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Not only Production Capacity

power.jpgAs we know, the main electricity consumers in Russia are industrial enterprises and the housing and municipal sector. Industry’s share of power consumption exceeds 50% with more than 32 % made up by heavy industry (metallurgy, chemical industry, etc.). A significant share of consumption is accounted for by power generation companies, - up to 16 % of the electricity produced. Housing and public utilities (HPU) can be estimated at 20%. It is obvious that the main potential for energy efficiency is concentrated in the fuel & energy complexes, industry and Housing and public utilities. Realizing this potential is associated primarily with large-scale modernization of production.

The need to modernize is already long overdue. According to Federal State Statistics Service depreciation of fixed assets in Russia is about 50%. Level of the technological gap with modern technology in some sectors reaches 70%.

Industry energy saving potential in millions tons of fuel is estimated according to the RF Ministry of Energy as follows:

  • fuel & energy complexes - 120-435;
  • industry and construction - 110-140;
  • transport - 23-30;
  • agriculture - 12-15;
  • HPU - 95-110.

Savings based on calculations

Currently, large companies with state participation are implementing energy saving programmes, which focuse on the modernization of not only production facilities. One of the most extensive programmes is currently being implemented at Rosatom enterprises. It provides for the reduction in energy consumption by 25% in 2016 as compared with the 2010 level. The main measures include modernization of lighting systems with the introduction of the latest LED lighting fixtures, which are about 10 times more efficient than incandescent ones.

One of the energy efficiency areas at the Mayak production association, which is a part of the Rosatom corporation, is the introduction of LED lighting technology,” - said Sergei Zaitsev, the networks and substations deputy shop foreman at FSUE PA Mayak. – “We have analyzed the economic effect of replacing the road lighting fixtures based on DRL250 lamps with LED lighting. DRL250 lamps consume 250 watts, while taking into account the losses due to the use of ballasts, the consumption of one lamp could reach up to 300 watts. Power consumed by the LED lighting, which we chose, is 36 watts.”

It is estimated that the use of LED lighting for 12 hours per day gives electricity savings sufficient to pay for the cost of the lighting within three years, after which the economic effect makes itself felt. Since 2010 PA Mayak has been widely implementing the lighting on onsite industrial facilities. Initially within the framework of pilot project 45 LED lighting units were installed onsite. “The economic effect has fully met expectations. In terms of the operation these are reliable and quality products. Later we bought another 595 lighting units produced by AtomSvet”, - explained Sergey Zaitsev. – “I should add that ordinary energy-saving lighting fixtures require additional costs for maintenance, as well as for special disposal because they contain mercury. LED lighting systems are maintenance-free and are not subject to special disposal requirements.”

Major energy efficiency programmes are also implemented by other state corporations, for example, by Russian Railways, which is one of the pioneers in the introduction of LED lighting in Russia. Russian Railways press office reports that during 2008 to 2012 JSC Russian Railways has spent 2,160,000,000 rubles on the introduction of LED equipment. In addition, the company purchases rolling stock equipped with LED spotlights, tail light and other modern lighting fixtures.

The HPU segment

In this area the main measures to improve lighting system energy efficiency are associated primarily with the modernization of street lighting. It means replacing outdated lighting fixtures based on DRL lamps with energy-efficient ones – lighting fixtures with DNaT (high-pressure sodium arc lamp) and LED. LED lighting is being actively implemented not only in big cities but also in small towns, down to rural settlements. Considerable potential for energy efficiency is associated with modernization of entrance lighting using LED lighting.

The development of energy efficiency in the public sector is not progressing by itself - it should be encouraged at the legislative level. Federal Law # 261- FZ “On energy saving and energy efficiency improvement...” suggests several mechanisms for financing energy efficiency projects. One of them is based on the provision of subsidies from the federal budget for the implementation of energy efficiency programmes. But, as a rule, to get the subsidy is not that easy. It is required that the company has developed an energy saving programme and its activities have been included in the same regional programme.

The most promising route (provided for by the same federal law) is the conclusion of energy service contracts. This is the best mechanism for energy saving, widely used in the West and gradually gaining ground in Russia. For example, in 2011 at the site of JSC Chelny-vodokanal (owned by KAMAZ) a comprehensive energy service project was implemented to modernize production and improve its energy efficiency. Project funding amounted to about 12.3 million rubles. The payback period was 2.7 years. The project result: energy savings of at least 20 % as compared with the 2009 level.

Today, despite all the problems in development of energy services in Russia we can talk about the formation of the domestic market in energy contracts. Reportedly, in the 1st quarter of 2013 the total value of purchases for energy service segment came in first place in the overall volume of trading in energy efficiency (total cost 849 million rubles, i.e. 42% of the total value of all tenders in the field of energy efficiency). An important trend is a growing use of energy service contracts in street lighting modernization. Thus, in the 1st quarter of 2013 the total value of such contracts amounted to 303 million rubles (15% of the total value of tenders in the field of energy efficiency).

However, the market for energy service contracts is not growing as fast as we would like. Many concerns regarding energy service have not yet been resolved,” - said Vadim Dadyka, General Director of AtomSvet. – “For example, there are no investment return mechanisms, there is no requirement that the procedure for calculating the energy savings is necessarily prescribed in such contract, there is no right for contractors to involve subcontractors, etc. In addition, company’s chief executives are often wary of the energy service idea and do not understand the essence of the proposed financial model.”

However, the situation seems to be changing. A number of amendments are now being considered to the Federal Law # 261-FZ, adoption of which will provide the energy service with reliable legal basis. And, hopefully, will become what it was originally anticipated to be, - the main mechanism for improving the energy efficiency of the Russian economy.

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