Boston, MA -- (SBWIRE) -- 08/30/2012 -- BMI View: Despite the considerable size of the electricity market, strong GDP per capita growth and widespread electricity export links, a whole host of challenges still face prospective investors in Russia's power sector. Issues concerning the transparency of the tendering process, liberalisation level and lack of subsidies are likely to hinder project developments across all sectors of power.
During the period 2012-2021, Russia's overall electricity generation is expected to increase by an annual average of 1.90%. This is underlined by an average annual increase in consumption of 1.97% which is driven by a relatively large real GDP growth rate (we estimate 3.2% for 2012) and large population of over 140 million. 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, stakeholders have voiced concerns that a trend towards consolidation of government-owned companies is beginning to emerge.
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Other key trends in the Russian electricity market include:
- Due to an abundance of gas and coal resources, Russia is currently heavily reliant on thermal energy sources for electricity generation, primarily gas.
- However, the Energy Strategy 2030 aims to double nuclear generation to 300TWh by 2020 and expand non-hydro renewable energy sources so they contribute at least 4.5% of the total electricity generation, also by 2020. Yet, owing to Russia's generally unattractive Industry and Country Risk profile, BMI believes that nuclear generation will fall short of the 2020 target.
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