Bid prices for planned investments in Russian wind projects fell dramatically to below $1m per MW in the second and final round of this year’s 830MW wind power tender, pointing to the participation of “experienced market players with great financial resources”, the Russian wind power association RAWI said.
In contrast to the allocation of support in much of Western Europe, which is usually measured by energy produced, support for renewables in Russia is granted on top of electricity wholesale prices until a 12% return on investment is reached during a 15-year period. The main criterion for gaining support is measured in Capex per kW of installed capacity.
Support also depends on the capacity factor of a project and the yield of long-term Russian bonds. A local content requirement of 55% is valid for projects commissioned this year, while 65% in localisation is required from next year on.
Bids this year for a first tranche of projects totalling 208.9MW to be commissioned in 2019 ranged from RUB80,305 ($1,279.9) per 1kW of installed capacity to RUB130,927/kW – or $1.28m/MW – $2.09m/MW.
Bids for a second tranche, summing up to 627.2MW, to be commissioned in 2021 came in at a much lower range of RUB59,339 to RUB129,987 per kW installed.
Bids for a third tranche totalling 1,377.67MW in projects, to be commissioned in 2023, ranged from RUB92,586 to RUB98,983 per kW.
RAWI stresses that the lowest bid of RUB59,339 ($945.62) per kW of installed power – or $945,619 per MW – for a total of 823.3MW in projects is for almost the entire 830MW of capacity on offer in this year’s tender.
“It is possible, with a strong likelihood, to assume that the bids belong to an experienced market player who has great financial resources and an OEM partner who has provided such a low price for the supply of turbines,” RAWI says.
Bid prices are down from a first round of the tender earlier this year that saw bid levels of around RUB 130,500 per kW.
In last year’s tender for 1.65GW in wind capacity, a partnership including Finnish utility Fortum won 1GW, while a unit of Russian nuclear power giant Rosatom won another 360MW and Italian utility Enel a further 291MW.
The result of this year’s wind tender will be announced in the coming days.
RAWI, which calls the bid price development a “revolution” in the Russian wind power market, says wind power now has become a credible rival to fossil and nuclear generation, which today make up great parts of the country’s electricity production.