny Grabchak, the level of energy consumption by the end of 2021 should recover to the level of 2019. In January, electricity consumption increased by 4.1 percent and amounted to 104,679.4 million kilowatt-hours.

What they say in the Ministry of Energy

The situation with wholesale prices was commented on by the Deputy Minister of Energy Pavel Snikkars. He noted that the price of the wholesale market is determined not by individual components, but by their aggregate, so that at the end of last year, growth (3.4 percent in the first and 0.6 percent in the second price zone) was significantly lower than inflation.

In addition, the wholesale price does not in any way affect energy tariffs for the population, which are fully regulated by the state, the deputy minister explained. “There have been no deviations in the growth of electricity tariffs for the population,” he said.

The Ministry of Energy also recalled that last year, electricity tariffs for the population grew within inflation, this also limited their growth in 2021.

“As for the wholesale prices at which our industry buys energy, in 2020 the wholesale price of electricity also grew significantly below inflation, giving the industry an opportunity to recover from the difficult economic situation due to the coronavirus,” the department told reporters. Said on the air

Expert opinion

The increase in wholesale prices for electricity is associated with a decrease in demand for it, Boris Bokarev, head of the project direction of the EnergyNet infrastructure center of the National Technology Initiative, told RIA Novosti.

“This is our market: demand is decreasing, but the amount of money that should go to generators is unchanged,” he explained.

According to the expert, weather or demand factors do not significantly affect the situation. “Prices for electricity for the population will not change from the previously declared growth levels – they are regulated within the framework of inflation, and the industry will pay for everything through mechanisms of cross-subsidization,” Bokarev said.

Aleksey Khokhlov, head of the Electric Power Sector at the Energy Center of the Skolkovo Moscow School of Management, drew attention to the fact that the drop in electricity demand did not lead to the desired drop in wholesale energy prices, but there were no catastrophic results either. Moscow Today: a megapolis for life

“In regions with a high share of oil production and transportation enterprises at the moment, the drop in demand was much deeper – for example, in the Tyumen region, Khanty-Mansiysk Autonomous Okrug and Yamalo-Nenets Autonomous Okrug in June, it amounted to 15.4 percent by 2019. According to System Operator, the total the decrease in electricity consumption by oil and gas enterprises in 2020 amounted to 13.3 percent compared to last year, “Khokhlov said, noting that as a result, the one-part price increased, but within the inflationary limits.

According to Khokhlov, the rise in electricity prices amid falling demand is quite natural and directly follows from the structure and principles of electricity pricing in Russia. “The fact is that an increasing part of the cost of generation is made up of power charges (in comparison with the payment for generated electricity), and its value is determined by previously made decisions on the commissioning of new plants (of all types – nuclear, thermal, renewable energy and others) and does not depend on the actual volume of electricity produced. The growing volume of these payments is distributed between fewer consumed kilowatt-hours, which leads to an increase in the cost of one kilowatt-hour. And this is happening despite the fact that the price of electricity is falling on the market, “said Khokhlov.

In his opinion, this speaks, among other things, of the low flexibility of the Russian centralized energy system – the principles of its functioning form the cost characteristics for a very long-term period, so that during periods of drawdown in demand below the planned parameters, this will directly negatively affect the price of a kilowatt-hour. In this context, the expert believes, one of the key factors of the future price is the rate of recovery in demand after the pandemic.

Author: wedocount

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