Report - UNDP Russia

odies; outdoor air; rocks and soil; solar installationsand energy recovery systems. The strategic goalshould be to manufacture heat pumps in Russia,and create the regulatory and engineering support,which could enable large-scale application of thesetechnologies in coming years.In many countries renewable energytechnologies (photoelectric solar elements, smallwind turbines, etc.) have also proven to be morecost-effective than conventional energy sources incertain industrial applications. The number of suchapplications is growing and includes: marine/rivertransport; cathodic protection of pipelines and wellheads; power for off-shore oil and gas platforms;power for telecommunications; and many otherapplications. The list of renewable energyapplications in industry is long and is beingconstantly added to. As well as generatingelectricity in specific circumstances at relativelylower costs, industrial use of renewable creates anew market for renewable energy, stimulatingfaster development of innovative technologies fornon-standard uses.Russia has considerable potential forindustrial applications of renewable energy, butits current use is extremely limited. Renewableenergy should be used in Russia to reduceenvironmental load in cities and towns withenvironmental problems, as well as in recreationand resort areas and specially protected naturalsites. Use of renewables should be a key aspectof innovation-based development in Russianscience, technology and the power sector.Russian technologies in the field ofrenewable energy are already comparable toforeign technologies in their construction andfunction. Russia has enormous experience in theconstruction and use of small hydropower plants(less than 25 MW capacity), and technologylevels in tidal and geothermal energy are aheadof the EU and US. But western countries areahead of Russia in development of windturbines, solar cells and heat pumps.Most Russian technologies are at the R&Dor testing stage, while similar western technologieshave already been commercialized to a greater orlesser extent, enabling production of electricitywith a huge price discount to traditionalgenerating. If Russia can develop a viable domesticmarket for renewable energy technologies basedon the considerable technical and scientificexperience, which it already has, this would kickstartlarge-scale renewable generating.The cost issue is the most crucial factorfor development of renewable energy. The twomain indicators, which determine efficiency, areinitial cost of building renewable power plantsand cost of electricity produced by these plants.Per unit capital costs, as well as cost ofelectricity generation, is significantly lower forpower plants, which use traditional sources ofenergy, than for renewable energy power plants.Cost of electricity produced usingrenewables consists mainly (92%) of capitalinvestments, while operating costs of renewableenergy installations is much lower than that of fuelfiredor nuclear plants, and their ‘fuel’ is free. Costsof electricity production using renewables are notsensitive to fluctuations on energy markets.Share of the fuel component in the saleprice of electricity produced at coal-firedplants is 36% and it is as high as 64% for gasfiredplants. Sustained rise of prices for fossilfuels (particularly oil) is bound to makerenewable energy increasingly competitive, asthe cost of electricity produced fromrenewable energy sources will approach thecost of electricity from conventional powerplants. Since renewable energy isenvironment-friendly and has otheradvantages over conventional power, there isbound to be increasing demand for ‘cleanelectricity’ in developed countries over comingyears, and renewable energy will become fullycompetitive in many countries.However, it is not hard to grasp whyinvestors are skeptical and reluctant to invest indevelopment of alternative energies. Theycannot see the sense of investing heavily inrelatively expensive facilities, future prospects forwhich are not entirely clear, when investments infuel-fired and nuclear power plants offerguaranteed returns. However, there are manyexamples of economic breakthroughs by new113