RES support in Russia: Impact on capacity and electricity market prices

Russian renewable energy policy has undergone changes following an establishment of targets for installed capacity and power production using renewable energy sources and the introduction of new capacity based support scheme for renewable energy. The forecasted amount of future renewable power will not provide enough power production to meet growing demand for renewable energy; although, it will help with modernization of the energy sector and development of renewable technology and innovation. At the same time, the capacity support scheme for renewable energy may adversely affect capacity prices and become an additional burden for industrial consumers, who are already paying the cost of capacity support for conventional power plants, so-called Capacity Delivery Agreements (CDAs). This work assesses the impact of the new capacity based support scheme on capacity and electricity price formation. Modeling results show that the impact of capacity support for renewable energy is small compared to that of capacity support for conventional energy, suggesting that the Russian energy production mix will continue to be dominated by fossil fuel based generation.