Russia

Russia

Russia to adopt CfD model for wind tenders

The Russian government is expected to change the way it awards wind power contracts in tenders from next year

The first tender under the new rules could be held in early 2021 (pic credit: Russian Association of the Wind power Industry)
The first tender under the new rules could be held in early 2021 (pic credit: Russian Association of the Wind power Industry)

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Wind power developers in Russia are due to receive state support through a mechanism similar to the UK’s contract for difference (CfD) model under proposed changes expected to be passed before the end of the year.

Under the changes, investors would enter their projects into tenders, bidding for the lowest rates per unit of energy, with a possible first round due to be held in early 2021.

They would receive revenue through Russia’s day-ahead market, with a premium financed through consumers’ increased electricity bills if the market price falls below the contract price – similar to the CfD model used in the UK and due to be used for Danish offshore wind farms.

To date, developers have secured contracts for state support in tenders based on their projects having the lowest capital costs.

The government is expected to give final approval to the changes by the end of the year, with a first tender under the new rules due to take place in early 2021.

The new programme for renewable projects coming online between 2025 and 2035 also introduces fines for projects failing to meet mandated local content levels (65%) or export requirements for equipment (20%).

Regulators believe this approach will make wind farms more cost-efficient and allow them to phase out state support.

However, investors have criticised the measures.

Alexey Zhikharev, director of the Russian Association for the Development of Renewable Energy, said these measures increase the risk for investors – especially the fines for not meeting local content or export targets.

Russia’s new state programme to support renewables in 2025-2035 may also feature limits to wind farm construction in the south of the country over fears of renewables’ variability placing stress on local grid systems.

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