Russian Energy Market Research Articles

Sino-Russian energy cooperation in the post-Cold War (2000-2021)

This article aims to analyze Sino-Russian energy cooperation. Energy cooperation is the cornerstone in the relations between Russia and China. The Russian interest in this cooperation is to assure demand for the country’s energy exports, to acquire investment capital, and to benefit from Chinese labour. On the Chinese side, the aim has been to obtain access to Russian natural resources and to invest surplus capital. Despite the overlap in supply and demand, as well as the geographical proximity, the Russian energy market is directed towards Europe, while Chinese energy demand primarily is covered by the Middle East and Central Asia. The need for energy diversification has changed this situation and spurred Sino-Russian cooperation. The article is structured in three parts: it first presents Sino-Russian energy trade, secondly, it treats the agreements signed between both countries, and finally, it analyses energy cooperation. We concluded that this cooperation tends to endure due to the energy-related ties formed as part of the long-term agreements and construction of infrastructure. Also, that this cooperation is of a strategic nature for both countries, as it offers an alternative to other energy relations and provides the necessary room of maneuver to defend central political and security-related interests.

Prospects for replacing Russian fuel with Latin American fuel in the European market

The subject of the study is the potential of the Latin American energy market in the context of the demand of the European Union market for the replacement of Russian energy resources. The object of the study is the energy resources market of the European Union, Latin America, and Russia. The purpose of the study is to identify the possibilities of Latin American countries in replacing Russian energy resources in the energy market of the European Union. The author examines in detail such aspects of the topic as the dependence of the EU economy on Russian energy resources, changes in the conjuncture in the fuel and energy sector of the European Union, and also touches on the consequences for European economies in connection with the abandonment of Russian energy resources. Special attention is paid to the opportunities of the Latin American region in the development of the European energy market. The prospects of the Latin American energy market are being explored from the point of view of the availability of natural resources, as well as from the point of view of real opportunities for exporting energy resources. The methodological basis of the research is a systematic and comparative analysis, a method of generalization, methods of grouping and classifying quantitative and qualitative data, methods of analyzing quantitative data. The main conclusions of the study are that in the short and medium term, the role of Latin America in Europe's energy security is small due to geographical remoteness and the lack of technological opportunities for Latin American countries to increase production capacities in the shortest possible time to increase energy production. For this reason, in the near future, the countries of the Latin American region will not be able to significantly replace Russian fuel in the European market of traditional energy resources. However, European companies are interested in the potential of the Latin American region in the field of "green" energy. In the long term, cooperation between the EU and Latin America in this area seems to be the most mutually beneficial for both sides. A special contribution of the author to the research of the topic is the study of the conjuncture of the EU fuel and energy complex in the context of energy imports. The novelty of the research lies in the fact that for the first time in the domestic literature the question of the prospects of the Latin American energy market as a substitute for the Russian energy market for the European one is raised.

The Role of State in Managing the Wind Energy Projects: Risk Assessment and Justification of the Economic Efficiency

Our paper focuses on assessing the role of state funding in supporting wind energy projects with a focus on economic efficiency and risk assessment. In particular, we analyze the new program aimed at supporting Russian renewable energy (RE) projects envisaged for the period from 2024–2035 that involves a reduction in investments in such projects and the introduction of large fines for non-compliance with regulatory requirements for localization and export. These strict rules imposed by the regulatory authorities, as well as the withdrawal by foreign manufacturers of equipment for renewable energy from the domestic energy market, put into doubt the economic feasibility of the participation of sector players in state-supported programs. Our paper assesses the economic justification for the practicality of the Russian energy market to implement renewable energy projects under the influence of negative environmental factors and the reduction of state support programs. We employ a case study of wind energy projects carried out in 2018–2020 as a part of the first sector support program. Our methodology is based on the calculations of the classical indicators of economic efficiency of projects (NPV, IRR, and DPP). Our own approach reveals that these indicators are supplemented by taking into account the cost of specific political, environmental, and economic risks of wind energy projects. Our results reveal that, at the moment, Russian wind energy projects in various scenarios retain a sufficient margin of financial strength and are able to withstand a reduction in the amount of financial support from the state. Our findings allow the formulation of some practical recommendations for reducing the share of governmental support for wind energy projects on the local energy market as a measure of cutting costs and increasing overall economic efficiency.

Modern Trends in Global Energy and Assessment of the Ever-Increasing Role of Digitalization

The global changes which are affecting countries at the moment act as a ‘censor’ of modern energy relations and energy market development strategies in general. The development of the energy market is no longer considered in terms of its efficiency but more in terms of its survivability under the influence of external environmental factors and its ability to maintain an acceptable level of energy safety. In order to fully balance a country’s internal interests and increase its competitiveness in the global energy market, the importance of the problem of choosing a development strategy—following the path of energy independence or cooperative development—is becoming evident. The purpose of this paper is to identify an effective energy strategy for a country under the influence of contemporary challenges. The object of the study is the Russian energy market and the energy companies as its key players. In this context, it examines the situations where Russia and other energy market players are unequally affected by external environmental factors. Particular emphasis is placed on the possibility of overcoming the negative impact of environmental factors during the implementation of measures aimed at ensuring energy safety, achieving a better environmental situation in the country by reducing CO2 emissions, and strengthening the country’s position in the global energy market by changing its own energy development strategy. The dependence of the financial outcome of the energy complex companies of the Russian Federation on the factors of the external and internal environment was determined as the main direction of the study. The financial outcome of the Russian energy complex companies in this article serves as a landmark indicator of energy market development. The working hypothesis of the research is the authors’ claim that it is necessary for modern energy companies in Russia, as important participants in the energy market of the country, to transform their strategy in the direction of deepening cooperation under the influence of external and internal environmental factors. The methodological and theoretical framework of this study consists of classical and modern economic science, covering the analysis of energy market dynamics and structure, as well as the theories aimed at selecting the most effective strategies under the influence of external and internal environmental factors. The study is based on the works of domestic and foreign scientists devoted to the issues of competitiveness, strategic planning, and sustainable development in the context of total digitalization. Within the framework of the conducted research, we used methods of system and factor analysis; statistical research methods, in particular the analysis of dynamic changes, as well as correlation and regression analysis; and methods of comparison, analogy, and generalization. An important source of data on the financial result of companies in the Russian energy sector was the materials of the Federal State Statistics Service of the Russian Federation. As a result of this paper, a notable influence of external and internal environmental factors is determined. Among the most significant factors, digitalization is identified as a development trend. It also represents a driver of improvement in Russia’s energy market, both in terms of improving its competitiveness and environmental safety and in terms of strengthening the country’s leadership position in the global energy market. In addition to the findings, this article provides a theoretical contribution and recommendations for the development of theoretical ideas concerning the choice of an effective strategy for the development of Russia’s energy market. Future research directions are also considered, and the implications of the presented analysis for further research are discussed.

Future Development of Renewable Energy in Russia: A Case of Solar Power

Currently, there is a growing number of studies related to assessing the cost-effectiveness of renewable energy projects around the world. This topic is also very relevant for the Russian energy market that is otherwise dominated by oil and gas. The Russian Ministry of Energy forecasts that local power plants running on the renewable energy sources (RES) may not become economically efficient until 2025 or later. However, a research question arises: Is it possible to effectively implement RES projects in Russia without any state support? In order to answer this question, the authors need to assess the economic feasibility of seven scenarios for the construction of a solar power plant in the Orenburg region of Russia. The methodological basis of this work is the widely used in the energy sector classic method of investment analysis based on the calculation of discounted indicators: net present value (NPV), payback period (DPP) and internal rate of return (IRR) of the project. All our calculations are based on industry-specific initial capital investment estimates, energy storage equipment costs, and related annual operating costs. This led to the development of the scenarios on the basis of an analysis of the features of electricity and capacity generation in the Orenburg region, the existing options for joining the trading system of the energy market, energy storage applications, as well as the availability of the Russian government support and funding for the solar energy projects. Our results demonstrate that the economic feasibility of the development of renewable energy in Russia can become a reality. Out of the seven scenarios, three yielded the positive economic outcome (among them there were the two project scenarios without government support). These two projects featured the sale of electricity in retail markets and the installation of an additional energy storage system, despite an almost twofold increase in capital investments. The projects in question achieved the best economic results according to the three calculated criteria. In particular, the scenario that provided for the work on the retail market directly to the energy consumer receives an NPV of more than 1.5 times higher than other projects, an IRR of 10% and pays off at least 3 years faster. Achieving a positive economic result in the wholesale market was possible only in case of state support for the project. In addition, this scenario of the project numerically reached almost identical indicators, as in the case of selling energy on the retail market in the region where the power facility operates: NPV is almost 127 million rubles, IRR is within 13.9%, and DPP is 15 years. Other scenarios that do not provide for the use of energy storage systems or do not have state support for working in the wholesale market are not self-sustaining even during the 25-year life of energy equipment. These results might have practical significance and will be used in developing an approach to creating a profile of regions in terms of the advancements of renewable energy, as well as in developing strategies for the incentives of this sector in Russia.

Assessment and Integral Indexing of the Main Indicators of Oil and Gas Companies by Circular Convolution

In the oil and gas industry, which is the basis of the Russian energy market, a significant and urgent question arises: How to distribute companies according to their investment attractiveness? Accordingly, quantitative indicators are needed. Lacking extensive experience in the practical implementation of fundamental rating tools, work is needed to develop methodologies of weighting coefficients and lists, built on the experience of the “big three” rating agencies. The article proposes an algorithm for forming an integral rating of companies based on financial reporting indicators and the author’s rules of fuzzy logic based on the principle of “circular convolution”, from the best to the slave, deepening the analysis to the center, when all companies are exhausted and places in the rating are distributed. The problem of assessing and integrally indexing the indicators of large companies in leading sectors of the economy (e.g., oil and gas, banks, electricity) is becoming manifest, while it is obvious that there is competition between large companies of the country’s leading industries for state investment resources. The nature of the leading industries is such that it is necessary to assess the quality of the company’s functioning based on the formation of rating groups. Based on the rating, investments are distributed among the companies under consideration. The author has developed a portfolio model that is analogous to the Harry Max Markowitz model, which does not contradict this model but allows consideration of a broader range of risk assessments used in the model (for example, the rating of companies). The optimal portfolio is built, taking into account the resulting index and the initial grouping in the hierarchical data correction mode. The logically sequential method of circular convolution of four important indicators to an integral index and a mathematically substantiated method for optimizing the minimax portfolio presented in the work will allow the investor to develop optimal (from the point of view of the transparency of the apparatus used, mathematical feasibility and time spent on the implementation of the software package) tools for investing and enlarging his capital.

Approaches for short-term photovoltaic energy production forecast in Russian climate conditions

Different techniques for short-term energy production by photovoltaic solar parks (PVSP) were considered taking into account specific features of Russian energy market. Based on theoretical simulation using numerical weather prediction results and experimental data it has been shown, that even for low precision techniques their application allows to improve economics of PVSP’s operation. With a decrease in the forecast error by 1.5–2 times, the economic losses due to the grid dispatch schedule deflection decrease by 5–9 times.

Scenario planning, cognition, and strategic investment decisions in a turbulent environment

We explore how scenario planning contributes to cognitive dynamics and strategic investment decisions in a changing environment. Our research is based on an in-depth, longitudinal case study of Shell's ventures in Russia between 1994 and 2016. We show that Shell's scenarios did not foresee some major events that occurred in the turbulent Russian energy market. However, the scenarios envisaged the rising role of gas, the strategic relevance of the gas transportation infrastructure, and the growing interventionism of the Russian government. The scenarios thus helped Shell's managers to adapt their strategic beliefs and ultimately enabled them to notice, assess, and respond successfully to external changes—even though these changes had not been foreseen in the scenarios. Shell has been the first (and, for almost a decade, the only) foreign company to produce and export gas from Russia.

The prevalence of renewable energy in the Russian energy market

The energy crisis of 1973-1974 showed that it is difficult to constantly increase the power supply of production, based only on traditional energy sources. The power supply of society is the basis of its scientific and technological progress. It means that it is necessary to introduce unconventional, alternative energy sources more widely. Unlike fossil fuels, unconventional forms of energy are not limited to geologically reserves. Their use and consumption does not lead to the inevitable exhaustion of stocks. However, currently, the reform of world energy markets and increasing the share of renewable energy sources in their structure is a long and innovative process. Lots of countries (Russia in particular) bear significant risks because of reforming their own energy market, which causes a slight increase in the share of renewable energy sources. In this regard, the purpose of this study is to analyse the influence of environmental factors on the development of renewable energy sources in Russia. The result of this study is a system of econometric equations, which allows to evaluate the impact of changes in key drivers of the development of the renewable energy market.

Electrical Energy Consumption Prediction is based on the Recurrent Neural Network

The results of forecasting of electric energy consumption based on recurrent neural network model. When developing the model, the following dominant factors were taken into account: data on energy consumption over the forecast period; meteorological factors (air temperature, cloudiness, amount of precipitation, wind speed, length of daylight, etc.); date (day, month); data of production calendars (information on the day of the week: weekday / weekend / holiday / shortened); specificity of the industry in the district under consideration (combining statistical information on major centers of federal districts). The factors were selected on the basis of test runs through the neural network of fixed configuration. The relevance of the study is explained by the practical importance of searching for the most accurate methods for predicting the main parameters of the Russian energy market, when a large error of the forecast subject to more expensive tariffs. The constructed recurrent neural network has yielded more accurate prediction results than the widely used mathematical prediction models based on regression dependencies. The obtained scientific result will help to reduce costs and increase the energy efficiency of the electro-energy subjects in the wholesale electric energy and capacity in Russia.

The slow expansion of renewable energy in Russia: Competitiveness and regulation issues

While the evidence mounts that renewable energy sources (RES) are becoming increasingly cost-effective, they have been slow to penetrate the Russian energy market. This is even more surprising since Russia was an early leader in RES deployment. Moreover, it raises the question whether renewables may be competitive in Russia, and if they may, how should the legal framework for their integration in the energy system evolve. Thus, the goals of this paper are twofold.Fist, the authors explore the potential competitiveness of wind and solar PV against new conventional power generation capacities. They find that international capital and operation costs put into Russian climatic (solar radiation, wind speed) and economic (discount rate, domestic fuel prices) conditions give levelized costs of wind and solar PV, which are comparable to these of new conventional power generation, and wind may be the second cheapest energy source after natural gas.Second, the authors give an overall review of the Russian RES regulation and its new developments to show that Russia has started to recognize its need to gain core competencies in renewable energy technologies. Still, Russia has much room to improve its regulation and to narrow the existing gap between policies and their implementation.

Политика Shell в России в условиях санкционных мер стран Запада

This article reports on research based on three crucial aspects of the current global economic situation. First is the role of transnational corporations (TNCs) in establishing and constructing international cooperation at the supranational level. Second is the policy of sanctions against Russia in connection with the situation in Ukraine. And third is the cooperation of Royal Dutch Shell with Russia’s Gazprom despite the political, economic and technological sanctions imposed on Russian companies and economic sectors.Analyzing Shell’s policy on the Russian energy market should reveal some kind of the managing principle that not only Shell but most TNCs follow in taking the political atmosphere into consideration, while striving to avoid any related restrictions.The research methodology uses analytical, ultimate analysis and functional methods. The analytical method helped to lay the theoretical foundation of the research. Modern TNCs are deeply engaged in the process of economic globalization. To expand their influence, such companies create economic conditions for organizing international production with local markets and for international markets for capital, labour, and scientific and consulting services. The ultimate analysis method revealed the following pattern: in struggling for the global market, TNCs raise the level of competition, which creates a permanent need for technical innovations and scientific progress. The functional analysis method demonstrated a casual relationship in modern economic development: by assisting capital turnover and labour and transport mobility, TNCs contribute significantly to economic growth and development.The first part of the article focuses on the history and methodology of the genesis and development of TNCs as actors in global economic relations. It also reviews the current role of TNCs in the global economy. The second part of the article examines the cooperation between Shell and Gazprom embodied in their joint realization of the Sakhalin-2 project and the prospects for the Sakhalin-3 project.The final section of the article contains analytical conclusions and theoretical recommendations. The authors came to two main conclusions. First, only transparent cooperation based on fair principles can guarantee stable economic ties between countries or any kind of global companies. Second, the accumulated experience in any field of cooperation provides quick and efficient payback of even the largest project. And even if the restrictions may correct (or try to correct) only in the short term but lay a foundation for long-term regress in relations, even one successful project, based on mutual trust and respect, can lead to a breakthrough in both economic and political relations between the countries.

Методика расчета рН и концентраций ионных примесей питательной воды на ТЭС по измерениям удельной электропроводности

Background: Tightening standards for the quality of thermal power plants water coolants and development of automatic chemical monitoring systems for water-chemical regime make it necessary to extend the diagnostic capacity of thermal power plant monitoring systems. Use of the most accurate measurement of coolant quality parameters, such as specific electrical conductivity and pH, increases boiler systems reliability and enables water regime diagnostics. This direction is adopted in power engineering in Western countries. In particular, the Swan firm (Switzerland) has developed and introduced to the Russian energy market its automatic analyzers «FAM Deltacon pH» and «AMI Deltacon Power». The purpose of our research is to develop techniques of indirect measurements and devices of automatic chemical control which are technologically not inferior to the best world samples. Materials and methods: The developed techniques are the result of in-depth studies conducted in the field of the electrolyte solutions theory, the theory and practice of ionic balance in water solutions by using the innovative stands of the Department of Chemistry and Chemical Technologies in Power Engineering. Similar techniques and stands were for the first time designed at ISPEU and have no analogs in other higher education institutions of Russia. Results: The study deals with three variants of calculating indirect determination of pH and ammonia concentration based on specific conductivity measurements of refrigerated samples. The calculation techniques are based on specific solutions to the generalized mathematical model of ionic equilibria in conditions of good-quality feed water in boiler installations. The paper represents the results of laboratory research into and industrial testing of the new techniques of indirect determination of water quality standard values at heat power stations. An algorithm has been selected to calculate parameters of industrial systems of automatic chemical control.  «Вестник ИГЭУ» Вып. 5 2016 г. ФГБОУВО «Ивановский государственный энергетический университет имени В.И. Ленина» 11 Conclusions: The suggested techniques and algorithms have been tested in industrial environments at heat power plants and partly implemented in developing new devices and automatic chemical control systems. The scientific value of the results obtained consists in receiving and justification of the calculation techniques suitable for practical use at heat power plants.

Factor of ‘power’ in the European vector of Russia’s foreign policy strategy and the globalization of energy policy

In the modern world of energy dependent economies, the energy component acts as a determining factor in making strategic and political decisions in the geopolitical dimensions. The article’s central interest focuses on the economic origins and financial base of the energy component of Russia’s aggressive foreign policy in the European space. It contains the qualitative and quantitative indicators of the structure of modern Russian energy market and presents the research of sources of economic basis of Russia’s military overcapacity and correlation between the size of defense spending and state budget revenues of the Russian Federation in the energy sector. Based on the findings of this study, possible ways and measures can be modeled to create an effective financial‑economic and political‑strategic system of the EU states to deter the current course of the Kremlin tight energy policy on the territory of European countries.

The Liberalization of Electricity Market in Russia

Until early 90's of last century a vertically integrated monopoly structure was main model of organization of power industry in most countries of world. The quality of services and prices for electricity were regulated in different countries exclusively by state authorities. However, it gradually became apparent that many of positive features of vertical integration, including in first place the impact of economies of scale, ceased to play a significant role. By this time, most of advanced and developing countries, including Russia, have realized objective need for a review of existing principles of power industry organization through introduction of market mechanisms of its functioning. The study gives overview of aims and objectives of reforms in Russian electric power industry. Of special interest is analysis of experience in energy markets restructuring in advanced and developing countries. The stages and main features of restructuring of Russian energy market are shown. The model of liberalization for electric power market in Russia is represented. Particular attention is paid to development of competition in different segments of wholesale and retail power markets.

Towards an efficient and low carbon economy post-2012: opportunities and barriers for foreign companies in the Russian energy market

Towards an efficient and low carbon economy post-2012: opportunities and barriers for foreign companies in the Russian energy market

Towards an Efficient and Low-Carbon Economy Post-2012: Opportunities and Barriers for Foreign Companies in the Russian Market

The purpose of this paper is to gain a broad overview and better understanding of the current and future policies, market trends, prospects and barriers related to Foreign Direct Investment (FDI) in energy efficiency and carbon mitigation in the Russian energy industry. The analysis was conducted by reviewing the relevant scientific and non-scientific literature, and focuses on a variety of theoretical and practice - oriented arguments. In this context, we assess the progress and future potential of Joint Implementation (JI) and the Green Investment Scheme (GIS) as two possible channels for FDI in transnational projects aiming at carbon mitigation and increases in energy efficiency. Based on this assessment, we presume that an Energy Service Company (ESCO), as an important intermediary, can be a well - suited entity for the implementation of the market - oriented mechanisms JI and GIS in Russia in the long term. The compatibility of the main features of JI and GIS with the working procedures under the ESCO model can generate numerous synergy effects and deliver an effective vehicle for overcoming the majority of transaction barriers specific for the Russian energy market. A possibility to overcome these barriers would assist the modernization of the Russian energy industry and improve a “win-win” situation for foreign companies seeking to invest strategically in energy efficiency and carbon mitigation projects.