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At the tenth anniversary forum «ATOMEXPO» 15.05.2018 «NovaWind» hosted the Round Table «Russia as a «new energy» market player. Is there a potential for entering the international market?»

18.05.2018

Leading experts in renewable energy and emerging RES technologies took part in a discussion on the future of energy industry.
Recent developments in climate change discussion, Paris agreement and decarbonization efforts have prompted significant changes in a world energy industry.  The conference moderator Alexey Hohlov (executive of Electrical Energy department of Energy center of Moscow School of Management «Skolkovo») noted that those changes contributed to the advancement of renewable energy industry, the rise of it’s share in the power balance and a decrease of RES-produced energy costs.

According to International Renewable Energy Agency IRENA renewable energy markets program executive Roland Roesch, over 50% of all new power capacities fall on RES, with annual growth of RES at 0,7%, while the cost of solar energy has been reduced by 80% in the last six years. Renewable energy is becoming fully capable of competing with traditional energy industry.
All those trends were boosted by the rapid process of decentralization of distributed power generation. Electrical power system becomes more democratic, now an energy consumer can also act as an energy producer - a prosumer.

Decentralized solutions are beginning to take a leading role in the world energy industry, as opposed to centralized ones. However, in a contemporary environment there is a problem of not only power generation, but of demand control systems, effectiveness and digitalization of the industry.  New energy storage technologies are being developed. With the rising competitiveness of RES, not least due to various government subsidiary programs, the costs of energy storage technologies decrease as well. As noted by Walter Pfeiffer (Center of competence in global energety and chemical substances Roland Berger GmbH, Netherlands), by the year 2030 the cost of these technologies will be reduced by more than 50%. Rapid advancements in cutting-edge technologies such as Internet of Things, block-chain and Artificial Intelligence now allow for a creation of new platforms, adapted for decentralized energy systems.
Annual investments in solar power and wind power amount to roughly 300 billion dollars. However today it is important not only to speak of investments in RES, but also in «smart technologies» that support it. The growth of decentralized energy systems boost innovations. According to IRENA, there are more than 600 000 RES-related patents today in the world, while in 2016 about 30% of patents worldwide were from China. Today, China becomes one of the key innovators in solar energy industry and related technologies.
The development of renewable energy industry also affects business strategies of both energy companies and hardware manufacturers. As an example Walter Pfeiffer provides the cases of E.ON/RWE, EDF, ENEL, Ibedrola, Siemens and GE.
EDF, a company which assets include large nuclear and thermal power plants, set a course on increasing it’s energy output with renewable energy. EDF’s strategy is to increase it’s RES energy output to 50 GW by the year 2030. One of the key aspects of EDF’s strategy is not just an increase in RES power output, but, amongst other things, a creation of decentralized energy systems and personal services in energy consumption management. The company places a stake on a synergy of atomic and renewable energy.
After several stages of business transformation, E.ON and RWE decided to leave the process of energy generation and it’s sales to RWE, and to concentrate E.ON on distributed energy generation, grids and consumer solutions.
Siemens and GE, the leaders of power engineering industry, started buying assets in renewable energy related fields since 2002-2005. In 2016, total world share of Siemens in wind turbine market amounted to 15%, with GE holding 14%. Apart from that, both companies conduct extensive research in the field of digital solutions for renewable energy.

«Engie», which already posses nuclear, hydro- and RES-power generating capacities, like many other energy industry leaders, aims at becoming one of the key players in ecosystem-transforming technologies. According to Willem Coppoolse (Head of Illiquid Market Origination, Engie, France), Engie is already a world leader in energy efficiency solutions. It offers solutions in congestion management and demand side response to it’s customers. In it’s business diversification efforts, Engie also develops energy storage technologies and offers self-manageable solar energy production solutions to industrial customers. The company is gradually reorients itself from a traditional power generating industry into a power-supply transformation solutions provider.
While speaking on an issue of digitalization, Willem Coppoolse pointed out the fact that there is a competition with IT-companies, which are not energy industries themselves, in this field, as said companies often provide much cheaper offers, and that energy companies ought to be prepared to become new «Googles» or «Amazons» themselves in new digital solutions.

«ABB», a major player in the field of renewable energy-related systems and hardware, takes special interest in the development of digital technologies, while also conceding superiority of the banking sphere and retail in this area. As an example of digital solutions development, Enver Shulgin (vice-president, head of the «Electric drive and Robotics» department of «ABB», Switzerland) sites a system of preventive analytics, which allows a remote hardware functionality forecasting. He stresses the importance of the digital solutions in after-sale services.

Will Russia remain uninvolved in these innovations, or do we have some opportunities to become active participants in new energy technologies business?

Emin Askerov (CEO of Red Wind B.V (joint project of Novawind and Lagerwey), Netherlands), while evaluating the prospect of expanding a portfolio of energy system transformation businesses, has noted that Rosatom has already made a significant step in diversification of decarbonized generating segment and power engineering thanks to it’s wind power projects. Peak management is the next opportunity. Traditional methods of peak management are gradually being replaced by consumer-oriented demand response and storage technologies. According to systems operator’s data, Russian peak generation market amounts to 46 GW, and it’s something that is possible to work with. We are growing our distributed generation industry. Solar panels are starting to appear in households, while major commercial consumers are aiming at self-managed power generation.  There is a change in a power supply balance. There are the same trends in Russia, determined by different factors. World peak power generation market has reached 980 GW, with estimated potential growth up to 1200 GW. Last year, Rosatom has set a goal of entering this market, both domestically and worldwide.  We have determined our three key technologies to work with peaks: gas-turbine installations, energy accumulation systems and consumer service. Those technologies are the basis of our future product line

Alxey Khohlov asked Willem Coppoolse if he sees the opportunities for development of  smart energy technologies in Russia. In response, Mr. Coppoolse has supported Emin Askerov’s statement that there is an opportunity for Russia in peaks load management segment, even though Russian power utility system is still strongly depends on carbon energy and has it’s own unique aspects of cost formation. If Russia would manage to adapt international trends in energy industry development, it will open up possibilities for new technologies development and new international partnerships. Russia has a potential to export technologies, as well as energy industry services. International partnerships are essential for our goal.

As pointed out by Enver Shulgin, just few years ago all discussions on renewable energy were purely speculative. There was no normative base in Russia that would have allowed RES industry to develop. A number of key industry players in collaboration with Ministries have made great efforts to establish such a base. Now, with more serious approach, international companies have entered Russian market.

Vladimir Sidorovich (chief executive of Autonomous non-commercial organization «Institute of Energy-effective Technologies in Construction», Russia) has noted that there are three main sources of income for business. These are hardware and generation equipment, engineering services (objects construction services), and projects management services.  Regarding equipment, Russia already exports it’s own solar power hardware. It is a question of quantity. Hevel has reached a production capacity of 250 MW, which would allow it to take a minuscule share of the world market. There is also a notable case of Algeria, which managed to boost it’s production capacity up to 550 MW a year. Nevertheless, this is a fast growing and highly liquid market, so we can still take our fair share. Rosatom is aimed at wind turbines sales. By building it’s manufacturing facilities in Volgodonsk close to the river port, it gains a solid logistical advantage, which raises locally-produced equipment marketing potential. In wind power industry, building wind farms and providing their management services might become promising exports. It is especially likely considering Rosatom’s large experience on highly competitive markets, which promises favorable conditions for an expansion into renewable energy market. EDF and Engie are good examples of large nuclear assets holders, who are especially aggressive on modern RES markets. Rosatom has a capability to enter solar power industry as well.
Speaking of stimulating technological development, Vladimir Sidorovich favours domestic RES market development. With internal production base and internal technological base, Russia gains a good chance for an external expansion. Getting references through local operations increases export potential. We cannot afford ourselves to lag behind and hope for miraculous exports. Rosatom itself is a testament to that: since the 40’s, there has been an accumulation of knowledge and technological competence, which in turn resulted in high competitiveness on a world market. Russia posses a big electrical energy industry by world standards, but there is a disparity between the size of economy and energy industry and the overall goals of renewable energy development. We have to challenge this priority. The growth potential exceeds predicted limit significantly. If we forgo developing our RES industry, we will miss out on our opportunity for future effectiveness. The market can grow bigger.

Dmitri Holkin (Head of Projects center for innovations development of the «Center of strategic development» Foundation, Russia), with his solid experience in advanced technologies development on behalf of NTI EnergyNET, has concluded that Russia is lagging behind in RES-related technologies. We have a technology transfer, and in accordance with Vladimir’s position, there is a task of developing Russian market, but there is no drive for export. We should pay close attention to the power utility system decentralization process. Decentralization is predicted to gain traction after 2025. Decentralized distributed energy industry has a great potential. Here, Russia can prosper. By introducing renewable energy, especially at a household level, we are creating a new problem, which we are trying to solve with reservation and other methods. As Emin Askerov noted in his presentation, peak load management and demand and response control technologies solve this problem with smart management. Power utility system architecture is of utmost importance. Our current architecture will not be adequate.  New technologies that we discuss today are a challenge in an established power utility system Energy industry will change dramatically. A system of infrastructure-integrated consumers exchanging electrical power will be created. There will be relatively few changes on the Big Energy level A significant economic boost will be received from the developments on consumer and distributed grids levels. New technologies will emerge there, such as Internet of Energy, accumulators and energy routers will appear, direct-current networks with a possible closed technology.  The New Energy, for us, is not RES - it is a component of a new world of energy industry. New technological elements emerge - these are new power electronics, accumulating systems and new platform solutions, which are based on big data, Internet of Things and decentralized autonomous organization technologies. It is this particular suit of technologies that shapes the future of energy industry. Even without a substantial share in RES, there is a goal of increasing the effectiveness of  network-enabled generating capacity.  This is what we aim for. NTI EnergyNet has determined it’s three major sectors - reliable flexible networks, intelligent distributed energy and consumer services. Russia has it’s place in those sectors, and there is an ever-growing demand.

Just the fact that discussions on new energy and relevant technologies are becoming an integral part of every conference of key industry players speaks of the vast opportunities for the business development in this field. Even though mere ten years ago all discussions of renewable energy were only speculative, leading companies today have made a practical approach to RES. Russia should define it’s suite of critical technologies, which would allow it to enter the landscape of modern energy industry. It has both the potential and necessary resources for the task.