The first regulatory changes following the passage of the Energy Policy Act of 2005 (EPACT) are starting to pick up steam—and encountering multi-faceted criticism—as the gas industry reacts.
Investment in Russia: Super Power Opportunities
of nine of the 10 nuclear power stations of Russia. This includes 26 power generation units with 18.2 million kW of total installed capacity. Rosenergo-Atom is a state company subordinate to the Ministry of Atomic Energy. The Leningrad Nuclear Power Plant is an independent operator (four units with 4 million kW of total installed capacity) and is directly subordinate to the Russian Ministry of Atomic Energy.
These nuclear power stations, located in the nodes of the network and determining the structure of high-voltage transmission lines in the European part of Russia, are the backbone of the energy system of Russia. Nuclear power plants participate in the seasonal regulation of both frequency and capacity of RAO UES, providing reliable and sustainable operations for the country's power system. Nuclear power generation facilities in Russia are expected to remain under state ownership for the foreseeable future, and an estimated 35.8 million kW of new generation capacity will be installed at existing nuclear plants by 2020. Private investments are not expected to be allowed in this sector.
Irkutskenergo has the most potential of the four independent AO-Energos. It operates 12.9 million kW of generating capacity (or 6 percent of all Russian capacity), including 9 million kW of hydro power station capacity (or 20 percent of all Russian capacity), and 33,000 km of transmission lines (1.3 percent of all Russian lines). The cost of power generated by Irkutskenergo is the lowest in Russia (due to the high proportion of hydro electric power capacity).
Although organizationally independent from RAO UES, the AO-Energos (as well as the nuclear power stations) depend on RAO UES technologically, as the principal backbone transmission lines are owned by the holding and the Central Dispatch Control Board of the Unified Energy System of Russia is a structural subdivision of RAO UES. The administrator of the federal wholesale power and capacity market (FOREM) is also a subsidiary of RAO UES.
The Business Case for Investment
Electricity production in Russia declined significantly in the 1990s because of the financial crisis and the subsequent slowdown of demand. However, since 1999 consumption has been growing slightly.
According to world power sector development forecasts, world power demand is expected to grow at a rate nearly equal to the growth rate of the gross domestic product (GDP), averaging an annual 3 percent until 2020. Thus, Russian energy strategy guidelines, approved by the government, contain two scenarios for changes in power demand from 2001 through to 2020, depending on the forecasted average annual GDP growth rates: "favorable" (GDP grows by 5 to 5.5 percent annually) and "reduced" (GDP grows by 3.2 to 3.5 percent). Under the "reduced" scenario, domestic power consumption over the period to 2020 will grow annually by an average 1.7 percent (about 50 percent of the GDP growth), whereas under the "favorable" scenario, power consumption will grow by 3 percent (about 55 percent of the GDP growth).
The expected levels of domestic power demand, under the various scenarios of Russian economic development, are illustrated in Figure 4. It should be noted that under the reducedscenario of economic development,