The Russian government has improved mechanisms for supporting renewable energy projects in retail markets

Chairman of the Government of the Russian Federation Mikhail Mishustin signed Resolution No. 1298 "On incentives for stimulating the use of renewable energy sources, amending some acts of the Government of the Russian Federation and on invalidating certain provisions of some acts of the Government of the Russian Federation."

The Resolution is aimed at improving the mechanisms for supporting renewable energy projects in retail markets. The approved changes introduce an integrated approach to the selection and implementation of projects for the construction of renewable energy generation facilities in retail markets, including:

• transition to technologically neutral competitive selection of projects for the construction of renewable energy facilities, regardless of the technology used for the production of electricity according to the criterion of the minimum price of electricity from renewable energy sources (RES), which will reduce expenditures of  consumers in the region;

• formation of the price for electricity of RES-generation facilities based on the price in the bid submitted by the investor for competitive selection, but not higher than the approved limit level, and not at regulated tariffs. Thus, the investor receives a guaranteed price for electricity for the entire payback period of the investment project (15 years) and, accordingly, the opportunity to compete according to the criterion of the minimum price for electricity, which, together with the principle of technologically neutral selection, contributes to increased competition between investors and gives implementation of the most efficient renewable energy generation projects for the respective region;

• establishing uniform rules for competitive selection of construction projects of RES-generation facilities for all regions, based on which, register of projects planned for implementation will be formed, indicating the annual volumes of electricity supply by RES-generation facilities and prices for the electricity they produce;

• establishing the obligation of grid companies to conclude sale and purchase contracts of electricity in order to compensate for losses with the winners of the selection before the start of the investment project, which makes it easier to attract debt financing for the project;

• establishing of requirements for the minimum share of non-renewable energy sources for RES-generation facilities using combined fuels. This approach increases the investment attractiveness of renewable energy projects that involve the use of traditional fuel in acceptable volumes without reducing the economic performance of such projects, and also eliminated the need to provide certificates confirming the volume of electricity production at RES-generation facilities for the sale of electricity by network organizations for the purpose of compensation for losses;

• reduction of the list of documents provided for qualification of a RES-generation facility, including the elimination of the need to provide design documentation for facilities using only renewable energy sources, as well as reducing the time required for qualification of a RES-generation facility.

The Ministry of Energy of Russia believes that these innovations can provide incentives for the widespread introduction of renewable energy facilities with a capacity of less than 25 MW in the retail electricity markets, which will increase the reliability of power supply due to the diversification of energy sources, will give an impetus to the development of innovative activity and the introduction of new types of generation adapted to local realities, and will also contribute to the achievement of the goals of the Paris Agreement and the Sustainable Development Goals, as defined by the UN General Assembly.