Russia eases local content rules

RUSSIA: The energy ministry has extended the deadline for wind project installations, and scaled down the introduction of local content requirement.

Russia's local content requirement had been set at 65% starting from 2016
Russia's local content requirement had been set at 65% starting from 2016

The changes follow pressure from local and foreign wind project developers who said that the previous rulings were impossible to meet. The market is seen as too small to sustain a major manufacturing investment.

The most significant change is to the local content requirement, which had been set at 65% starting from 2016. According to the new amendments, this year the level of local content requirement will be set at 20%, increasing to a maximum of 30% in 2016. This increases again to 45% between 2018-2020, and 65% during 2020-2024.

In the package of amendments announced by Aliya Samigullina, a representative of Russia’s deputy prime minister Arkady Dvorkovich, who is responsible for renewables development, the target of 3.6GW wind installations remains unchanged, but the project completion deadline is extended from 2020 to 2024.

Government support will be available for up to 500MW of development annually. The previous target was 250MW annually to 2019, increasing to 1GW from 2020.

The available support for projects, based on project capacity and lasting for 15 years, remains unchanged at RUB 65,000/kW (US$1,137/kW). The payment is made every year for 15 years.

Competitive and state tenders allocate contracts to build wind projects in Russia. The government guarantees the return on investment with a yield of about 14%. State support is only be eligible for developers who comply with the local content requirements.

These amendments follows pressure from from both local and foreign wind project developers and manufacturers, including GE. They had stated that the previous requirements were overstated and needed to be changed in order for development to take place.

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