New Russian energy market model ready - deputy energy minister
MOSCOW. March 27 (Interfax) - The new model for the energy market is ready, and the Russian Energy Ministry hopes it can be launched in 2015, Deputy Energy Minister Mikhail Kurbatov said at an Interfax press conference in Moscow on Wednesday.
"We have the model. Conceptually we are ready, there are probably things that need to be discussed with market participants," he said, clarifying that he was referring to the model for bilateral agreements, which, for example, envisages cancelling competitive capacity selection.
Market Council Chairman Vyacheslav Kravchenko told the press that the new model does not contain radical changes.
"The elements on the market will remain the same: there will continue to be a balancing market, a day-ahead market and regulated contracts. But the trading volumes in these segments will change. Currently free agreements make a few percent, and they [their volume] will increase considerably," he said.
One alternative to this model was a model with an adapted Capacity Delivery Agreement system, which extended the CDA mechanism for use with modernization projects. This was rejected for various reasons, including, Kurbatov said, due to difficulties with correct calculation of the cost of modernization for recouping interest on it.
The new model itself should provide a boost towards modernization. "There are not that many facilities that are really in dire need of modernization, and the generating companies themselves are willing to invest in these, and if there is some kind of boost - and the bilateral agreements market will provide that boost - I'm sure we will see the first modernization projects," Kurbatov said. At the same time, the government will maintain the chance, if investors do not take decisions with the necessary speed, to hold tenders for construction and even for modernizing capacity and provide a limited amount of the new CDA.
The new model could be launched in 2015, he said. The Energy Ministry planned to present the new model to the energy market at the end of February, but the government sent it back for revision until July 1. Earlier, the new model was expected to launch in early or mid-2014.