Russian govt to study optimizing financing mechanisms for power generation construction, modernization

MOSCOW. June 6 (Interfax) - The search for optimal financing mechanisms for creating and upgrading power infrastructure has been included in Prime Minister Mikhail Mishustin's list of instructions following April's strategic session on power sector development.

The optimization of funding sources involves developing proposals to utilize existing project financing mechanisms, budgets at all levels, tax incentives and preferential regimes, as well as infrastructure menu mechanisms, the government said.

The task has been assigned to the Energy Ministry, Economic Development Ministry, Finance Ministry, Construction Ministry and the Federal Antimonopoly Service (FAS), with a deadline of July 29.

New power capacity creation will be coordinated with improving the efficiency of grid operations, the government said.

One potential scenario involves utilizing existing grid capacity reserves, including through incentive-based pricing mechanisms. Regional authorities' participation in approving grid connections for major consumers will also be explored to better assess future grid load and project requirements.

Mishustin also ordered improvements to the competitive selection mechanism for thermal generation projects post-2031. Priority will go to power plant modernization projects enabling combined heat and power generation. The government was also instructed to develop a hydropower plant construction mechanism identifying funding sources for reservoir creation.

Separately, the Energy Ministry, Economic Development Ministry and FAS must prepare detailed electricity tariff forecasts through 2030 and proposals for cost containment mechanisms for consumers by July 29.

Currently, Russia employs several power sector financing mechanisms funded by large industrial consumers. These support thermal generation construction and modernization, projects in energy-deficient regions of southern Russia and Siberia, renewable energy and several new nuclear power units built by Rosatom.

"We need a national power sector project because of the scale required. Building 88 GW of new generation and 66 GW of modernization, plus massive grid expansion," Energy Minister Sergei Tsivilev said ahead of the strategy session.