Investor Presentaiton
En+
GROUP
En+ Group Annual Report 2021
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
APPENDICES
BUSINESS REVIEW
POWER SEGMENT REVIEW
3.8%
increase in electricity
consumption in the
Siberian IES
Market overview¹
Overview of the Russian power sector
The Russian Federation's power sector
is among the largest in the world, with
installed electricity capacity of the Unified
Energy System (UES) of Russia of 246.6
GW in 2021, and electricity output of
1,114.55 TWh. The UES of Russia covers
the most populated areas of Russia. Grid
interconnections between different energy
systems are limited by long distances, with
the Russian wholesale power and capacity
market split into two market pricing and
four non-market pricing zones. The first
pricing zone (European-Ural)² includes
the integrated energy systems (IES) of the
North-West, Centre, Middle Volga, Urals
and South in the European part of Russia.
The second pricing zone, the Siberian
IES, encompasses Siberia. The electricity
prices of the two market price zones are
driven by the differences in capacity and
fuel mix in the respective price zones,
while grid limitations are yet another
factor affecting prices in the second
pricing zone. The zones where special
rules are used to set prices instead of
the market environment, include the
Kaliningrad and Arkhangelsk Regions,
Komi Republic and the Russian Far East.
The Group's power generation facilities are
mostly located in the second price zone,
the Siberian IES, which covers 4,944,300
km² and has a population of c. 19 million.
The Siberian IES includes 118 power plants
with an aggregate installed capacity of
52.3 GW, with 25.3 GW (48.4%) provided
by HPPS, 26.6 GW (50.9%) by CHPs
and 350.2 MW (0.7%) by SPPs (solar).
The backbone grids of the Siberian IES
consist of 102,807 km² of HV power
lines of 110, 220, 500 and 1,150 kV³.
A unique feature of the Siberian IES is
the significant role of HPPS in both the
installed electricity capacity mix and
electricity output. Thermal power in
the Siberian IES is generated mostly
through coal-fired power plants,
which are primarily located near
regions where the coal is mined.
Electricity demand
Electricity consumption in the UES of
Russia in 2021 increased by 5.5% y-o-y
to 1,090.4 TWh. Electricity consumption
in the European-Ural zone grew
5.9% to 830.2 TWh, and by 3.8% to
217.3 TWh in the Siberian IES.
Electricity supply
The total installed electricity capacity
of the UES of Russia as of 1 January
2022 amounted to 246.6 GW and
increased by 1.3 GW in 2021. The increase
can be explained by the commissioning of
2.7 GW of new capacity, decommissioning
of 1.9 GW of old capacity, and a 0.5 GW
capacity increase linked to remarking,
corrections, etc. In the second pricing
zone, 60 MW was commissioned, no
capacity was decommissioned and
there was an increase in capacity as
a result of 51 MW being remarked.
In 2021, electricity output in
the UES of Russia increased by
6.4% y-o-y to 1,114.55 TWh. Electricity
output in the European-Ural pricing
zone increased by 7.0% to 851.7 TWh.
Electricity output within the Siberian IES
in 2021 was 215.9 TWh, up 4.3% y-o-y.
Output from HPPS in Siberia increased
by 8.5% y-o-y to 127.8 TWh. In 2021, the
Group's HPPs generated approximately
60.8% of the total electricity produced
by hydropower stations in the Siberian
IES. At the same time, thermal power
plants decreased their electricity
production by 1.4% y-o-y to 87.7 TWh.
In 2021, combined heat and power
(CHP) plants accounted for 40.6% of
full-year electricity output within the
Siberian IES, while HPPS accounted for
59.2% and SPPS contributed 0.2%.
4.3%
increase in electricity output
within the Siberian IES
Electricity output
in Siberian IES in 2021 (TWh)
HPP
CHP
Total
Total in Siberia
En+ Group in Siberia
127.8
77.7
87.7
10.7
215.9
88.4
Electricity and capacity prices
In the Siberian IES, electricity spot
prices are effectively determined
by the production costs of the least
efficient coal-fired generation plants,
with HPPS acting as price takers. Over
the long term, electricity prices tend
to move with prices of thermal coal.
A significant proportion of the power
generated by Siberian CHPs is produced
using locally sourced brown coal.
Due to seasonality in demand and
the intermittency of hydropower,
the price of electricity can exhibit
significant fluctuations throughout
the course of the year.
One of the major factors exerting
significant influence in the medium term.
is the water inflow to and water volumes
in the reservoirs of Siberian HPPs, which
determines the availability of low-cost
hydropower for the wholesale market.
Reflecting the long-term nature of these
decisions, the capacity market functions
rather differently to the electricity
market, with annual auctions carried
out to determine the price and select
an optimal set of generating facilities
to meet the forecast demand in each
pricing zone. Capacity prices are currently
determined through to 2026, and prices
are indexed annually at the previous year's
Consumer Price Index (CPI) minus 0.1% -
the indexation is applied starting from
1 January of the year when the auction
was conducted, until 1 January of the
year when the capacity is supplied. On 10
October 2021, the Russian Government
issued Order No. 1852, changing the
length of the period for which the results
of the long-term auctions apply; effective
from 2022, it is now 3 years instead of the
previous 6 years. The same Government
Order sets a deadline of 15 November
2023 for a capacity auction for the
period till 2027. The shorter horizon is
to ensure planning flexibility and better
accommodate investment decisions
taken in the electric energy industry.
38
Unless otherwise stated, data for the Power segment's "Market overview" section is sourced from ATS,
Association "NP Market Council", System Operator of the Unified Energy System of the Russian Federation.
Comprises the Central, Central Volga, Urals, North-West and South Energy systems.
According to the System Operator of the Unified Energy System of the Russian Federation
(www.so-ups.ru/).
3.
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