Siberian TEC’s operating at a loss

One of the main issues to be discussed by the experts of Thermal- Power Generation companies of the Siberian Federal District (SFD) was the program "The problems of thermal generation of Siberia", said "Rossiskaya Gazeta" , a national newspaper.

According to Vladimir Rudakov, Deputy Chairman of the Executive Committee of the Interregional Association "Siberian Agreement" (IASA), the document was prepared by a creative team of professionals in charge of researching sustainable and reliable energy sources for the different regions of Siberia. This group answers to the Presidential Envoy to the Siberian Federal District.

The program was introduced by Nicholas Voropai, director of the Institute of Energy Systems of the Siberian Branch of the Russian Academy of Science “L.A. Melentev”. Mr. Voropai stressed the relevance of the problem.

“This program demonstrated that a change in the rules and regulations of the wholesale electricity market (ADEM) significantly affected the economic efficiency of the thermal power generation in Siberia. The prices of the wholesale market were below the cost of production of electricity in most thermal power plants” said the expert

The change in the regulations of electricity trading made the generation costs at some thermal power plants be higher than the selling prices in the wholesale electricity market. This has led to an increase in purchases and a decline in production and sales of electricity in the market. The main negative consequence of the new regulations was reducing the overall economic performance of the Siberian coal-fired plants. Last year they did not even cover fuel costs. According to experts, if the existing rules remain unchanged for the period 2012-2015, all Siberian power companies will have increasing losses trading in the wholesale electricity market.

“Existing rules and regulations OREM (ОРЭМ) constitute an obstacle to the development of cost-efficient ways of generating energy – when combining heat and power” concluded the participants. In their view, if we don’t take the necessary steps we can slow down equipment modernization and introduction of new technologies at the thermal power generation plants, and as a result, we will be facing a deficit of energy output from existing power plants by 2015.

In addition, this year’s low water reserves in the Siberian rivers have reduced the overall hydroelectric production. In order to cover the electricity deficit, gas-fired and coal power plants were deployed at full capacity. In addition, the economic mechanisms that would reimburse unscheduled large volumes of thermal generation are not in effect.

“The whole weight of the issue today lies on the thermal generation companies”, says Maxim Shakhov, technical director of one of the companies.

According to the professionals, the solution lies in taking a series of measures including price improvement in the thermal power generation market, settling the ceiling prices for power and equipment upgrading. The materials and conclusions drawn from the discussion of the program, the Siberian Joint Meeting Coordinating Council for Energy, the energy conservation and efficiency agency AMIS and the working group under the Presidential Envoy to the SFD will conduct a presentation to the Russian government.