Winds of change – the Rosatom way31 May 2018
Rosatom has long been known for its nuclear power capabilities, but renewables are seemingly just as big a part of the picture as NEI explores.
Wind power is now one of the Russian state nuclear corporation, Rosatom’s, businesses according to Dr Alexander Bychkov, Rosatom’s representative and Senior Counsellor of the Russian Permanent Mission for International Organisations in Vienna. “It is not a key business, but we are interested in this technology and consider Rosatom to be the biggest Russian company involved in non-carbon and environmentally friendly energy technology,” he told NEI. “Of course it’s additional to our main business, but in any case, we are going to be a key player in this market, initially in Russia.”
Russia has set a renewable energy target of 4% in its total energy generation by 2020 and aims to reduce its carbon emission footprint by 2030 to 70% of its current level. Recently, VetroOGK, a subsidiary of Rosatom’s OTEK division, won contracts for 610MWe of wind capacity in an extended procurement for state-supported clean energy capacity distribution in 2018-20. This represents 17% of the new wind energy capacity projected for Russia by 2024. The company plans to install 150MWe by 2018, 200MWe in 2019, and a further 260MWe in 2020. The total investment is estimated at RUB83bn ($1.3bn). Windfarms are to be built in the republic of Adygea as well as the Krasnodar, Rostov and Stavropol regions among other locations.
Taking the first step
Rosatom founded OTEK in 2013 to develop non-nuclear energy projects across the country. A Russian tender in early 2016 attracted only one bidder for wind power development, Finland’s Fortum, which signed up for the 35MWe on offer. Russian media attributed the lack of interest at that time to the 70% local content requirement from 2017, which it said deterred many developers. Legislation on renewables was subsequently amended to be more flexible. Later that year VetroOGK won a tender to build three wind power plants (WPPs) in Adygea and the Krasnodar Territory, with a total capacity of 610MWe by 2024. Media reports said Rosatom’s wind projects would be supported by Gazprombank with investment of RUB63.1bn ($976m).
The first project is a 150MWe windfarm in the Shovgenovsky and Giaginsky municipal districts of the Adygea republic. The station, which will comprise up to 60 WPPs, will be built in three stages with capacities of 32MWe, 70MWe and 48MWe, respectively. The maximum investment in Adygeya for this windfarm will be RUB20bn ($309m). Portuguese company Megajoule will assist in identifying the optimal location for the WPPs and calculating their energy output. WPP components will be manufactured at Rosatom’s Atommash plant in Volgodonsk (Rostov region). These components will be developed using technology from Dutch company Lagerwey. It has been reported the first windfarms will be operational in 2024. They will be installed in the Rostov region, Stavropol and Krasnodar territory, as well as in the Republic of Adygea.
In June 2017, Russia launched its biggest clean energy tendering process in history, awarding contracts for the construction of over 2220MWe of wind, solar and small-sized hydroelectric generation. The process attracted bids not only from VetroOGK, but also Finland’s Fortum and Italy’s Enel. VetroOGK won contracts to build a further 360MWe of wind power capacity in Adygea, Krasnodar Kray and the Kurgan region, representing some 43% of the Russian wind power market. Construction was scheduled for 2019-22; to support this a programme to comply with local content rules for WPPs was launched at the enterprises of the Rosatom’s engineering division.
Additionally, during the Atomexpo-2017 forum, OTEK JSC, the management company VetroOGK, and Lagerwey signed a licensing agreement for the transfer of technology from the Dutch company to make possible the production of WPP components. The agreement required the localisation of component production in Russia of more than 65%.
In September 2017, Rosatom consolidated all its wind assets into a new company, NovaWind, with capital backing of some RUB1101bn ($17bn), which included OTEK’s rights in the agreement with Lagerwey, Rosatom said. Concentrating “all our effort on new energy projects” by setting up a new subsidiary devoted to wind power was the best way to successfully manage the total 970MWe capacity being developed by VetroOGK, NovaWind’s director general Alexandre Korchagin said. Rosatom said this required building absolutely new competences for development and management of wind power plants in Russia, plans for the series build of wind turbines in Russia, organisation of post-sale servicing, competence in marketing, and development and sale of new products.
However, NovaWind will not be limited to 970MWe (388 WPPs). “In the coming six to seven years the company plans to manufacture wind turbines totalling 1.4GWe (about 550 WPPs) for the Russian market alone,” Rosatom noted. “Also, the company plans to enter the international market with new wind turbine products.”
The German supplier of integrated solutions for the construction of wind power plants, Aero Dynamik Consult GmbH, was commissioned by JSC NPK Khimpromengineering (part of Rosatom), in October 2017 to design and construct a new fibreglass blade for WPPs. Rosatom’s procurement website said the blade was to be developed by the spring of 2018 and would operate as a part of a 2.5MWe windmill based on Lagerwey technology.
November saw a formal joint venture, Red Wind, set up between NovaWind and Dutch wind turbine manufacturer Lagerwey. Red Wind is responsible for marketing, sales, supply of wind turbines on a turnkey basis and post-sale support. The company conforms to localisation requirements and is also responsible for certification of suppliers and component part contracting for subsequent supply to JSC NovaWind’s production sites. Lagerwey is responsible for the transfer of technologies for production of 2.5MWe and 4.5MWe wind turbines to NovaWind and will share in the development of windfarms. It will supply components for the first 60 wind turbines. Lagerwey will also assist Red Wind in training personnel, required for the WPP manufacture and operation. VetroOGK will remain an energy utility company and an owner of the windfarms.
“The thermal power business, which I lead today, will become a separate business unit. OTEK’s management team has fulfilled the goals set by Rosatom,” said Korchagin. “We’ve successfully implemented an effective business management model: it took us three years to double the profitability of Rosatom’s thermal power assets. Now we have to concentrate all our effort on new energy projects.”
He said the successful entry into the domestic and international wind energy markets, as well as the development of new products, largely depend on full concentration of managerial efforts for the success of the new energy programmes. “To meet these challenging goals we have to obtain and develop a number of core competences, which are absolutely new to Russia.,” he said. “Now I can definitely say that we have all the competences in place required to launch Russia’s wind industry, based on second to none technologies with the strongest team of managers.”
This year in Volgodonsk, production of the hub, gondola, generator and cooling system for WPPs will begin using Lagerwey technology. By 2020 the degree of localisation of production will be about 80% if projections are met, with production capacity at 100 turbines a year. In addition, an agreement with the regional government will facilitate the construction of windfarms in that region which will simplify the logistics of the programme during the early stages of technology development.
Rosatom estimates that by 2024 its production volume may be 3.6GWe with an annual turnover of $1.6bn and assets valued at $6.3bn.
In February 2018 more agreements were signed at the Russian Investment Forum in Sochi. VetroOGK completed a deal for the construction of windfarms of up to 600MWe in southern Russia. A memorandum of understanding was signed by Korchagin and Krasnodar Territory Governor Veniamin Kondratiev for the construction of 200MWe of WPPs in the Temryuk and Eisk regions, for commissioning at the end of 2019. This was a follow-up to the cooperation agreement with the Krasnodar Territory signed in September 2016. Wind measurements have already been taken in Temryuk and Eisk and an investment project business plan has been approved. The total investment in the project will amount to RUB20.5bn ($317bn).
Korchagin also signed a cooperation agreement with Stavropol Territory Governor Vladimir Vladimirov for construction 400MWe of WPPs. The Stavropol Government will establish a favourable business climate for implementation of renewables projects in the region and consider tax and other relief to support projects aimed at the development the territory’s fuel and energy complex. “Southern Russia is a priority region for implementing Rosatom’s wind energy strategy,” said Korchagin. “With the localisation of wind mill manufacturing in Volgodonsk, Rosatom will create about 1000 new jobs in the region. This is good start for the new industry and diversification of Rosatom’s portfolio in the carbon free energy.”
In addition, Rosatom will invest RUB15bn ($232m) in the construction of windfarms with a capacity of more than 100MWe across the Rostov region, under another agreement signed in Sochi by Korchagin and Rostov region governor Vasily Golubev. Rostov will cooperate with NovaWind on the preparation and implementation of the projects, including links to engineering and technical support networks, as well as on the selection of land sites.
Rosatom and the Republic of Karelia plan to build a windfarm with a capacity of up to 60MWe on the White Sea coast in 2021-22. Korchagin discussed the project with the Head of the Republic of Karelia, Artur Parfyonchikov, during the Sochi event. “NovaWind is undertaking the largest programme for localisation of wind power production in Russia, and we are interested in expanding the geography of our projects,” said Korchagin. “Karelia, in turn, has sufficient potential for development of wind power programmes and we are selecting sites for the project.” As part its localisation progamme, NovaWind is considering the possibility of launching the production of cast billets in Karelia at the Petrozavodskmash JSC plant.
Companies other than Rosatom are also developing wind power in Russia. In January 2018, Russia’s first windfarm, with a capacity of 35MWe, began operation in the Ulyanovsk region. The wind park was built by Finnish utility Fortum, after it won an extraordinary tender for the project in December 2015. In accordance with the terms of the tender, the capital costs for construction of the windfarm to receive support were to be about RUB7bn ($108m). China’s DongFang was selected to supply 14 wind turbines with a capacity of 2.5MWe each. Design work began in February 2016 and a letter of contract establishing the consortium to build the wind park was signed that November. Fortum entered the Krasniy Yar site in December 2016 and construction began the following May. A number of Russian companies took part in the project. Fortum will receive capacity supply agreement payments of between €180/MWh and €200/MWh for 15 years.
Fortum is also involved in a RUB30bn ($464m) renewables fund under a joint venture, Fortum Energy LLC, set up in 2017 with Russian nanotechnology company Rusnano. The fund signed a cooperation agreement with the government of Rostov region for the construction of up to 600MWe of wind parks there in the 2019-22 period. Rosnano selected Denmark-based Vestas to localise the production of its wind generators.
“Our territory has a lot of areas where it is possible to build high capacity windfarms,” said Dr Bychkov. We also have a number of enterprises where it is possible to manufacture wind generators and we have research and development institutes where it is possible to improve the technologies using graphite or carbon for wind blades, for instance.” There is a lot of territory between villages and towns – a lot of free space – where it is possible to integrate wind power with agriculture,” he explained. “This is good for small communities; and it may also be good for companies with big nuclear or thermal power plants to have alternatives for flexibility. In the future wind could be combined with small modular reactors – it is a gradual combining of different technological approaches for the future of power generation.” Dr Bychkov said there is no serious competition between different forms of energy in Russia. “We have a balance of energies in Russia and will continue to construct nuclear power plants. From Soviet times we have had good relations among all industries related to electricity production.” Currently nuclear accounts for 18.6% of Russia’s electricity, gas for 49.6%, coal for 14.8% and hydro for 16%, with just 1% coming from renewables. Different energy sources are used where they are most effective Dr Bychkov explained. “In some regions it is easier to provide gas. We are slowly reducing coal and oil from our electricity production. However, Russia is a northern country and we need stable heating for villages and towns. It is very important to have flexibility and access to different resources.” He cited the example of the Research Institute for Atomic Reactors (NNIAR) in Dimitrovgrad. “In my experience, when I was Director General of NIIAR, we had a flexible system for our small territory. NIIAR had, and has now, a gas power station as a reserve source of power that is required for safety reasons. This station provides heating for part of town. In parallel two research reactors (VK-50 and BOR-60) also generated electricity and heat. Part of Dimitrovgrad’s industrial facilities were heated by nuclear heat and as backup we had oil reserves. This particular case is one example of the effective combination of small nuclear and small gas/oil power,” he concluded.
Judith Perera is Contributing Editor, Nuclear Engineering International