St. Petersburg International Economic Forum 2015 on Energy Efficiency Trends in Russia

The economic conditions have changed – both in Russia and the rest of the world, and this situation is presenting us fresh opportunities to develop energy efficiency. This idea was expressed numerous times during the discussions on energy efficiency that were held at the St. Petersburg International Economic Forum 2015. The regions can help facilitate the growth, yet the Government must not cut funding of energy efficiency projects, say Russian environmental NGOs.

The experts who took part in discussions on energy efficiency at the St. Petersburg International Economic Forum 2015, among the main issues of Russia’s energy sector named physical wear and tear of the equipment, lagging behind in terms of technological development, unattractiveness of the sector for investors, and the lack of consumer discipline when it comes to regular payments.

Experts say that given today’s economic crunch, the real economy is not ready to invest in the expansion of industrial capacities, and prefers to focus on reducing the costs. According to Parviz Abdushukurov, Vice-President of Fortum, Public Limited Company, “currently, all market participants – suppliers, consumers and authorities – are dissatisfied with the situation. Suppliers are not happy with the lack of tariff regulation, consumers – with the quality of services provided, and the authorities – with the direction where the entire sector is headed.”

The Economic Forum’s participants discussed various options of transforming the energy sector and transitioning to a new model, which would imply new principles of tariff setting and regulation. As a remedy to the disincentives, during the times of recession, the experts suggested increasing domestic gas tariffs, reforming heat supply systems, and developing energy services.
Increasing the tariffs is hardly a fresh new way of promoting energy efficiency and is unlikely to be received with enthusiasm and support by general public and businesses in particular. However, when it comes to promoting energy service contracts, some experts say, they are precisely something we should bet on.

Perceiving all the potential benefits energy efficiency is able to deliver, a few years ago, some of Russia’s leading banks started creating subsidiaries to work in this field. According to a Kommersant report, the examples include Gazprombank, which created “GPB Energoeffect” and Sberbank’s “Sberenergodevelopment”. Both structures are actively working in the regions.

There are reasons to be optimistic about the promotion of energy efficiency, say energy managing authorities. According to Anton Inyutsin, Russia’s Deputy Minister of Energy, “the current situation reveals new opportunities for private investments and the implementation of measures that are able to speed-up the growth rate of energy saving and the introduction of new technologies in Russia.”

At the same time, the state of governmental support of energy efficiency looks rather sad, since the regions have recently been deprived of 5.7 billion rubles of federal grants and subsidies that had been promised earlier. A number of ministers and governmental bodies proposed new formats of supporting low-carbon energy development projects (and energy efficiency as one of its main fields) without the use of federal money.

Nevertheless, according to Mr.Inyutsin, the Ministry of Energy is going to suggest supporting programs of providing subsidies to valid energy efficiency projects “with good parameters”, i.e. the ones that bring tangible results, of up to 3-5 billion rubles per year.

Environmental NGO experts say that it is crucial that the Government keep supporting regional energy efficiency programs. “The very regions may become the growing point for the implementation of energy efficiency programs,” says Olga Senova, head of Russian Social Ecological Union’s Climate Secretariat. “Instead of just focusing on looking for investments elsewhere, it is important to maintain governmental regional financial support programs. They have a great potential pay-off. Obtaining energy by means of energy saving is more cost-efficient than investing in the construction of new generating capacities. Energy efficiency is, in fact, the biggest, cleanest and cheapest power source in our country.”