2013-02-22 14:09:34 - New Energy research report from Business Monitor International is now available from Fast Market Research
BMI View: Recent events are testament to our core view that, 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, especially as new policies suggests that the government's approach to the electricity sector is muddled. 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.
Full Report Details at
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 3.91% between 2017 and 2021.
In addition, an adverse demographic trend is likely to constrain hikes in demand in the long term. Hence, BMI believes that during the period 2012-2021 electricity consumption will see an average annual increase in consumption of 1.77% year-on-year (y-o-y), mirrored by 1.6% average annual growth for generation, with the country continuing to play an important role as exporter of energy in the region. That said, it is interesting to note that Finland is set to test its first power exports to Russia in 2013. Although a highvoltage 400 kilovolt electricity transmission has been in operation between Russia and Finland since 1982, technical restrictions had so far blocked exports to Russia and we note that commercial terms for potential shift have not been agreed yet.
Among the key trend and development observed in the market this quarter, we also highlight 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. That said, our view that attempts to lessen the country's strong reliance on thermal sources could create opportunities for other segments is playing out, with RusHydro having announced that it plans to build seven major power facilities in the Far East region following President Vladimir Putin's decree injecting RUB50bn into the company's capital in November 2012.
* We highlight however once again that these opportunities are likely to be constrained be the lack of appropriate policy and regulatory framework to stimulate demand and attract investors, leading us to believe that the Energy Strategy 2030 targets will not be met, perpetuating gas predominance over the next decade.
* 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 a trend towards consolidation of government-owned companies is beginning to emerge.
Report Table of Contents:
BMI Industry View
- Russia Snapshot
- Table: Country Snapshot: Economic and Demographic Data
- Table: Country Snapshot: Power Sector
- Russia Frecast Scenario
- Electricity Generation and Power Generating Capacity
- Table: Russia Total Electricity Generation Data And Forecasts
- Table: Russia Total Electricity Generation Long-Term Forecasts
- Table: Russia Electricity Generating Capacity Data And Forecasts
- Table: Russia Electricity Generating Capacity Long-Term Forecasts
- Electricity Consumption
- Table: Russia Total Electricity Consumption Data And Forecasts
- Table: Russia Total Electricity Consumption Long-Term Forecasts
- Transmission & Distribution, Imports & Exports
- Table: Russia Electric Power Transmission And Distribution Losses Data And Forecasts
- Table: Russia Electric Power Transmission And Distribution Losses Long-Term Forecasts
- Table: Russia Trade Data And Forecasts
- Table: Russia Trade Long-Term Forecasts
Industry Risk Reward Ratings
- CEE Power Risk/Reward Ratings
- Table: CEE Power Risk/Reward Ratings (Scores Out Of 100)
- Russia Power Risk/Reward Ratings
- Key Policies And Market Structure
- Regulation and Competition
- Sustainable Energy Policies
- Russia Power Projects Database
- Table: Russia Power Projects Database
- Inter RAO UES
- Gazprom Energoholding
- Inter RAO UES
- CEE Industry Overview
- Glossary of Terms
- Table: Glossary of Terms
- Industry Forecasts
- Power Industry - Data Methodology
- Generation and Consumption Data
- Electricity Generating Capacity Data
- Power Risk/Reward Ratings Methodology
- Table: Power Risk/Reward Indicators
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