Energy efficiency potential in the region

A substantial potential for electricity savings exists through increased energy efficiency in Northwest Russia. How much it is reasonable to believe will be saved in the coming years depends to a large extent on future electricity prices and the rate of modernisation of production equipment.

The main consumption of electricity lies with industry. Industry in general lost its interest in energy efficiency measures after August 1998, when the rouble was reduced to 1/3 of its value towards USD. The devaluation of the rouble protected the industry from cheap imports and increased the value of the exported goods. One of the results was that industrial leaders changed their focus away from cost reduction through efficiency.

Electricity prices are now moving towards the pre-1998 level, measured in USD. The energy commission indicates new tariffs, with power prices reaching rouble /KWh (0,03 USD).

Should the electricity price reach this level, industry in Norwest Russia will no longer have the competitive advantage of cheap power. This will make establishment of new industry less probable, and, at the same time, old enterprises may be forced to terminate or reduce their operation. Others can be forced to carry out energy saving measures, so that their energy consumption per produced unit is compliable with western standards. Already, increasing power prices have once again made the industry take an interest in energy saving measures.

Russian industry is often said to have huge energy efficiency potential, but case studies show huge differences between industries. The comparison between Scandinavian and Russian industries indicates that the biggest energy potential does not lie in the smelting processes, but in mechanical processes. Electric motors, pumps and transportation devices are often inefficient, oversized and incapable of regulating capacity.

In the private and social sector there was no influence of the devaluation. Unlike heat and hot water, electricity is normally measured and invoiced according to each spent unit. Consumers have therefore all along had a motive for saving and efficiency. Increased prices have also increased the need for saving measures. About 70 % of electricity consumption in buildings is for lighting. Saving in large buildings is mostly done by reducing energy services, such as taking out every second light bulb in corridors. Replacement of old and inefficient lighting would reduce consumption by half. In public buildings, modernisation means new and more energy efficient equipment, but it also means and end to forced savings. Implementation of energy efficiency will make it possible to increase the growth in energy services and introduce new electrical appliances without a steep increase in consumption.
Combined Heat and Power plants - CHPs

Northwest Russia has a well-developed infrastructure for district heating. The existing infrastructure provides a good basis for further development of combined heat and power production. Through modernisation and new technology, power output could increase substantially without increasing fuel consumption. New capacity is prepared in areas with a natural gas supply (Leningrad Oblast and parts of Karelia). There are also good future prospects for cogeneration based on wood waste in the region.

Most of the CHPs are old and in need of modernisation or replacement. Among new generation technologies, the combined heat and power gas-steam turbines seem to represent the most cost efficient technology. Today, domestic gas prices are substantially lower than world market prices, which result in a limited supply to the region. Neither limited supply, nor increased prices could challenge gas as the most cost efficient alternative for new investment in new generation capacity inside the existing gas distribution network. Development of gas distribution for Murmansk, from the southern parts of the region, will not be feasible. Distances are too great and regional consumption too small to justify the investment required. Gas supply in the Murmansk region may eventually be developed sometime in the future when an export industry for gas from the Barents Sea has been developed.
Bioenergy

Outside the natural gas distribution network, wood waste for heating purposes is competitive compared to traditional fuel. In regions with easily available wood waste, and in connection with the wood processing industries, wood waste will be an alternative for power production.
Northwest CHP

When St Petersburg North West CHP started up in 2001, it was the first power production plant opened in about 15 years. This is the first large modern gas turbine combined cycle plant in Russia, and has increased competition in the power market by taking market share from Leningrad NPP. The plant has opened one combined cycle unit of 450 MWe, while total capacity is planed to be 1.800 MWe. The North West CHP plant is located adjacent to the planned new prestigious and high population density residential suburb of Primorski region.

The aim of the project was to help resolve "a number of the most critical social and ecological issues", the most important of which were: supply of district heating to the north western districts of St. Petersburg, enhance power supply reliability in the region, and improve overall air quality in the city. The electricity is supplied to the city of St. Petersburg and will also be traded into Scandinavia via Vyborg on the Finnish border.

The construction of additional units at the North West CHP depends on decommissioning of nuclear units or on a contract to supply bulk electricity to the Scandinavian market. This would require further increases in the capacity of the Vyborg connection. The St. Petersburg North West CHP project was initiated by RAO "UES of Russia" and North West CHP, a private stock company. Funding included RAO UES, with 46 per cent of equities and 80 per cent of financial investment, and Lenenergo with 13 per cent. Full investment payback is expected in not less than 9 years.

Northwest CHP provides an essential contribution to the replacement of the oldest nuclear reactors.