Vladimir Putin already for the second time approved the transition of Russian energy to a new investment cycle to upgrade old facilities, although all the parameters of the new mechanism have not yet been finally approved. According to Kommersant's information, the level of localization of gas turbines purchased for the modernization of old TPPs is planned to be increased to 100% by 2025, and the main developer is likely to be Alexei Mordashov's Power Machines. In addition, the president approved the inclusion of a separate investment supplement to the prices of the wholesale energy market for upgrading capacities in the Far East. But the key parameter is the profitability of investment projects, which the White House has previously reduced from 14% to 12%, until separately discussed.
Vladimir Putin supported the key parameters of the Energy Ministry's proposed program for the modernization of old thermal power plants, Energy Minister Alexander Novak said on Monday after the meeting of the presidential commission for the fuel and energy complex. "At present, we will introduce into the government a draft regulatory and legal framework that will allow us to begin the investment process almost from the end of 2018," Mr. Novak said, adding that it was an investment of up to 1.5 trillion rubles. According to him, the growth of the tariff in the implementation of this program will not exceed inflation.
For the first time, Vladimir Putin conceptually approved the modernization program in November 2017, more than six months the regulators worked through its parameters. The essence of the program is the "redirection" of the increased payments of consumers from the completed program of contracts for the supply of capacity (DPM, construction sites 2010-2015) for the renewal of 39 GW of old TPPs. Peak payments for DPM will be in 2021-2022, but by 2026 they had to run out. Originally, according to Kommersant, the Ministry of Energy offered to include in the list of TPPs and investors "in manual mode", the key lobbyists of this idea were Inter RAO, Gazprom energoholding and Siberian Generating Company Andrei Melnichenko. As a result, it was decided to hold competitive selections, partially retaining the "list" mechanism for coordinating 10% of the projects through the government commission on energy. Return of investment under the new program will go 16 years. Large consumers opposed reinvesting funds for modernization, as it was assumed that after the completion of the PDM, the burden on them would decrease.
Separately at the meeting of the commission discussed the issue of the level of localization of production in Russia of gas turbines of high power (over 65 MW). The president at the open part of the meeting said that "it is necessary to do this with maximum support for domestic equipment, up to its absolute localization." According to Kommersant sources familiar with the outcome of the discussion, the threshold of 100% of the localization will be postponed for 2025. Previously, the Ministry of Energy insisted on 90% of the localization for modernization.
The issue of privileges for generating companies using large-scale pilot Russian turbines is that the investor, at the suggestion of the Ministry of Energy, will be able to transfer the commissioning of such facilities without penalty for an unlimited period of time. At the meeting, the final decision was not taken. This issue will continue to be worked out at the government level, one source of Kommersant believes.
During the period of the DPM program, generative companies bought mainly foreign gas turbines, Russian machine builders do not have such technologies (first of all, the hot part of machines - turbine blades and combustion chambers - the last 5-7% of the localization). The development of the Russian turbine is claimed by Alexey Mordashov, who was under the US sanctions "Power Machines", in early April, the businessman asked for state support for the project. But the head of German Siemens in Russia, Dietrich Möller, announced his intention to increase the level of localization at the concern's plant in St. Petersburg from the current 65% to 90% in order to participate in the modernization program. According to "Kommersant", in early September, Vladimir Putin can meet with the leadership of Siemens, where the possible participation of the concern in the program of renovation of old thermal power plants will be discussed.
Also, in general, the inclusion in the program of modernization of the old thermal generation of RusHydro in the Far East was approved at the presidential commission. It is assumed that funding will be provided through a separate premium to the price of the energy market (now a similar mechanism is in place to reduce energy tariffs in the Far Eastern Federal District).
At the meeting, the commission did not discuss WACC (profitability) of new investment projects, one of the interlocutors of Kommersant says. At a meeting at the profile vice-premier Dmitry Kozak on Aug. 22, on the whole, the lowering of the basic level of profitability for upgrading TPPs from the initial 14% to 12% was approved, and the linkage of this parameter to the current yield of OFZ of 7.5%. In general, this decision can be considered final, one of the interlocutors of "Kommerz" clarifies. However, some of the generators are dissatisfied with the decrease in profitability, another source from Kommersant says, that smaller and medium-sized companies may have problems with borrowing "at a rate much lower than 12%," which effectively "closes access to the modernization program for them and gives preferences large players with their own working capital. "