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The NovaWind roundtable discussion "Russia's opportunities in the new electric power industry. Is there a potential for coming in the international market" at Atomexpo – 2018

16.05.2018

Leading experts in the renewable energy and RES advanced technologies took part in the discussion on the future of energy sector.
Recently, the emphasis on climate agenda, Paris Agreement, and decarbonization have caused serious changes in the global electric power industry. As Aleksei Khokhlov (the moderator of the discussion and the Head of the Electric Power Industry Line-of-Business of Skolkovo Energy Center of the Moscow School of Management) noted, this contributed to the development of renewable energy sector, increase in its share in the power balance and decrease in the value of power generated by the renewable energy sources. According to the IRENA's data, announced at the roundtable discussion by Roland Roesch (Senior Programme Officer, Renewable Energy Markets, the International Renewable Energy Agency (IRENA), Germany), since 2012, more than 50% of the new electric power facilities put into operation are related to the renewable energy sources, with an annual increase in the renewable energy sources of 0.7%, and, for example, the cost of solar energy has decreased by 80% over the past six years. The renewable energy becomes absolutely competitive with regard to the traditional electric power industry.
All these processes have set the wheels of decentralization and distributed electric power industry in motion. The electric power system becomes more democratic, the electric power consumer becomes also the energy producer — the prosumer.

In the global power industry, the decentralized power-supply source start to prevail over the centralized ones. But, under the current conditions, it is not only about generation, but also about the demand management system, energy saving and digitalization. Technologies are also developing in the area of electric power storage. As the competitiveness of RES increases, due to the various mechanisms of state support, electric power storage technologies become cheaper. As Walter Pfeiffer (Partner in the Global Energy & Chemicals Competence Center, Roland Berger GmbH, Netherlands) noted, the cost of these technologies will decrease by more than 50% in 2030. The development of the Internet of Things, blockchain and artificial intelligence gives way to new platforms adjusted to decentralized electric power systems.

Annual investments in the solar and wind power make up about $ 300 billion a year. But today we are talking not only about investments in RES, but also in "smart technologies" that support and develop renewable energy production. The development of decentralized electric power systems boosts the growth of innovations. According to IRENA, today, there are more than 600,000 patents in the area of RES in the world, while in 2016, 30% of the total number of requests came from China. Currently, China becomes one of the leading innovators in the area of solar power and related technologies.
The development of renewable energy also affects changing of strategies of both utility companies and equipment manufacturers. Walter Pfeiffer gives the cases of E.ON/RWE, EDF, ENEL, Iberdrola, Siemens and GE as an example.
EDF, a company with nuclear and thermal power plants in its asset portfolio, put a great attention to the capacity increase due to renewable energy. EDF strategy is to increase the capacity of RES up to 50 GW by 2030. One of the fundamental points of the strategy is not just RES power increase, but also the creation of competitive solutions for decentralized electric power systems and personal services in the area of electric power consumption management. The company relies on the synergy of nuclear and renewable power industries.
E.ON and RWE, having passed several stages of business transformation, decided to keep RWE to be engaged in generation and sale of electric power, and E.ON to be focused on the distributed generation, grids, and consumer solutions.
In 2002-2005, Siemens and GE, leaders of the power engineering industry, began to actively acquire assets in the area of renewable energy production. In 2016, the Siemens' share in the global wind power market was 15%, and the GE's share was 14%. In addition, both companies are actively developing digital solutions for the renewable energy.

Engie, like many leading energy companies, has nuclear, gas, hydro, and RES generation facilities and strives to become one of the key players in the technologies supporting the transformation of energy system. According to Willem Coppoolse (Head of Illiquid Gas Markets Origination, Engie, France), now Engie is the world leader in the area of energy-efficient solutions. The company offers consumers solutions to control peak loads and demand management technologies. As a part of business diversification, Engie also deals with technologies in the area of electric power storage and works with industrial consumers, offering solutions for independent energy supply by means of solar power. The company is gradually transforming from a traditional utility company into the business that provides services in the context of the electric power system transformation. Speaking about digitalization, Willem Coppoolse paid special attention to the IT companies. Being not related to the electric power industry, they come to the market offering cheaper solutions for the energy segment. With this trend the traditional industry players need to become Googles and Amazons of the new digital solutions.

ABB, one of the leaders in the production of systems and components for renewable energy, pays special attention to the development of digital technologies, noting that energy in this area falls behind the banking and retail sectors. As an example of digital solutions development, Enver Shulgin (Vice President, Local Division Manager Motion and Robotics, ABB LLC, Switzerland) gives a preventive analytics system allowing remote forecasting of equipment operation in the future. Special attention is paid to digital solutions in the area of after-sales services.

Will Russia remain aloof from all these processes, or do we have an opportunity to become active participants in the business of new technologies in the electric power industry?

Emin Askerov (Managing Director of Red Wind B.V. (joint venture of JSC "NovaWind" and Lagerwey, Netherlands)), assessing the prospect of expanding businesses portfolio under the conditions of the energy system transformation, noted that Rosatom, thanks to the wind power projects, has already made a confident step towards the diversification of the carbon-free generation and power engineering segments. The next option is to manage peak loads. Traditional methods of managing peak loads are being gradually replaced by technologies of the consumer-based action in terms of demand management and storage technologies. According to the statistics of the system operator, the Russian market of peak generation is 46 GW and it is possible to work with it. A distributed generation increases. Solar panels appear in the households, large commercial consumers plan to cross over to their own generation. There is an imbalance in the electric power system. As a matter of fact, there are the same trends in Russia, but they are determined by other factors. Today, the world market of peak generation is 980 GW with a forecasting growth of up to 1,200 GW. At the end of last year, Rosatom decided to work in this market, both at Russian and international levels. We set for ourselves three lines in the technologies developed to work with peaks — gas turbine plants, power storage systems and consumer service. We will form our product line based on these technologies.
Responding to the Alexei Khokhlov's question about whether Willem Coppoolse sees opportunities for the development of new energy technologies in Russia, the representative of Engie supported the Emin Askerov's view on the existing opportunities in the area of peak loads management, although the Russian power system still relies heavily on carbon energy and has its own aspects of pricing. If Russia adapts international trends in the energy development, it will open up great opportunities for the new technologies and new international partnerships in this area. Russia could well become both an exporter of technologies and services in the electric power industry. Here the international partnerships are needed.
Enver Shulgin emphasized that only a few years ago discussions on the renewable energy would have been purely speculative. In Russia, there was no legal framework allowing RES development in the country at all. The pool of serious players in the area of renewable energy, together with the ministries, has done a great job for these standards to appear. The transition of projects to a specific area led to the fact that international companies are now actively working in the Russian market.
Vladimir Sidorovich (Director General of the Autonomous Non-Profit Organization "Institute of Energy-Efficient Technologies in Construction", Russia) noted that there are three main areas in the electric power industry where business earns money. They are engineering and generating equipment, engineering services (services for the creation of facilities and generation, including, among other things, facilities management services). As for the equipment, Russia is already selling its equipment to the international market of solar power. The question, of course, is the volumes. Hevel brings its production facilities up to 250 MW per year, which will allow the company to get a very little share in the global market. Algeria, for example, brings its production facilities up to 550 MW per year. Nevertheless, this market is rapidly growing and is highly liquid, so a little share can be got in it. Rosatom is focused on the sale of wind turbines. Establishing production in Volgodonsk near river routes, it gets good logistics preferences, which increases the marketing potential of the equipment produced here.
In the wind power industry, the export of services for the construction of facilities, as well as their management may become promising. Moreover, Rosatom has competence in sales in highly competitive markets, which creates favorable conditions for entering the renewable energy market. It is sufficient to pay attention to EDF and Engie, which, having large nuclear assets, are now very aggressive in the renewable energy market. Rosatom can also participate in the solar power industry.
Speaking about the incentives to develop technologies, Vladimir Sidorovich supports the development of the domestic market of RES. Having a domestic production facilities and processing base, the country has a good chance for external expansion. Running-in of technologies in our territory increases their export potential. We cannot stay in the Stone Age and work an export miracle. Rosatom itself illustrates this: since the forties of the last century, it accumulates knowhow and technological competences, which results in the high competitiveness in the world market. According to international standards, Russia has a large electric power industry, but there is disparity between the size of the economics and power industry and the renewable energy development goals. It is possible to work to overcome this disparity. The development potential is much higher than the available planning figures. If we refuse to develop the renewable energy, we deny the possibility to achieve the efficiency in the future. The market may well be larger.
Dmitry Kholkin (head of the Engineering Research Center for Innovation Development of the fund "Center for Strategic Research", Russia), having an extensive experience in researching advanced technologies in the interests of the National Technological Initiative of Russia EnergyNET, believes that Russia is deeply lagged behind in the area of renewable energy technologies. We have a technology transfer and we can agree with Vladimir Sidorovich that there is a task to develop the Russian market, but there is no driver for export. It is necessary to pay attention to the process of the energy system decentralization. Decentralization will gain momentum after 2025. Distributions and decentralized electric power industry have a great potential. Here, Russia can do pretty well. By introducing renewable energy, especially on the side of households, we create a new challenge and try to solve it: by means of reservation, etc. Emin Askerov rightly noted in his report that the technologies in the area of peak loads and demand management allow solving this challenge by means of intellectual management. It is important what will be the architecture of the electric power system. The current architecture cannot cope with this. New technologies, which we are discussing today, are the challenges existing in current architecture of the electric power system. Energy will qualitatively change. There will be a system when consumers will integrate into the infrastructure and share electricity. Not a whole lot will change at a level of the big electric power industry. Significant economic growth will influence what will happen at the level of a consumer and at the level of distribution networks. There will be the Internet of energy, energy storage devices and power routers, direct-current networks with, perhaps, closed cycle technology. For us, RES is not the new electric power industry, it is a component of the new energy world. New technological elements appear, such as new power electronics, electric power storage systems. They are platform solutions based on the big data, Internet of Things and the technology of a decentralized autonomous organization. This is a package of technologies that changes the appearance of the electric power industry. Even without a significant share of RES, there is a task to increase the efficiency of using the grid generating capacity. What to stake on. The National Technological Initiative of Russia EnergyNET selects three major lines: reliable and flexible grids, intelligent distributed electric power industry and consumer services. These lines are the groundwork for Russia and rapid dynamics of demand.

The fact that discussions on the new electric power industry and technologies in the new electric power industry become an obligatory part of all forums involving serious players is an evidence of great opportunities for development in this area. Ten years ago, talks about renewable energy was purely speculative, today, serious companies have transferred RES projects to a specific plane. Russia should define a package of critical technologies with which it will enter a new energy structure. It has both the potential and the resources to do this.