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BMI View:
Whilst the Russian power market benefits from considerable market size and widespread electricity export links, a whole host of challenges still face prospective investors in the sector. Macroeconomic trends, coupled with declining population, are set to take a toll on power demand. In addition, while we expect Russia to converge steadily towards developed standards of wealth, we caution that structural risks, including a weak business environment and poor institutional capacity will pose challenges to project development across all segment of power sector over the long term.
The Russian Federation is currently one of the top electricity generating economies in the world. Yet, a number of concurring factors point to the fact that the diverse components of Russia’s power market will see rather moderate growth over our forecast period to 2021. BMI’s Country Risks analysts anticipate that Russian growth will slow markedly over our 10-year forecast horizon, with real GDP growth to average 3.9% between 2016 and 2021.
A slowdown in exports on the back of developments in the commodity sector could potentially reduce power consumption in energy-intensive industries; with elevated domestic demand growth likely to cover the gap only partially, hindered by an adverse demographic trend. Hence, BMI believes that during the period 2012-2021 electricity consumption will see an average annual increase in consumption of 2% year-on-year (y-o-y), mirrored by 1.9% average annual growth for generation, as the country continues to play an important role as exporter of energy in the region.
This considered, we believe that:
BMI View:
Whilst the Russian power market benefits from considerable market size and widespread electricity export links, a whole host of challenges still face prospective investors in the sector. Macroeconomic trends, coupled with declining population, are set to take a toll on power demand. In addition, while we expect Russia to converge steadily towards developed standards of wealth, we caution that structural risks, including a weak business environment and poor institutional capacity will pose challenges to project development across all segment of power sector over the long term.
The Russian Federation is currently one of the top electricity generating economies in the world. Yet, a number of concurring factors point to the fact that the diverse components of Russia’s power market will see rather moderate growth over our forecast period to 2021. BMI’s Country Risks analysts anticipate that Russian growth will slow markedly over our 10-year forecast horizon, with real GDP growth to average 3.9% between 2016 and 2021.
A slowdown in exports on the back of developments in the commodity sector could potentially reduce power consumption in energy-intensive industries; with elevated domestic demand growth likely to cover the gap only partially, hindered by an adverse demographic trend. Hence, BMI believes that during the period 2012-2021 electricity consumption will see an average annual increase in consumption of 2% year-on-year (y-o-y), mirrored by 1.9% average annual growth for generation, as the country continues to play an important role as exporter of energy in the region.
This considered, we believe that:
- Refurbishment and substitution of ageing plants will represent one of the main drivers for new investments, with gas remaining the most significant source for power generation, owing to its abundance.
- There is considerable scope for the Russian government to increase divestment within the electricity market, and introduce greater private sector involvement into the industry. However, we note that downside risks appear on the rise as stakeholders have voiced concerns that a trend towards consolidation of government-owned companies is beginning to emerge.
- Attempts to lessen the country’s strong reliance on thermal sources could create opportunities for other segments. Most notably, as a result of the Energy Strategy 2030, nuclear and non-hydropower renewable expansion are at the top of Russia's energy agenda. However, delays in the construction of nuclear installations and the lack of appropriate policy and regulatory framework to stimulate demand and attract investors within the renewable industry, leads us to believe that these targets will not be met, perpetuating gas predominance over the next decade.
BMI Industry View
SWOT Analysis
Russia Power SWOT
Regional Overview
Industry Forecast Scenario
Table: Country Snapshot: Economic and Demographic Data
Table: Country Snapshot: Power Sector
Russia Forecast Scenario
Electricity Generation and Power Generating Capacity
Table: Russia Total Electricity Generation Data And Forecasts, 2010 - 2016
Table: Russia Total Electricity Generation Long-Term Forecasts, 2015 - 2021
Table: Russia Electricity Generating Capacity Data And Forecasts, 2010 - 2016
Table: Russia Electricity Generating Capacity Long Term Forecasts, 2015 - 2021
Electricity Consumption
Table: Russia Total Electricity Consumption Data And Forecasts, 2010 - 2016
Table: Russia Total Electricity Consumption Long-Term Forecasts, 2015 - 2021
Transmission & Distribution, Imports & Exports
Table: Russia Electric Power Transmission And Distribution Losses Data And Forecasts, 2010 - 2016
Table: Russia Electric Power Transmission And Distribution Losses Long-Term Forecasts, 2010 - 2016
Table: Russia Trade Forecasts, 2010 - 2016
Table: Russia Trade Data Long-Term Forecasts, 2015 - 2021
Key Policies/Market Structure
Regulation And Competition
Sustainable Energy Policies
Pricing
Key Projects Database
Table: Key Projects
Power Risk/Reward Ratings
Central and Eastern Europe Regional Power Risk/Reward Ratings
Table: CEE Power Risk/Reward Ratings (Scores Out Of 100)
Russia’s Power Risk/Reward Ratings
Rewards
Risks
Competitive Landscape
Enel
Company Profiles
EON
Inter RAO UES
Glossary of Terms
Table: Glossary of Terms
Methodology And Sources
Industry Forecasts
Power Industry - Data Methodology
Generation and Consumption Data
Electricity Generation Capacity Data
Power Risk/Reward Ratings Methodology
Table: Power Risk/Reward Indicators
Sources
SWOT Analysis
Russia Power SWOT
Regional Overview
Industry Forecast Scenario
Table: Country Snapshot: Economic and Demographic Data
Table: Country Snapshot: Power Sector
Russia Forecast Scenario
Electricity Generation and Power Generating Capacity
Table: Russia Total Electricity Generation Data And Forecasts, 2010 - 2016
Table: Russia Total Electricity Generation Long-Term Forecasts, 2015 - 2021
Table: Russia Electricity Generating Capacity Data And Forecasts, 2010 - 2016
Table: Russia Electricity Generating Capacity Long Term Forecasts, 2015 - 2021
Electricity Consumption
Table: Russia Total Electricity Consumption Data And Forecasts, 2010 - 2016
Table: Russia Total Electricity Consumption Long-Term Forecasts, 2015 - 2021
Transmission & Distribution, Imports & Exports
Table: Russia Electric Power Transmission And Distribution Losses Data And Forecasts, 2010 - 2016
Table: Russia Electric Power Transmission And Distribution Losses Long-Term Forecasts, 2010 - 2016
Table: Russia Trade Forecasts, 2010 - 2016
Table: Russia Trade Data Long-Term Forecasts, 2015 - 2021
Key Policies/Market Structure
Regulation And Competition
Sustainable Energy Policies
Pricing
Key Projects Database
Table: Key Projects
Power Risk/Reward Ratings
Central and Eastern Europe Regional Power Risk/Reward Ratings
Table: CEE Power Risk/Reward Ratings (Scores Out Of 100)
Russia’s Power Risk/Reward Ratings
Rewards
Risks
Competitive Landscape
Enel
Company Profiles
EON
Inter RAO UES
Glossary of Terms
Table: Glossary of Terms
Methodology And Sources
Industry Forecasts
Power Industry - Data Methodology
Generation and Consumption Data
Electricity Generation Capacity Data
Power Risk/Reward Ratings Methodology
Table: Power Risk/Reward Indicators
Sources