TL: NORTH-WEST RUSSIA: ENERGY REPORT SO: INSTITUTE FOR APPLIED ECOLOGY, FOR GREENPEACE INTERNATIONAL, (GP) DT: May 1997 Final Report commissioned by Greenpeace International Felix Chr. Matthes (Project Management) Martin Cames Gero Lcking Gesch CONTENTS 1 INTRODUCTION 2 THE DEMOGRAPHIC AND ECONOMIC SITUATION 3 ELECTRICITY SUPPLY 3.1 ELECTRICITY CONSUMPTION 3.2 ELECTRICITY PRODUCTION 3.2.1 ELECTRICITY PRODUCTION IN THE RUSSIAN FEDERATION 3.2.2 ELECTRICITY EXCHANGE 3.3 POWER PLANT CAPACITY 3.3.1 POWER PLANT CAPACITY IN THE RUSSIAN FEDERATION 3.3.2 POWER PLANT CAPACITY IN NORTHWEST RUSSIA 3.3.2.1 NUCLEAR POWER PLANTS IN NORTHWEST RUSSIA 3.3.2.2 HYDROELECTRIC POWER PLANTS 3.3.2.3 POWER SUPPLY COMPANIES IN NORTHWEST RUSSIA 4 SCENARIOS FOR ELECTRICITY DEMAND UNTIL THE YEAR 2010 4.1 PRELIMINARY REMARKS ON METHODOLOGY 4.2 DEVELOPMENT OF ELECTRICITY CONSUMPTION DETERMINANTS 4.2.1 POPULATION AND GROSS DOMESTIC PRODUCT 4.2.2 LABOUR PRODUCTIVITY 4.2.3 EMPLOYMENT 4.2.4 CHARACTERISTIC VALUES FOR ELECTRICITY CONSUMPTION 4.3 TRENDS IN ELECTRICITY CONSUMPTION IN THE REFERENCE SCENARIO 4.4 ENERGY SAVING POTENTIAL 4.5 THE EFFICIENCY SCENARIO 4.6 COMPARISON OF SCENARIOS 5 OPTIONS FOR DEMAND COVERAGE 5.1 PRELIMINARY REMARKS 5.2 NUCLEAR POWER PLANTS 5.3 REHABILITATION AND REPLACEMENT OF FOSSIL POWER PLANTS 5.4 THE USE OF HYDROELECTRIC POWER IN NORTHWEST RUSSIA 5.5 THE USE OF WIND ENERGY IN NORTHWEST RUSSIA 5.6 SCENARIOS FOR ALL POWER PLANTS 6 SUMMARY 7 REFERENCES 8 APPENDIX TABLES [TABLES AND DIAGRAMS NOT AVAILABLE - FOR FULL REPORT CONTACT GREENPEACE INTERNATIONAL] Table 1: Key economic and demographic data for the region of Northwest Russia Table 2: Foreign direct investments in Russia and population by region Table 3: Selected economic indicators for the regions in the Russian Federation Table 4: Regional distribution of non-nuclear power plant capacity Table 5: Power plant capacity in Northwest Russia by region and energy source, 1993 Table 6: Nuclear power plants in Northwest Russia, 1993 Table 7: Hydroelectric power plants in Northwest Russia by size category Table 8: Electricity saving potential in the economy of the Russian Federation Table 9: Savings potential by sector in the Russian Federation (reference year 1990) Table 10: Specific electricity consumption levels in Northwest Russia by sector Table 11: Retrofitting of the Nizhne-Tulomskaya and Volkhovskaya hydroelectric power plants Table 12: Hydroelectric power plants in Northwest Russia particularly suited for retrofitting Table 13: Options for electricity demand coverage in Northwest Russia in the reference and efficiency scenario Table 14: Power plant capacities in Northwest Russia by region Table 15: Hydroelectric power plants in Northwest Russia DIAGRAMS Figure 1: Trends in electricity consumption in the Russian Federation, 1985 to 1994 Figure 2: Industrial electricity consumption in the Russian Federation by sector 1990-1994 Figure 3: Electricity consumption in 1991 by region Figure 4: Electricity consumption in Northwest Russia by sector, 1991 Figure 5: Industrial electricity consumption in the Russian Federation by sector, 1991 Figure 6: Net electricity production in the Russian Federation, 1990 Figure 7: Electricity imports and exports by the Russian Federation, 1990-1993 Figure 8: Electricity exchange between Northwest Russia and the neighboring foreign states, 1991 Figure 9: Electricity exchange capacities in the IPS system between Northwest Russia and Central Russia Figure 10: Power plant capacity in the Russian Federation, 1994 Figure 11: Fossil fueled power plants in the Russian Federation by fuel type, 1994 Figure 12: Power plant capacity in Northwest Russia by fuel type used, 1993 Figure 13: Power plant output in Northwest Russia by region and energy source, 1993 Figure 14: Generating capacity in Northwest Russia by power plant type Figure 15: Nuclear power plants in the Russian Federation Figure 16: Assumed trends in gross domestic product in Russia Figure 17: Specific electricity consumption per industry employee in selected OECD countries and Northwest Russia, 1993 Figure 18: Specific electricity consumption levels per employee in agriculture in selected OECD countries and Northwest Russia, 1993 Figure 19: Specific electricity consumption levels per employee in the service sector in selected OECD countries and Northwest Russia, 1993 Figure 20: Specific household electricity consumption per inhabitant in selected OECD countries and Northwest Russia, 1993 Figure 21: Electricity demand in the reference scenario Figure 22: Electricity demand in the efficiency scenario Figure 23: Compilation of various scenarios for electricity demand in Northwest Russia Figure 24: Present values of power plant technologies compared INTRODUCTION The Russian Federation is one of the countries with an extremely large capacity for nuclear electricity generation. At present, Russian power plants have an installed capacity total output of around 20,000 MW. However, these plants are by no means evenly distributed across the Russian Federation; the share of energy produced therefore varies greatly in different regions of the country. Since the Chernobyl disaster in 1986, the development of nuclear power has stagnated in Russia. Although a number of nuclear power plants were completed after 1986, their construction had begun prior to Chernobyl (Matthes/Mez 1996). The situation in the North West of Russia, which has it's own power system, is a very unusual one. Electricity production is based to a higher than the Russian average on nuclear energy in the region, while considerable quantities of electricity are also exported to Finland. The problems associated with nuclear electricity generation in the North West of Russia have recently intensified. Firstly, the majority of nuclear power plants have reached a considerable age. In the next ten years, around three-fifths will definitely have reached the end of their projected operating life, and substantial investment will be required to replace or rehabilitate them. Secondly, all of the reactor types concerned have particularly high associated safety risks. Thirdly, the Russian Atomic Ministry is trying to resuscitate the nuclear power programme in the Russian Federation, as demonstrated by its decision to build reactors of a new type near St. Petersburg. Current developments in the North West of Russia show quite clearly what conclusions have been drawn from the nuclear debate in the past 10 years. The central elements of this discussion are: the need for nuclear power from an energy management perspective; the relationship between safety and economic and/or supply considerations; and Russian decision-makers' attitude to technology policy and global strategy. To date, there has been no public discourse about these issues or about the decisions soon to be taken on nuclear policy. Indeed, only one side of the argument has been presented; that is, the necessity, in energy policy terms, of the continued operation of existing plants and the planned construction of new ones. Against this background, Greenpeace International commissioned the ko-Institut to study the possibilities and implications of ending nuclear power use in the North West of the Russian Federation. The aim of this study is not so much to look at the safety aspects of existing or planned nuclear power plants, as to demonstrate the energy policy consequences of shutting down high-risk plants and/or abandoning the construction of new ones. This study therefore deals exclusively with analyses relating to energy economy, concentrating principally on the electricity sector. Both the safety debate and the relationship with other areas of energy policy will be treated qualitatively. Section 2 outlines the demographic and economic conditions in the region. The region, "Northwest Russia", is defined by the North-West partial grid in the Russian electrical power system. In Section 3, present electricity supply in Northwest Russia is analysed in detail. Section 4 describes possible trends in electricity demand in the North West of Russia up to the year 2010 on the basis of two scenarios. The reference scenario, based on various electricity demand forecasts by 'official' Russian and international institutions, describes possible trends assuming energy policy is largely unchanged in Northwest Russia. The so-called efficiency scenario focuses on the potential offered by more rational and environmentally-friendly energy use. Finally, in Section 5, the various options for meeting electricity demand are discussed for both scenarios. This section looks at the feasibility, in terms of energy policy, of new nuclear power plants, of the retrofitting of existing plants and of the building of new, modern fossil fuel power plants, as well as the development of renewable energy sources. Here, risk reduction - in both environmental and economic terms - plays a major role, in addition to general environmental and economic considerations. This study has been produced to a short deadline by a small team from the ko-Institut. We would like to take this opportunity to thank Eduard Gismatullin in Moscow and Karen Richardson in London, above all, for their comprehensive and intensive support with data research on site. Without their help it would hardly have been possible to complete this study within such a short period of time. In spite of intensive evaluation of the relatively large number of studies and complementary field studies, the amount and quality of data available for the study presented here were relatively poor. Not only is the data available on Russia as a whole (both overall and relating to energy management) often insufficiently validated, in spite of the many efforts of various institutions, but the analysis of individual regions - not just in Russia - causes additional difficulties. Unsolvable and severe inconsistencies in the data material have been noted in the text. Despite these problems, the authors of this study accept full responsibility for all data extrapolated and the conclusions drawn. THE DEMOGRAPHIC AND ECONOMIC SITUATION An analysis of regional electricity management requires a definition of the geographical area of reference. In this study the region to be investigated is defined by the United Power System (UPS) "Northwest" region in the Integrated Russian Power System (IPS) 1. This delineation - for energy management purposes - does not conform to any particular political division. The UPS "Northwest" region covers the areas of (Oblast) Pskov, Novgorod, Leningrad and Murmansk, the city of St. Petersburg and the Republic of Karelia. [TABLE 1: KEY ECONOMIC AND DEMOGRAPHIC DATA FOR THE REGION OF NORTHWEST RUSSIA SOURCE: FAZ-ID 1994, PP. 8-29 CALCULATIONS BY THE OEKO INSTITUTE] In the following study, the area under investigation will be referred to as "Northwest Russia". This does not make it identical to the "North-Western Economic Area" sometimes designated. A total of approximately 10 million people live in Northwest Russia (Table 1) around 7 % of the total population of the Russian Federation. The vast majority of the population live in urban areas. Around half of the total population of Northwest Russia live in the largest and most important city in this region, St. Petersburg. Only around 13 % of the population are located in rural areas. Economically, the region of Northwest Russia is characterised by an industrial output which is 5% above the Russian index average. However, industrial production is concentrated chiefly in the districts of Murmansk and St. Petersburg; the area of Pskov records a considerably below-average index. Overall, over 7% of total Russian industrial output was generated in Northwest Russia in 1990. Due to above-average development in this region, this figure is likely to have increased slightly in the meantime. The principal sectors of economic activity are mining (iron ore and aluminium), primary industry (paper production), metal-working (mechanical and automotive engineering, electrical engineering and electronics) as well as food processing. In addition to this, the armaments industry is traditionally of above-average importance in the districts of Novgorod and St. Petersburg. One indication of the development potential of Northwest Russia is the regional distribution of foreign direct investment. Around US $ 60 million in direct investments were made in the North and North-West of Russia in the first half of 1996 alone, almost two-thirds of which went to St. Petersburg. In Northwest Russia (which covers the economic area of North-West Russia and parts of the Northern economic area) around US $ 5 per inhabitant was invested by foreign producers. This is higher than the average for the whole of Russia (around US $ 3.7 per capita). Of the direct investments accumulated by 1 January 1995, 64% went to the mechanical engineering sector. The only other noteworthy blocks of accumulated direct investments went to the service sector and the chemical industry (27% and 19% respectively) (DIW 1997, p. 68). Although some sectors (such as mechanical engineering) certainly show above-average development potential, an evaluation of the various economic indicators (see Table 2 and Table 3) shows with a fair degree of certainty that the economic prospects in Northwest Russia (i.e. the Northwest area shown and parts of the Northern area) are approximately on a level with the average for Russia as a whole. [TABLE 2: FOREIGN DIRECT INVESTMENTS IN RUSSIA AND POPULATION BY REGION; SOURCE: GOSKOMSTAT 1994, DIW 1997] [TABLE 3: SELECTED ECONOMIC INDICATORS FOR THE REGIONS IN THE RUSSIAN FEDERATION SOURCE: KOROWKIN 1996] ELECTRICITY SUPPLY ELECTRICITY CONSUMPTION Electricity demand data for Northwest Russia were only partially available for this study and with varying degrees of precision. For this reason, in some cases the authors were forced to draw on structural data, extrapolated from developments in the Russian Federation as a whole. Electricity demand in Russia has declined continuously in recent years. After peaking in 1990 at around 1,078 TWh, electricity consumption dropped by 21%, to 852 Twh in 1994 (IEA 1995). Consumption by sector is shown in Figure 1. The trend in electricity demand reflects the structural crisis in the Russian Federation. Consumption in the private residential sector alone increased 77 - 92 TWh in absolute terms, on the 1990 level. [FIGURE 1: ELECTRICITY CONSUMPTION IN THE RUSSIAN FEDERATION, 1985 TO 1994, SOURCE: IEA 1995, MATTHES/MEZ 1996] Apart from minor annual fluctuations, electricity consumption in the agriculture and public service sectors remained generally constant.In contrast to this, however, electricity consumption in the energy, industry and transport sectors declined significantly. Consumption dropped by 19% (48 TWh) in the energy sector, 31 % (151 TWh) in industry and 42 % (44 TWh) in the transport sector, from the 1990 level. In line with these changes, the structure of electricity consumption shifted considerably between 1990 and 1994. Whilst the importance of the industry and transport sectors decreased substantially, the share of the domestic, public service and agriculture sectors together increased from 22 % (1990) to 30 % (1994). In spite of the decline in industrial consumption, this sector continues to account for the greatest single share, 40 % (1990: 45 %). The reasons for the trend in industrial electricity consumption can be demonstrated by means of a sectoral analysis for the Russian Federation (Figure 2). In all sectors - with the exception of mining - electricity consumption dropped in absolute terms in the Russian Federation between 1990 and 1994. In percentage terms, the distribution was considerably different in 1994 from in 1990. While the significance of four sectors (iron and steel, non-ferrous metals, mining and other industry) increased, all other sectors decreased in percentage terms. [FIGURE 2: INDUSTRIAL ELECTRICITY CONSUMPTION IN THE RUSSIAN FEDERATION BY SECTOR 1990-1994, SOURCE: IEA 1995][ [FIGURE 3: ELECTRICITY CONSUMPTION BY REGION, 1991 SOURCE: IEA 1995] Data on the regional distribution of electricity consumption in Russia is only available for the period 1990 - 1992 (IEA 1995); Figure 3 shows the data for 1991 as an example.According to this, the main areas of electricity consumption are to be found in the regions of Central Russia, the Urals and Siberia. These three regions account for more than two-thirds (71 %) of the electricity consumed. 2 Northwest Russia accounts for around 7 % of all electricity consumed in the Russian Federation in 1991. Total consumption is 71.2 TWh. In 1992, electricity consumption in Northwest Russia dropped to 61.9 TWh. However, the percentage of total Russian electricity consumption accounted for by Northwest Russia is little changed - 7.1% - as similar decreases in consumption were also recorded in the other regions. The absolute decline in consumption for Northwest Russia in the period 1990-1992 amounted to 15 %, or 11.3 TWh. Accordingly, the regional distribution of electricity demand did not change radically in the three years for which data was available. Clearly, the drop in demand had more or less proportional effects in all the regions. [FIGURE 4: ELECTRICITY CONSUMPTION IN NORTHWEST RUSSIA BY SECTOR, 1991, SOURCE: EPC 1995, IEA 1995] The sectoral distribution of electricity consumption in Northwest Russia for the early 1990s is shown in Figure 4. In Northwest Russia, as in the Russian Federation, industry is the most important sector, accounting for around 60 % of all electricity consumed in the region. The public service and residential sectors together account for 31%, meaning that they need around half as much electricity as industry. The structure of the entire Russian Federation (Figure 5) may give an indication of the distribution of industrial electricity consumption in the North-West, as all the major sectors of industry can be found here (see Chapter 2 for analysis). Electricity losses in the transmission and distribution networks of the Russian Federation were in some cases considerably higher than in the West in 1990-1993 (8.3 % in 1990 and 9.1 % in 1993).3 Whether this rise in grid losses in the period under investigation is coincidental or the result of the deteriorating technical condition of the networks is impossible to determine precisely here. [FIGURE 5: INDUSTRIAL ELECTRICITY CONSUMPTION IN THE RUSSIAN FEDERATION BY SECTOR, 1991, SOURCE: IEA 1995, EPC 1995, KO-INSTITUT CALCULATIONS] ELECTRICITY PRODUCTION ELECTRICITY PRODUCTION IN THE RUSSIAN FEDERATION In 1990, net electricity production in the Russian Federation stood at around 1,010 TWh. By 1993 it had dropped by 12 % to 889 TWh (IEA 1993/95). In 1990, almost three-quarters of electricity was generated in thermal power plants; hydroelectric power plants contributed 16% and nuclear power plants 11 %. Other electricity-generating technologies play only a minor role. In 1993, this distribution shifted slightly, while total output was considerably lower. The share of thermal power plants was 68 %, hydroelectric plants 20% and nuclear 12 %. So the drop in electricity production led to a lower capacity use for fossil fuel plants. While nuclear output remained almost constant in the period under review, in 1993 electricity production in hydroelectric power plants increased by approximately 9.7 TWh on the 1990 level. Thermal power plants produced 130 TWh less electricity in 1993 (IEA 1993/95). [FIGURE 6: NET ELECTRICITY PRODUCTION IN THE RUSSIAN FEDERATION, 1990 SOURCE: IEA 1993/95] ELECTRICITY EXCHANGE The Russian Federation trades in electricity internationally. For technical reasons it is necessary to distinguish between its two main groups of trading partners:The Scandinavian states are linked to each other via the NORDEL power system. Direct electricity transmission into this power system is only possible via special coupling systems, due to differing frequency regimes. A d.c. coupling with a transmission power of around 1,000 MW connects Russia's and Finland's high voltage grids in Vyborg (ko-Institut/FFU 1992). The Baltic states and Belarus (White Russia) and the Ukraine are still integrated in the Integrated Power System (IPS) of the former Soviet Union. Thus no special coupling systems are required for the exchange of electricity between these countries. Figure 7 shows the balance of imports and exports for the exchange of electricity with other countries. [FIGURE 7: ELECTRICITY IMPORTS AND EXPORTS BY THE RUSSIAN FEDERATION, 1990-1993, SOURCE: IEA 1993/95] Electricity imports decreased by 29% (over 10 TWh) in the period 1990-1993. Exports of electricity rose by just under 4 TWh, resulting in a net balance increase in electricity exports - especially due to the considerable drop in imports (IEA 1993/95).In 1991, the total electricity exchange between Northwest Russia and European foreign countries amounted to around 6.4 TWh (OECD/IEA 1994). Eighty per cent (5.1 TWh) of exported electricity was supplied to Finland. These transmission capacities should remain constant until the year 2000. In addition, there are plans to increase the existing 100 kV and 400 kV transmission capacities (total: 1,000 MW) to 1,400 MW (OECD/IEA 1994). Plans for the development of the Scandinavian electricity market assume that Finland will purchase a not inconsiderable share of its electricity from Russia (Agrenius 1992). 1.3 TWh of electric energy was supplied to the Baltic states in 1993. Electricity supplies are to be completely halted in the medium term. After the Baltic states of Estonia, Latvia and Lithuania gained their independence, problems occurred with the electricity supply for the Russian area of Pskov, which was separated from the Russian high voltage grid. This region is currently being supplied through three 330-kV overhead cables via the Baltic states. The construction of a transmission station to the 330 kV grid in Northwest Russia, to link this region to the Russian integrated grid, is being planned (OECD/IEA 1994). [FIGURE 8: ELECTRICITY EXCHANGE BETWEEN NORTHWEST RUSSIA AND THE NEIGHBOURING FOREIGN STATES, 1991 SOURCE: OECD/IEA 1994] The exchange of electricity with Norway occurs via cables. Accounting for 0.1 %of total electricity exports (8 GWh) in 1991, it is of practically no significance (OECD/IEA 1994). Electricity consumption in Northwest Russia in 1992 was 61.9 TWh. Electricity exports - 6.4 TWh - account for a share of around 10%. About one-third of exported Russian electricity goes via Northwest Russia. The different regions of Russia have their own United Power System (UPS) and are integrated in the (IPS). This central system connects the regional integrated power systems of the following six regions: Northwest Russia Central Russia Middle Volga Region North Caucasus The Urals (incl. Tjumen) Siberia The far east of Russia is only intermittently integrated. Altogether 65 local power supply companies are linked to the IPS system. Seven companies which supply power in the more remote regions of Kamtchatka, Magadan and Sakhalin are not connected to the integrated system (EPC 1995). Northwest Russia is connected to the Central region of Russiavia high voltage grids. The transmission capacities betweenthese two regions are as follows (EPC 1995): * transmission capacity from Northwest Russia into the Central region: 1.5 - 1.8 GW * transmission capacity from the Central region to Northwest Russia: 0.9 - 1.3 GW The development of additional transmission output of 750 MW in both directions is planned for the year 2000. Altogether, three high voltage overhead cables are in operation (one with 100 kV, one with 330 kV and one with 750 kV). [FIGURE 9: ELECTRICITY EXCHANGE CAPACITIES IN THE IPS SYSTEM BETWEEN NORTHWEST RUSSIA AND CENTRAL RUSSIA, SOURCE: EPC 1995] This results in a net power output from Northwest Russia to Central Russia of approximately 700 MW. This is equivalent to the output of a medium-sized power plant. On the basis of the new Russian Energy Programme, a balanced exchange of electricity between the North-Western and Central Russian power system is expected for the year 2000. The projected net exports from Northwest Russia to Central Russia are 200 MW in 2005 and 1,000 MW in 2010 (Energoatomisdat 1995, p. 237). Thus - in mathematical terms, at least - the amount of electricity exported to Scandinavia and the Baltic states must all be generated in Northwest Russia. Planned electricity exports from the North-West abroad and to other networks in the Russian power system thus total around 2,500 MW. In light of this, it is clear the Russian Government's plans assume that Northwest Russia will develop into a major location for the export of electricity. POWER PLANT CAPACITY POWER PLANT CAPACITY IN THE RUSSIAN FEDERATION In January 1994 the Russian Federation had a total installed power plant capacity of 198.7 GW. Most (135.7 GW) of this capacity is fossil fuel power plants. A distinction must be made between condensation power plants for pure electricity generation and thermal cogeneration plants (CHP) for providing heat and electricity. [FIGURE 10: POWER PLANT CAPACITY IN THE RUSSIAN FEDERATION, 1994 SOURCE: EPC 1995, APPENDIX I] With 36 % of total power plant output (72.7 GW) fossil-fuelled CHP plants form the single largest group of power plants. Conventional thermal power plants account for 32% of installed capacity (63.1 GW). ). In 1994, hydroelectric power plants accounted for a somewhat smaller share of the total - 21% (41.2 GW). This is almost double the output of all nuclear power plants in the Russian Federation put together - 11 % (21.2 GW) (EPC 1995, Appendix B, Liebholz 1996). The fossil power plant capacity (Figure 11) is broken down by type of fuel used (EPC 1995): Over half (57 %) of the total installed capacity is generated by plants using a natural gas / heavy oil mixture. Lignite-fired power plants account for 23% - or 30.7 GW. The remaining 20% is from power plants fired by bitumen or natural gas. [FIGURE 11: FOSSIL FUEL POWER PLANTS IN THE RUSSIAN FEDERATION BY FUEL TYPE, 1994, SOURCE: EPC 1995] Geographically, total power plant capacity is very unevenly distributed across the regions: More than two-thirds of total installed power plant capacity (approximately 68%) is located in Central Russia, the Urals region and in Siberia. Concentration of electricity generation generally follows electricity demand; the three regions mentioned are those with the highest energy consumption. Table 4 shows the regional distribution of power plant capacity for fossil and hydroelectric power plants. [TABLE 4: REGIONAL DISTRIBUTION OF NON-NUCLEAR POWER PLANT CAPACITY, 4 SOURCE: EPC 1995] Power plant capacity in Northwest RussiaAn evaluation of the power plants in Northwest Russia according to OECD/IEA (1994) presents the following picture: * total installed power plant capacity in Northwest Russia is put at 19,870 MW; * of this, approximately 5,260 MW (26.5 %) is accounted for by oil-fired power plants; * the two nuclear power plants have an output of 5,760 MW and represent the largest single source, with almost 30% of total installed capacity; * the share of coal (3,780 MW or 19 %), water (2,870 MW or 14 %) and gas power plants (1,425 MW or 7 %) adds up to 41% of all available power plant generating capacity; * peat and shale power plants play a subordinate role, with a generating capacity of 630 and 150 MW respectively. [FIGURE 12: POWER PLANT CAPACITY IN NORTHWEST RUSSIA BY FUEL TYPE USED, 1993, SOURCE: OECD/IEA 1994, LIEBHOLZ 1996 The geographical distribution of power plants corresponds to the economic importance of the different regions in Northwest Russia. [TABLE 5: POWER PLANT CAPACITY IN NORTHWEST RUSSIA BY REGION AND ENERGY SOURCE, 1993, SOURCE: OECD/IEA 1994 LIEBHOLZ 1996 (CF. ALSO TABLE 14 IN APPENDIX)] Sixty-one per cent of the total power plant capacity (12,100 MW) is concentrated in the economically strongest region, Leningrad. Over a quarter (5,040 MW) is located in the Murmansk region. Four of a total of eight reactors are connected to the grid in each of these two regions (Figure 13). [FIGURE 13: POWER PLANT CAPACITY IN NORTHWEST RUSSIA BY REGION AND ENERGY SOURCE, 1993 SOURCE: OECD/IEA 1994, LEIBHOLZ 1996] A large number of the power plants operating on fossil fuel energy sources - oil, coal and gas - are designed for CHP. 5 The CHP output in all power plants in Northwest Russia amounts to a total of approximately 7,630 MW. This corresponds roughly to the installed nuclear and hydroelectric capacity. The remaining 19% is accounted for by unspecified local power plants. 6 [FIGURE 14: GENERATING CAPACITY IN NORTHWEST RUSSIA BY POWER PLANT TYPE SOURCE: OECD/IEA 1994] NUCLEAR POWER PLANTS IN NORTHWEST RUSSIA A total of eight nuclear reactors operate in Northwest Russia - four in the Murmansk region and four in the Leningrad region [TABLE 6: NUCLEAR POWER PLANTS IN NORTHWEST RUSSIA, SOURCE: LIEBHOLZ 1996, NUCLEONICS WEEK, FEBRUARY 13, 1997, P.20] The four nuclear reactors sited at Kola nuclear power plant consist of two VVER-440/230 reactors and two VVER-440/213 reactors with a gross electrical capacity of 440 MW each. The nuclear reactors sited at Leningrad nuclear power plant are of the RBMK type with a gross unit capacity of 1,000 MW each. Two units in each case originate from the first and second series of RBMK-type reactor. The total nuclear electricity-generating capacity in Northwest Russia thus adds up to 5,760 MW gross and 5,340 MW net (Table 6). This means that over a quarter (27 %) of total installed nuclear capacity in the Russian Federation is concentrated in Northwest Russia (Figure 15). All the reactors operating in Northwest Russia have reached a relatively advanced age. Unit 4 at the Kola plant is, at 12 years of age, the "youngest" reactor. Two reactors (Kola-3 and Leningrad-4) have been in operation for 15 years and Unit 3 at Leningrad has been operating for 17 years. Four of the total of eight reactors - each of which is the first series of the reactor type - have been connected to the grid for more than 20 years. The projected operating lifetimes of Units 1 and 2 of the Kola reactors end in 2003 and 2004 (Kelm/Wenk 1995); according to current plans, the remaining two units are to be shut down in 2011-2014. Thorough rehabilitation work will be necessary on the pressure pipes of the reactors at Leningrad, at the latest by 2000 (Unit 2) / 2005 (Units 3 and 4) (Kollert & Donderer 1996). [FIGURE 15: NUCLEAR POWER PLANTS IN THE RUSSIAN FEDERATION SOURCE: LIEBHOLZ 1996, KO-INSTITUT CALCULATIONS] HYDROELECTRIC POWER PLANTS Hydroelectric power has a long tradition in the Russian Federation and played a key role in the industrial development of the country. Hydroelectric power plants currently installed in the Russian Federation have a total generating capacity of 41,200 MW. This is around 21 % of the total. These plants supply an annual average of 160,000 GWh of electricity. Total economic potential of hydroelectric power for the Russian Federation is put at 850,000 GWh per annum (EPC 1995, Appendix I). This suggests that only 19 % of total available hydroelectric power resources are currently being used. However, the geographical distribution of these resources varies greatly. Whereas around half of the potential is used in the European part of the Federation, most of the unused potential is located in Siberia and the far east of the Russian Federation. In Northwest Russia there is a total of 26 hydroelectric power plants with a capacity of over 30 MW, and an unspecified number of smaller hydroelectric power plants with a generating capacity of under 30 MW. The total installed capacity of hydroelectric power plants amounts to 2,844 MW. These supply 12,460 GWh of electricity from hydroelectric energy in Northwest Russia per annum. [TABLE 7: HYDROELECTRIC POWER PLANTS IN NORTHWEST RUSSIA BY SIZE SOURCE: EPC 1995, APPENDIX I] The locations, installed electrical capacity, average annual electricity production and further technical data are given in the Appendix. (Table 15) POWER SUPPLY COMPANIES IN NORTHWEST RUSSIA Northwest Russia is supplied with electricity by five power supply companies: KarelEnergo (Republic of Karelia), KolEnergo (Kola peninsula), LenEnergo (city and district of St. Petersburg), NovgorodEnergo (Novgorod region) and PskovEnergo (Pskov region). The Integrated Power System North-West and the Integrated Power System of Russia are operated by RAO EES. The nuclear power plants are not assigned to the regional electricity suppliers or RAO EES, but to AO Rosenergoatom, a company wholly owned by the Atomic Ministry. Scenarios for electricity demand up to the year 2010 PRELIMINARY REMARKS ON METHODOLOGY In this section two scenarios will be drawn up for expected electricity demand in Northwest Russia up to the year 2010. The reference scenario assumes that during this period no special efforts will be made with energy policy in Northwest Russia, beyond what is currently practised and anticipated. The efficiency scenario assumes moderate implementation rates for the existing energy saving potential. Between the reference and the efficiency scenario, therefore, there is a potential electricity consumption "corridor", which shows how much scope there is for political action. Electricity consumption in the value-added areas depends very much on the development of this value added. It makes little sense to base calculation of this on international value-related data, due to the problematic conversion rates between currencies. For this reason, the scenarios were developed using the ko-Institut's EBES-Model. 7 Four principal factors were taken as the basis for calculating the scenarios for each of the different areas of value added: * gross domestic product (GDP); * labour productivity; * developments in the labour market; * specific electricity consumption per employee. Here consumption is broken down into the sectors: industry, forestry and agriculture, services 8 and private households.The assumed key economic data, such as trends in GDP, labour productivity and the labour market are the same for both scenarios. The only difference in the assumptions between the efficiency and the reference scenario lies in the specific electricity consumption per employee and/or in household consumption. These factors are explained on the following pages. DEVELOPMENT OF ELECTRICITY CONSUMPTION DETERMINANTS POPULATION AND GROSS DOMESTIC PRODUCT By the year 2010 the population will decrease by about 10% in line with trends in Russia as a whole. While the size of the average household is expected to decline from 2.75 persons per household (1994) to around 2.5 persons per household, the number of households will remain more or less constant at 3.6 million. Electricity consumption in Northwest Russia will depend to a great extent on the economy. The main indicator for economic performance is GDP. As there are no regional economic performance data or forecasts for Northwest Russia, we assume (on the basis of the development potentials presented in Chapter 2) that these can be extrapolated relatively accurately from data and projections for the Russian Federation generally. GDP in Russia dropped drastically from 1990 to 1994 (World Bank 1995, p. 424). In 1995, real GDP stood at slightly over half of the 1990 level (55 %). For 1996 too, a further, if slower drop in GDP is expected. Yet some experts describe the slight projected decline of 3% in 1996 as optimistic (FAZ-ID 1996, p. 203), as in the first half of the year GDP was down 5% in real terms on the same period in the previous year. An increase in GDP is not expected before 1997 at the earliest. However, this is subject to appropriate support measures being taken (tax reform, opening the country to foreign investors, etc). If economic policy provides consistent support for the stabilisation course, it can be assumed that economic decline in Russia is currently bottoming out. In the long term, high growth rates cannot be expected. The cause for this is to be found in the state sector, which is still very large. The proportion of people employed in the state sector was approximately halved by 1995 from over 80 % in 1990 (FAZ-ID 1996, p. 199). However, as the so-called "mixed" sector increased considerably at the same time, those working in the private sector still account for less than half of all employees. The IEA (1995, p. 281) projects the following trend for GDP up to the year 2010: between 1990 and 1997 GDP initially drops sharply and then less dramatically. 1997 is the bottoming-out year. Three scenarios have been developed for the period up to 2010. In the first 'probable' scenario, real GDP reaches the 1990 level in 2010. The authors of the Joint Electric Power Alternatives Study 9 base their calculations on similar assumptions. In the optimistic scenario, real GDP increases slightly above the 1990 level by the year 2010. If economic developments are less favourable, however, the increase in GDP is much weaker. In this case, real GDP increases to a mere 88% of the 1990 level in 2010 (EPC 1995, pp. 1-7). Figure 16 shows the trend for GDP assumed by the ko-Institut. Slight economic growth is projected from 1998, increasing up to the year 2010. Nevertheless, the assumption of growth of, on average, more than 3% per annum in real terms over a period of more than 10 years is optimistic. According to this projection, the industrial sector will bottom out in 1997. Overall, GDP will almost reach the 1990 level in 2010. [FIGURE 16: ASSUMED GROSS DOMESTIC PRODUCT TREND IN RUSSIA, SOURCE: KO-INSTITUT CALCULATIONS AND ESTIMATES] LABOUR PRODUCTIVITY Labour productivity, defined as a quotient of the GDP and the number of jobs in the country, has dropped sharply since 1990. In 1996, the productivity of all sectors of the economy will be approximately 30 % lower than in 1991 (World Bank 1995, p. 418ff, FAZ-ID 1996, p. 195ff). 10 An increase in average productivity cannot be expected until 1997.However, these averages conceal the considerable differences between individual sectors of the economy. Whereas productivity in the service sector initially remains more or less constant and then increases significantly in the wake of economic recovery, productivity in the agricultural sector collapses almost completely. Here, by 1996 productivity drops -by about one-third from the 1990 level. From 1997, it rises, but despite doubling the 1996 figure, by the year 2010 it will only reach just over 60% of the 1991 level. In the industrial sector too, productivity first declines by a good third. From 1997 a slow (initially) but continuous increase is projected. In 2010, productivity will thus stand almost 25 % above the 1991 level. EMPLOYMENT In 1990, the employment rate in Russia stood at more than 50 %. By contrast, the employment rate in the Federal Republic of Germany was 42% in 1993 (StBA 1995, p. 103). The figure for Russia is therefore relatively high; it is to be expected that it will go down in future. In the scenarios it is assumed that the employment rate in Northwest Russia and in the Russian Federation will drop to 44 %. There will also be a significant shift within the individual sectors. Due to structural problems in industry and agriculture, the number of jobs in these sectors will probably decrease. In forestry and agriculture a decline to 53 % of the 1991 level is expected, and in industry 74 %. In contrast to this, after a slight drop, employment in the service sector is expected to grow again disproportionately. Whereas total employment will decline to 78% of the 1991 level by 2010, employment in the service sector will only drop to 85 %. CHARACTERISTIC VALUES FOR ELECTRICITY CONSUMPTION Electricity consumption per employee has decreased continuously in recent years, probably due to the fact that productivity dropped much more than jobs. Specific electricity consumption, that is, the annual consumption of electricity per job, will probably increase overall in the wake of the general reorganisation and modernisation of production plants and work processes now taking place. Work processes will become generally less labour-intensive. This may also involve an increase in electricity consumption per employee, e.g. due to increased automation and the greater use of electricity for heating applications. Whereas the determinants so far presented (GDP, labour productivity, employment) are the same in the two scenarios, the efficiency scenario differs considerably from the reference scenario with respect to trends in electricity consumption per employee. Here, the findings are broken down into the industry, agriculture, services and private household sectors. Industrial electricity consumption per employee shows the greatest variability in the OECD states considered here. The highest annual consumption - more than 100 MWh/employee - is found in Norway. Austria has the lowest consumption per employee with less than 14 MWh. The annual average for all the OECD countries considered lies at around 25 MWh per industry employee 11. Figure 17 shows very clearly that it is possible to distinguish between four groups within the OECD states studied, each with quite specific consumption structures:Scandinavian countries (Norway, Finland, Sweden) and Canada: all these countries are characterised by high shares of hydroelectricity and - principally as a result of this - historically, very low electricity prices. USA and Australia: although the share of hydroelectricity is only around the average for the OECD countries considered, the price of electricity is considerably below average in both countries. Switzerland, Austria and Great Britain: these countries show the lowest consumption levels per employee. The reason for this is the smaller role played, historically - or in the case of Great Britain, since the mid-1980s - by energy-intensive industries compared to the other European OECD countries studied. Italy, Japan, Spain, Germany and France: for these countries the electricity consumption per employee in industry is slightly below the average of the OECD states considered here. The chief reason for this is the slightly higher price of electricity compared to the countries in the first two groups. Indeed this is one reason why Japan - with high electricity prices - finds itself at the lower end of this group. Industrial electricity consumption per employee in Northwest Russia is currently quite comparable to central European countries. Although at present the level is borderline between the third and fourth group, Northwest Russia can clearly be assigned to the fourth group. For one thing, industrial electricity consumption per employee has dropped drastically since 1990, and for another, Northwest Russia is more comparable to Japan, Germany or France than to Austria or Switzerland with regard to its industrial structure. Figure 19 and Figure 20 show that the method of categorisation between the four groups is also suitable for the service and private household sectors. With some exceptions, the same basic structures can be clearly recognised in these diagrams. On the other hand, the figure for consumption per employee in the service sector in Northwest Russia clearly belongs to the central European fourth group. However, electricity consumption per capita in private households remains much lower than western European levels due to the fact that electrical appliances are considerably less widespread. It is only in the agriculture sector, which is of minor importance for electricity consumption, that the breakdown selected no longer applies with any degree of precision (Figure 18). Here, although Northwest Russia is clearly above the average for the reference countries considered here, it is still within the range of all the OECD countries (Figure 18). Here, although Northwest Russia is clearly above the average for the reference countries considered here, it is still within the range of all the OECD countries considered. [FIGURE 17: SPECIFIC ANNUAL ELECTRICITY CONSUMPTION PER INDUSTRY EMPLOYEE IN SELECTED OECD COUNTRIES AND NORTHWEST RUSSIA, 1993 SOURCE: IEA 1996, STBA 1995] [FIGURE 18: SPECIFIC ANNUAL ELECTRICITY CONSUMPTION LEVELS PER EMPLOYEE IN AGRICULTURE IN SELECTED OECD COUNTRIES AND NORTHWEST RUSSIA, 1993 EMBED WORD.PICTURE.6 SOURCE: IEA 1996, STBA 1995] [FIGURE 19: SPECIFIC ANNUAL ELECTRICITY CONSUMPTION LEVELS PER EMPLOYEE IN THE SERVICE SECTOR IN SELECTED OECD COUNTRIES AND NORTHWEST RUSSIA, 1993 SOURCE: IEA 1996, STBA 1995] [FIGURE 20: SPECIFIC ANNUAL HOUSEHOLD ELECTRICITY CONSUMPTION PER INHABITANT IN SELECTED OECD COUNTRIES AND NORTHWEST RUSSIA, 1993 SOURCE: IEA 1996, STBA 1995] ELECTRICITY CONSUMPTION IN THE REFERENCE SCENARIO An average of approximately 25 MWh of electricity per employee was consumed in the industrial sector in the OECD reference countries in 1993. In Northwest Russia consumption per industry employee in 1993 stood at more than 17 MWh, considerably higher than in Japan or Italy. This is due to the importance of energy-intensive industries in Northwest Russia. 12 For the reference scenario it is assumed that this value will only increase moderately - by 35% - to just over 23 MWh per employee by the year 2010. In the agriculture sector, in 1993 annual consumption of electrical energy stood at more than 13 MWh per employee. In the OECD reference countries, electricity consumption per employee in agriculture was much lower, that is, a little more than 3 MWh. In Canada, Norway and Germany, however, more electricity was consumed per employee in this sector than in Northwest Russia. Here, electricity consumption per employee in agriculture dropped still further between 1993 and 1995. For the projection to 2010 in Northwest Russia it is therefore assumed that electricity consumption per employee will initially stabilise at the low 1995 level of just over 12 MWh, and in the long term will increase only moderately to around 14 MWh. In the service sector, electricity consumption per employee in Northwest Russia is below the average of the OECD countries considered here. In 1993, 6.1 MWh was consumed per employee in Northwest Russia. This level dropped to 5.7 MWh by 1995. In the long term, however, electricity consumption per employee in the service sector in Northwest Russia will rise again. For the reference scenario it is therefore assumed that this figure will increase to around 7.2 MWh by 2010, putting it slightly below the OECD reference countries' average for 1993. [FIGURE 21: ELECTRICITY DEMAND IN THE REFERENCE SCENARIO, SOURCE: KO-INSTITUT CALCULATIONS AND ESTIMATES] On the basis of the assumptions explained above, in 2010 electricity consumption in Northwest Russia regains the 1991 level, reaching 71.0 TWh (in 1991 it was 71.2 TWh). The decrease in consumption observed since 1990 continues until 1998, reaching a minimum of 51.4 TWh, before rising again from 1999 (cf. REF Figure 21). In the private household sector electricity consumption per capita is currently considerably lower than in the OECD reference countries. Whereas in these countries an average of 2.6 MWh is consumed per person, in 1993 one person in Northwest Russia required only approximately 0.7 MWh.13 Here the reference scenario assumes an increase of approximately 230 % on the 1993 level. Accordingly, electricity consumption in 2010 reaches a level of 1.6 MWh per capita.Energy saving potentialThe development taking place in the industrialised countries of the West suggests that efficiency strategies can be implemented in all national economies, over and above current trends in development. Without an active efficiency policy, opportunities for saving energy through structure, technology and behaviour in the former Eastern Bloc countries will not be exploited. In drawing up an active electricity-saving policy, the most important objective must therefore be to increase and speed up the uptake of efficiency measures via the targeted use of suitable instruments. 1. Structural savings potential. As described above, the economic structure in Northwest Russia is characterised by an overweighting of industry. Here, the energy and electricity-intensive areas of heavy industry are of particular importance. The trend assumed for economic development is based on a largely crisis-induced decline in the share of industrial value added in total economic performance. A policy aimed at exploiting electricity-saving potential would allow for the economic restructuring process, while curbing electricity consumption through structural measures. 2. Technological savings potential. A comparison of electricity and energy consumption per employee in the former Soviet Union and the countries of the West - bearing in mind the considerable technical saving potential still available in the West (cf. ko-Institut 1992) - suggests that there is still a substantial savings potential, for instance by replacing outdated plant with more energy-efficient technologies. An active electricity-saving policy would firstly aim at creating incentives for speeding up the retrofitting process when investing in plant modernisation. Secondly, high efficiency standards should be set in the cushioning and incentive programmes, which continue to exist. 3. Behaviour-related savings potential. Given that electricity prices are relatively high in relation to disposable income, a fundamental change of behaviour could well be brought about, especially in the domestic sector. An active programme to save electricity would aim to lastingly stabilise and further encourage such a change in awareness brought about by scarcity by setting prices strictly related to consumption (no flat-rate pricing components, etc.) and providing detailed information to this end. The situation whereby prices have reached a considerable level but many customers' discipline in paying is exceptionally poor, on account of their poor income situation, certainly presents an important point of departure here for services offered by the energy suppliers or state authorities. Not only are reduced bills as a result of greater efficiency and economising more attractive than high bills, paid electricity bills are, for all concerned, more attractive than unpaid bills. To date no detailed studies on specific energy savings potential in Northwest Russia are available. However, if one assumes that the technology and age structure of the capital stock in Northwest Russia do not differ greatly from those in the other regions and countries of the former Soviet Union (about which a large number of studies exist 14), it is possible to extrapolate.Opitz/Pfaffenberger (1996), moreover, document savings potential for different sectors of the economy in the Russian Federation (Table 8). The financial investments necessary for these are shown here. The 'no cost' column shows the saving potential which can be realised at very low or no cost by means of administrative and organisational measures alone. To achieve further savings, investment is needed. [TABLE 8: ELECTRICITY SAVING POTENTIAL IN THE ECONOMY OF THE RUSSIAN FEDERATION SOURCE: OPITZ/PFAFFENBERGER 1996] Overall therefore, it would be possible to save approximately 41 % of 1990 electricity consumption. Eleven per cent of this can be realised without any expenditure. The highest savings potential in both absolute and relative terms is in the industrial sector (Opitz/Pfaffenberger 1996, p. 97). Table 9 shows the savings potential by sector as stated in EPC (1995), also based on 1990. Both analyses arrive at similar results for this. The no-cost and/or very low-cost savings potential is around 100 TWh/a on average over all sectors. A further 240-290 TWh can be saved if investments are made. Absolute savings potential can be put at approximately 350 TWh per annum. For Northwest Russia this would mean that approximately 20 TWh of electricity could be saved, on 1992 consumption. This is the equivalent of a one-third reduction in (specific) consumption. [TABLE 9: ANNUAL SAVINGS POTENTIAL BY SECTOR IN THE RUSSIAN FEDERATION (REFERENCE YEAR 1990), Source: EPC 1995] It is worth re-emphasising this point: on the basis of these assumptions, energy savings can be achieved not only by specific increases in efficiency, but also through economic structural change and changes in behaviour, brought about through incentives and/or information. Furthermore, this analysis shows that the annual savings potential for all energy sources, i.e. fuels and electricity, is considerable. In principle, the problems already discussed in this section, of relating energy consumption data to value added quantified by monetary values, mean that savings potential should actually be shown and extrapolated by product. However, as this would go far beyond the scope of the present study, an alternative construction is called for. In the reference scenario, the structural and technological savings potential is shown in terms of specific electricity consumption per employee in the industry, services, and agriculture and forestry sectors. THE EFFICIENCY SCENARIO The following assumptions apply in the projection for electricity consumption made here: allowing for labour productivity (which will certainly still be lower than in the West in 2010) a structural and technological savings potential of one-third on the reference scenario was assumed for the industrial sector. Approximately 30% of this potential comes from further structural change and 70% from improvements in technological efficiency. This represents a reduction in electricity consumption per employee in industry of just under 15 % from 1991 levels. In the service sector, electricity consumption of 6.8 MWh per employee is assumed. This means an increase in efficiency of around 5% on the reference scenario. Here electricity consumption of workplaces in the service sector in 2010 would still be around 17 % higher than the in 1995. Electricity consumption in agriculture and forestry accounts for a relatively small share of total consumption. Here only a very moderate increase in efficiency of 5% is expected. For households it was assumed that electricity consumption per capita will double to 1.44 MWh, around 11 % below the figure assumed in the reference scenario. 15 [FIGURE 22: ELECTRICITY DEMAND IN THE EFFICIENCY SCENARIO, SOURCE: KO-INSTITUT CALCULATIONS AND ESTIMATES] The development of value added in the main sectors, i.e. industry, agriculture, and forestry and services is the same as in the reference scenario. The downward trend in electricity consumption up to 1997 will run the same course in the efficiency scenario as in the reference scenario. Electricity consumption does not increase in the efficiency scenario until the economic situation in Northwest Russia has stabilised. Overall, however, the increase is more moderate than in the reference scenario, so that in 2010, on the assumptions explained above, electricity consumption amounts to approximately 56.9 TWh (Figure 22). It would thus be 5 % higher than the 1995 level (54 TWh). COMPARISON OF SCENARIOS The calculations in the scenarios are based principally on four determinants: GDP, labour productivity, expected trends in the labour market and electricity consumption per employee, broken down for the industry, forestry and agriculture, services and private household sectors (unit: consumption in kWh per household). Whilst the key economic data is assumed to be the same in both scenarios, in the efficiency scenario lower specific consumption levels have been assumed than in the reference scenario. Table 10 gives an overview of the assumed specific electricity consumption levels by sector of economic activity. TABLE 10: SPECIFIC ELECTRICITY CONSUMPTION LEVELS IN NORTHWEST RUSSIA BY SECTOR, SOURCE: KO-INSTITUT CALCULATIONS] In REF Figure 23 (see p. 37) the results of the ko-Institut calculations are compared with the scenarios published by other institutions (IEA 1995). Four further scenarios are available; one 'official one' by the Russian Government and one forecast each by IEA/World Bank and IEA (1995, p. 206). 16 Moreover, two further electricity demand scenarios were developed as part of the Joint Electric Power Alternatives Study (EPC 1995, p. 1-11). In the 'optimistic' scenario, a favourable economic development is assumed for the Russian Federation, and in the 'pessimistic' one an unfavourable development. [FIGURE 23: COMPILATION OF VARIOUS SCENARIOS FOR ELECTRICITY DEMAND IN NORTHWEST RUSSIA, SOURCE: IEA 1995, S. 205, EPC 1995, S. 1-11, KO-INSTITUT CALCULATIONS] These scenarios start in the year 1990, meaning that in some cases the projections for consumption up to 1995 differ greatly from what actually happened - especially in the older forecasts: The official Government scenario of 1992-93 overestimates electricity consumption in Northwest Russia in 1995 by 36 %. The IEA/World Bank scenario of 1992-93 is 7 % too high. The 1995 IEA scenario also overestimates electricity demand by around 9 %. Only the EPC scenarios lie within the range of actual developments. A comparison of the different scenarios, including the ko-Institut scenarios outlined here, from 1995, shows: The official Government scenario assumes that electricity demand bottoms out in 1995. According to this, from 1995 electricity demand in Northwest Russia increases continuously and reaches a level of around 102 TWh in 2010. This figure is almost two-fifths higher than the - already very high - electricity demand in 1990. The IEA/World Bank scenario from 1992-93 does not expect the upturn in electricity demand until after 1995. 16 However, as electricity demand increases sharply from 2000, and even more sharply from 2005, electricity consumption in 2010 will be around 18 % higher than in 1990. The IEA scenario from 1995 assumes an earlier upturn and lower growth rates for electricity demand than the 1992-93 forecast. By the year 2010, however, electricity demand will be 14% higher than in 1990, reaching levels similar to the earlier scenario. The scenarios drawn up within the framework of the Joint Electric Power Alternatives Study regard 1995 as the turning-point for electricity consumption. Under favourable overall economic conditions electricity demand increases rapidly at first and, from 2005, at a very fast rate. If economic developments are unfavourable, electricity consumption stays at the current level until around 2000 and then increases only moderately. In the first scenario, electricity demand in 2010 would exceed the 1990 level by 20 %, whereas in the second case it would be a little lower (-4 %). In the ko-Institut scenarios, the turning-point in electricity consumption comes around 1997. But even after that, electricity consumption stays level for a while. In the reference scenario, electricity consumption then increases continuously from the year 2000, in line with economic developments, and reaches just under (-3%) the 1990 level in 2010. In the ko-Institut efficiency scenario on the other hand, electricity consumption stays level much longer and even then increases only moderately. The reason for this is an energy policy which is systematically geared towards increasing structural and technical efficiency, allowing the existing efficiency potential in all sectors of electricity consumption to be consistently exploited. Therefore electricity consumption only increases to just under 70 TWh by the year 2010 - or just over 22% below the 1990 level. By systematically drawing on electricity saving potential and pursuing an energy policy consistently geared to energy and electricity efficiency, a total of almost 20% of electricity demand could be cut in Northwest Russia compared to the reference scenario. This would firstly cut primary energy demand for the conversion sector and secondly considerably reduce the power plant capacity required. OPTIONS FOR MEETING DEMAND PRELIMINARY REMARKS The electricity demand scenarios can be taken as a basis for calculating the demand to be met by the total power plant capacity in Northwest Russia. For this, an average capacity use of 5,500 h per annum for all power plants together is assumed.17 In the base year this results in a required output for Northwest Russia of 9,800 MW. In the reference scenario, the power plant output required increases by approximately 30 % to 12,900 MW. By exploiting the savings potential, the efficiency scenario shows the required output increasing only slightly to 10,300 MW. In addition to this output required exclusively to satisfy the demand for electricity in Northwest Russia, planned exports also have to be considered. Current plans assume total exports of 2,500 MW (1,500 to Scandinavia and 1,000 to the Central Russian power system). However, in energy economics terms, these exports are only realistic if there is a cost differential between electricity generation in Northwest Russia and in the export regions. Therefore they will be considered separately. The following sections first of all examine the individual technical options for meeting electricity demand in Northwest Russia. Here, environmental and risk factors play a major role as well as economic ones. NUCLEAR POWER PLANTS Three factors are of particular importance for evaluating the future role of nuclear power in Northwest Russia: Can continued operation of the plants be justified from the point of view of safety? What costs are involved in the continued operation of existing plants? What is the situation with regard to new nuclear power plants? The principle that the safety of people and the environment must be given priority over economic considerations, with high-risk technologies such as nuclear fission, must apply in Northwest Russia, as anywhere. At this point is should be pointed out that for nuclear plants there is no such thing as absolute safety. It is only possible to influence the statistical probability of accidents on predefined "accident paths" by means of technical and organisational modifications. The ko-Institut pointed out the inadequacy of such safety philosophies very early on (ko-Institut 1983+1987+1990). In the West there is a relatively broad consensus that the RBMK reactors must be shut down as soon as possible (Kollert & Donderer 1996, BMU 1991). 18 Furthermore, it is almost impossible to retrofit the reactors of the VVER-440/230 and VVER-440/213 series still in operation to bring them up to the safety standard usual in the West 19 (Sailer 1992).In this context, it is no longer a question of whether these reactors should be shut down, but of the options available for replacing them. It follows from this that the question of the cost of possible alternatives must not be set against a "no-cost" option of continued operation of the reactors or against marginal investments in safety or maintenance. Due to cost-intensive rehabilitation measures necessary by the year 2005, at least three of the four reactors at Leningrad nuclear power plant will have to be shut down by then anyway. In addition, two of the four reactors at Kola nuclear power plant will reach the end of their operating lifetime in 2005. But this indication gives no justification for the continued operation of these plants for the next 10 years. In view of the planned shutdown of the nuclear reactors at Leningrad and Kola nuclear power plants, among other reasons, the construction of two new reactors - one on the Kola peninsular (Kola-2) and one at the Sosnovy Bor site - has commenced. They are of the new VVER-640 series with a nominal capacity of 640 MWel and 1.800 MWth (Minatom 1996). A total of two units of this reactor type are currently planned for the Kola-2 (Minatom 1996). 20 This raises the question of whether this project can be justified - not just from the safety point of view but from an energy policy perspective - and/or what alternatives exist. Whereas in the western world - with a few exceptions - the construction of new reactors is hardly ever under discussion, primarily for cost reasons, in many countries of central and eastern Europe and the former Soviet Union, an intensive debate is currently in progress on the building of new plants. This debate can generally be divided into two areas: 1. New construction: Almost all energy policy analyses of new nuclear plant construction conclude that in no sense does this represent the best option. This applies to eastern Europe, too. (PH&B 1994, ko-Institut 1994+1995, Galinis/Midkinis 1996). 2. Even the completion of nuclear power plant projects which have already started and where construction has reached a relatively advanced stage is hotly disputed and leads to contradicting conclusions (PH&B 1994, Lahmeyer 1995, ko-Institut 1994+1995, SPRU 1997). 21 Energy economics assessments of the construction of new nuclear reactors are negative in the vast majority of cases, even given the general conditions prevailing in eastern Europe, and despite the fact that opinions usually differ widely. For example, the present value of new reactors in Slovakia under optimistic general conditions (extremely low capital costs, relatively low interest rate and almost completely ignoring decommissioning and disposal costs) is put at 3,400 DM/kW (PH&B 1994). According to ko-Institut estimates, the present value of eastern European plants, specifically allowing for decommissioning costs, should be in the region of over 5,000 DM/kW (ko-Institut 1995). REHABILITATION AND REPLACEMENT OF FOSSIL POWER PLANTS The power plants in the Russian Federation in general, and in Northwest Russia specifically, are extremely obsolete. In Northwest Russia, fossil-fired power plants with a capacity of 4,500 MW will have to be replaced by the year 2010 due to their advanced age (EPC 1995). This means that in the next 14 years investments have to be made in many areas in Northwest Russia. These investments, which are unavoidable, offer an opportunity: * to increase efficiency by using improved technology and thus to increase electricity output * to switch fuels (gas instead of oil or coal) * to convert power plants currently in condensation operation to CHP or * to increase the amount of electricity generated in the thermal power stations (district heat production). Cost efficiency is very high for investments which have to be made anyway - for example for environmental protection. The power plant structure in Russia, regarded as out-dated, therefore offers favourable conditions for additional investment measures. If the fuels used in the thermal power plants to be shut down is in line with the general fuel mix in use in (thermal) power plants in Northwest Russia, more than 3,930 MW of coal and oil capacity has to be replaced by 2010. Various options are available, depending on the condition of the plants: Replacement by new power plants: with the same fuel a 25% increase in electricity generation can be expected. For the coal and oil-fired power plants, with capacity around 3,900 MW, this would mean extra capacity of just under 1,000 MW. The cost of such an investment, in Russia, lies in the region of 1,700 DM/kW. Replacement with gas-fired power plants offers an opportunity to make use of modern combined cycle power plants with an electrical efficiency level of up to more than 50%. This could mean an increase in efficiency of around 15% (i.e. a capacity increase of more than 40% with the same fuel). Costs for this should amount to around 1,000 DM/kW. Rehabilitation with improved environmental and energy technology. Apart from retrofitting with flue gas cleaning equipment, optimising the energy technology would make it possible to achieve improvements in efficiency of around 3% net. 23 This corresponds to an improvement in efficiency of around 8%. Assuming a retrofittable power plant capacity of roughly 1,000 MW, this would mean that output could be increased by 80 MW. By using local suppliers for the parts required, the costs for this should amount to around 800 DM/kW. In addition to the replacement or rehabilitation of power plants, the increased use of CHP could make a considerable contribution to increases in efficiency. Assuming - on the basis of experience in the new federal German states - a specific CHP potential of 500 kW per 1,000 inhabitants for the urban population of Northwest Russia (i.e. approx. 8.6 million inhabitants), there is a potential of at least 4,000 MW for electricity generation in CHP plants, allowing for safety margins, which could definitely be taken advantage of at a cost of 1,000 DM/kW. Energy consumption in the plants themselves can be considerably reduced (for instance by efficient motors, pumps and improved control technology). The output saved is then available for supplying external customers. Studies by the Vereinigung Deutscher Elektrizittswerke, for example, have shown that the power plants formerly operated in the new German federal states, (similar to those now in Northwest Russia), have an internal energy consumption one-quarter higher than comparable electricity-generating plants in the West, which are equipped with electricity-consuming environment-protection technology. Assuming that internal consumption is reduced by half, and allowing for additional consumption due to retrofitting in line with environmental protection, it is possible to achieve an additional capacity of 100 MW. THE USE OF HYDROELECTRIC POWER IN NORTHWEST RUSSIA In the Joint Electric Power Alternative Study the use of hydroelectric energy was studied in detail and strategies drawn up for expanding it. The proposals for developing hydroelectric energy were made in the following categories, with a fixed time schedule: * increasing the output of existing power plants by installing new, more efficient generators, turbines, etc * retrofitting existing power plants * finalising plans for new power plants * planning new power plants from the beginning The first two categories are of vital importance for the rapid development of the use of hydroelectric energy. In Northwest Russia the hydroelectric power plants in Nizhne-Tulomskaya and in Volkhovskaya can be assigned to the first category and a further 13 to the second category. Accordingly, it is possible to expand the use of hydroelectric power in Northwest Russia simply by technically upgrading existing plants, without having to open up new sites. At the hydroelectric power plant of Nizhne-Tulomskaya near Murmansk, work has already started on replacing two of the four turbines and generators. This technical retrofitting, due to be completed during this year, will bring about a 7 MW increase in output. This represents a 14% increase in performance. Total investment amounts to US $ 25 million (at the 1991 rate), which is equivalent to specific costs of US $ 439/kW. The second hydroelectric power plant in Northwest Russia that can be retrofitted at short notice is sited in the Leningrad region. In the hydroelectric power plant of Volkhovskaya, turbines and generators are due to be replaced and structural changes made to the machine building and the water inlets and outlets by 1998. These improvements are expected to increase output from the current 66 MW to 96 MW. US $60 million has been earmarked for this, which is equivalent to specific costs of US $ 625/kW. [TABLE 11: RETROFITTING OF THE NIZHNE-TULOMSKAYA AND VOLKHOVSKAYA HYDROELECTRIC POWER PLANTS, SOURCE: EPC 1995, APPENDIX I] With the rehabilitation of these two hydroelectric plants, electricity generation can be increased by 80 GWh per annum at these two sites alone. [TABLE 12: HYDROELECTRIC POWER PLANTS IN NORTHWEST RUSSIA PARTICULARLY SUITED FOR RETROFITTING, SOURCE: EPC 1995, APPENDIX I, KO-INSTITUT CALCULATIONS] At least 13 further hydroelectric plants in Northwest Russia could be technically retrofitted, giving a considerable potential increase in electricity generation. Based on the (conservative) assumption 24 that electricity production would rise by around 10% with technical retrofitting measures, over 570 GWh more could be fed into the supply grid than the current average. In Northwest Russia there is currently an installed hydroelectric power plant capacity of 2,844 MW. These power plants contribute 12,460 GWh to the electrical power supply of the region. By means of technical and structural retrofitting of the existing plants (replacement of old turbines, generators and other technical facilities, combined with structural improvements to the water inflow and outflow) it is possible to increase the installed capacity and so improve electricity output. The additional electricity which can be generated in this way is estimated at at least 650 GWh per annum. This is an increase of 5% on current electricity production in hydroelectric power plants. WIND ENERGY IN NORTHWEST RUSSIA At present, wind energy does not make any significant contribution to the electricity supply in Russia. In a country with a surface area of more than 17 million square kilometres, wind power offers potential for development on an immense scale. The technical potential for wind energy in Russia is put at roughly 1,000 TWh annually (Ahm and others. 1995). The technical and legal possibilities for using wind power, especially in the region around St. Petersburg, was investigated in detail in a feasibility study by Ahm and others (1995). According to this study, the coastal zones on the Gulf of Finland in the region of St. Petersburg are particularly suitable for the use of wind energy. The wind power potential on the south coast of the Gulf is put at 600 MW (Ahm and others. 1995). With full load-hours of at least 2,000 h/a on the south coast alone 1,200 GWh of electrical energy a year can be generated in an environmentally-friendly manner. The potential for the entire territory of Northwest Russia in the next 10 years amounts to between 2,000 and 3,000 MW, assuming that the right general economic conditions prevail. SCENARIOS FOR ALL POWER PLANTS The options for supplying electricity have been evaluated individually, in economic terms, by means of a simplified present-value calculation 25, in which it is assumed that in future fuel prices will be around the same as in central Europe. Figure 24 shows the standardised present values for different fossil electricity generation options and hydroelectric power plants: The most favourable present value of 800 DM/kWel is calculated for the retrofitting of existing hydroelectric power plants. As no fuel costs and only minimal operating and maintenance costs are incurred in future, the present value is around the same as the investment necessary for retrofitting. Another relatively favourable option is the rehabilitation of existing oil and coal-fired power plants. In view of the relatively low operating costs, because of the fuel used in this option, a present value of approximately 1,000 DM/kWel can be assumed here. The present values of gas-fired power plants, both CHP and condensation, are relatively high (2,000 DM/kWel). This is mostly due to the higher fuel costs. The specific investments costs are relatively low at around 1,000 DM/kWel. The highest present value was calculated for the construction of new coal or oil-fired power plants (2,200 DM/kWel). The reason for this is the relatively high investment costs, caused especially by coal and oil handling and complex exhaust gas purification facilities. As fuel costs are lower, they are of less importance to the present value. However, the analysis also shows quite clearly that all the fossil options considered, as well as the retrofitting of hydroelectric power plants, are far more economically attractive than building new nuclear power plants. To this extent, this result shows that the economic reasons for the virtual halt in construction of new nuclear power plants in the western world also apply to Russia. Given the comparative unreliability of electricity demand projections, with the transition process still underway, it is not possible to base an investment strategy for future power plants solely on a comparison of specific present values or investment costs. Firstly, as in any country, environmental and risk considerations must be taken into account in energy decisions in Northwest Russia. And secondly, a decision based only on present values or investment costs would ignore key, broader economic considerations. [FIGURE 24: PRESENT VALUES OF POWER PLANT TECHNOLOGIES COMPARED, SOURCE: KO-INSTITUT CALCULATIONS] Not only are the specific investment costs and/or present value of relevance, but the ratio between the two values is important. Technologies with a relatively high ratio between the specific and present value are always more problematic in the context of unreliable demand projections. If sales grow more slowly than forecast, power plant capacity cannot be exploited as planned. The capital already spent (sunk costs) is therefore no longer available for other projects. Technologies with a low ratio between investment costs and present value, on the other hand, can adapt to unexpected shifts in demand with relative flexibility. Furthermore, options requiring a high degree of financing place an additional burden on the availability of capital, which is particularly tight in the transition phase. Especially when - as in the case of the VVER-640 - financing is to be provided by the Russian government, it must be asked what projects are being displaced by the nuclear funding. For the building of the planned 3 VVER-640 units, the sum in question - taking differing cost parameters - is equivalent to a financing volume of around 5-7.5 billion DM. Bearing these factors in mind, options for future power plants in Northwest Russia are outlined which take both economic and environmental considerations into account (Table 13). [TABLE 13: OPTIONS FOR MEETING ELECTRICITY DEMAND IN NORTHWEST RUSSIA IN THE REFERENCE AND EFFICIENCY SCENARIOS, SOURCE: KO-INSTITUT CALCULATIONS] The following considerations played a major role in drawing up these options for meeting electricity demand: The retrofitting of existing hydroelectric power plants is a cost-effective option for meeting future electricity demand. Investment of a mere 160 million DM would produce around 200 MW of additional output. This option can thus be regarded as generally acceptable from both an environmental and an economic point of view. The systematic development of wind power is motivated by environmental considerations. Specific investment costs are relatively high for this option. The reason for this is the comparatively low operational availability of these plants. In order to supply a total of 1,000 MW of guaranteed output, wind power plants with a total capacity of around 2,500 MW would have to be installed. (There has to be a greater installed capacity due to the sporadic availability of wind power). However, it should be borne in mind that as a practically CO2-free source of energy, wind makes a crucial contribution to the reduction of greenhouse gases. Coal and oil-fired power plants, given their high CO2 emissions, are only used to the extent that they are particularly cost-effective. A further disadvantage is the comparatively unfavourable ratio between investment costs and present value. For this reason, only the rehabilitation of existing power plants, which is particularly cost-effective, is considered in both scenarios. Gas is used to a considerable extent in both scenarios. Here both cogeneration and condensation power plants were gas-fired. A definite change can be observed in the fuel structure of electricity generation in Northwest Russia. The question is therefore whether enough gas capacity can be made available and whether this is acceptable from an environmental point of view. In 1990, gas consumption in the districts of Pskov, Leningrad, Novgorod and the city of St. Petersburg alone was around 645 PJ, or 70 GJ per inhabitant. 26 As this was chiefly accounted for by the final consumer sectors, a substantial savings potential can also be expected in the use of gas 27. Therefore, with an integrated strategy involving energy saving on both the supply and demand side, an adequate supply of gas can be guaranteed. Allowing for the fact that gas demand for the power plant capacities to be shut down and newly built respectively can only be considered as additional gas demand up to a maximum of 4,000 MW, the upper limit for additional gas demand stands at 160 PJ. This represents around 20% of total gas consumption in Northwest Russia in 1990. If one further considers the savings in the efficiency scenario and assumes that electricity exports will be lower, the additional gas demand will drop to at least zero in comparison to an option involving nuclear power plants. In addition to extending gas reserves through energy saving measures, it can be assumed that the development of the Stokmanskaya natural gas field in the Barents Sea will considerably improve the availability of natural gas, especially for the Kola peninsula. Overall, in the efficiency scenario demand is 20% lower than in the reference scenario, due to exploitation of saving potential. Accordingly, the investments necessary are also much lower in the efficiency scenario. This means that more than 3.5 billion DM would be available for additional measures on the demand side. Given that this considerable electricity saving potential is in principle cost-free or very low cost (cf. Section 4.4), these funds could be used to exploit more savings potential, and thereby to reduce electricity requirements in the North-West still further. It was also indicated that with a comprehensive energy-saving strategy the additional gas demand in the power plant sector caused by the replacement of nuclear can be compensated for by savings in other sectors. The argument that replacement by nuclear power alone contributes to the avoidance of greenhouse gases does not go nearly far enough. It is clear that the tying up of considerable funds (made available by the Russian Government on favourable terms) constitutes a direct obstacle to the implementation of energy-saving strategies. This is because one of the principal obstacles to implementing economically feasible efficiency strategies in the Russian Federation is the fact that credit lines for such investments are only available on extremely unfavourable terms. 28 Last but not least, it is important to assess the question of electricity exports abroad or to other regions in Russia. The prerequisite for electricity exports must be that the difference between electricity generating costs in Northwest Russia and costs abroad is greater than the transport costs. If one considers - that new nuclear power plants hardly represent the most cost-effective option for electricity production even under Russian conditions and - that the most favourable additional electricity-generating option with a large potential (i.e. more than 2,000 MW) is the building of new gas-fired gas combined cycle power plants. The export of electricity is only commercially attractive according to rational criteria if unit costs for electricity generated by new combined cycle power plants is much lower than abroad or in other regions. The fact that electricity exports are currently highly attractive can be attributed to the fact that electricity is generated in extremely dangerous, written-off power plants at practically variable costs. The profits earned from electricity exports are at present being paid for in the form of environmental pollution and the increased risk of accidents faced by the population of Northwest Russia, and can thus not be justified on moral grounds. If the economics of new gas-fired power plants makes electricity exports attractive and gas supply is relatively unproblematic, electricity exports in the order of 2,500 MW are quite conceivable. However, the profits earned at home and abroad must be compared with the costs incurred, for example, by reducing greenhouse emissions in other sectors, as in the medium term the Russian Federation will not be able to avoid falling in line with international agreements on emission reductions. However, there is certainly considerable potential for reduction with negative avoidance costs, with the result that the economic advantages of energy saving are greater than the costs of the measures implemented. It follows from this that the export of electricity is no justification for the operation of nuclear power plants. Although it is not possible in this study to arrive at a final evaluation of the economic rationale for electricity exports, purely from the point of view of energy management, electricity for export will be generated principally by gas-fired power plants, if it is exported at all. SUMMARY Analysis of the options for the development of power plants in Northwest Russia has shown that both in the efficiency scenario and in the reference scenario nuclear power can be abandoned without any loss of prosperity. The continued operation of the nuclear power plants at the Kola and Leningrad sites, which is highly problematic from a safety perspective, cannot be justified in terms of safety technology or energy policy and in any case does not represent a medium-or long-term alternative, as these plants are obsolete. Nor can replacement of these reactors with modern and allegedly safer reactors be justified in terms of economic management of electricity and capacity demand in Northwest Russia. Energy capacity demand can only be significantly reduced by a policy which aims specifically at electricity saving. Important elements in the development strategy for power plants in Northwest Russia are the use of renewable sources of energy (especially water and wind) together with the comprehensive expansion of industrial and public CHP capacity. Fossil generation capacities in pure condensation operation (coal, oil, gas) are of minor importance overall, both in the reference scenario and - even more so - in the efficiency scenario. The supply of fuel for fossil electricity-generating plants - some of which will replace nuclear power plants - is hardly likely to cause any problems and can also be environmentally justified if all energy-consuming sectors are included in an integrated strategy for the rational use of energy. The tying up of considerable financial resources in the construction of three new reactors at the Sosnovy Bor and at Kola-2 sites will continue to mean that other - definitely lower-risk - investments (energy saving, CHP) will not be realised, solely because of lack of available financing. In contrast to this, the development strategy shown here for the conversion sector in Northwest Russia makes a substantial contribution towards reducing the risks involved in the long-term operation of nuclear plants in Northwest Russia. Even the continuation of or increase in the already substantial exports of electricity to Finland, and the expansion of electricity supplies to other regions in Russia, by no means indicate that the building of new reactors in Northwest Russia is necessary. If electricity exports from written-off and extremely high-risk nuclear power plants are to be competitive, it must first be asked whether such exports are morally justifiable. 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Washington APPENDIX [TABLE 14: POWER PLANT CAPACITIES IN NORTHWEST RUSSIA BY REGION SOURCE: OECD/IEA 1994, LIEBHOLZ] [TABLE 15: HYDROELECTRIC POWER PLANTS IN NORTHWEST RUSSIA SOURCE: EPC 1995, APPENDIX I] 1 UPS and IPS are operated by RAO EES, the Russian Federation power and electrification company (see 3.3.2.3) 2 This distribution of electricity consumption in terms of percentage is basically in line with the regional distribution of population and economic output. 3 According to OECD/IEA statistics (1996), in 1994 grid losses amounted to approx. 7.8% in the USA and Great Britain, 4.2% in Japan and 4.5% in Germany. 4 Statistics on hydroelectric power in the region of Tjumen are included in the installed output of the hydroelectric power plants in the region of the Urals. 5 Specification as CHP plants initially says nothing about the degree of heat and power combination. Studies for various countries in central and eastern Europe as well as for the former Soviet Union show that either the degree of heat decoupling compared to electricity generation or electricity compared to heat production may be extremely low. 6 The total capacity of fossil power plants is significantly higher than the figure shown in Table 4. The reason for this is that in EPC (1995) only the generation capacities which report to the IPS of RAO EES were counted. In OECD/IEA (1994) regional power plants with a capacity of 4,000 MW are also considered. 7 The Employment Based Energy Scenario Model (EBES-Model) is based on specific energy consumption per employee. In an estimate of employment structure, labour productivity and the development of value added, an energy demand scenario which can easily be compared on an international scale is developed for the different areas of value added. 8 This covers all areas of economic activity not attributable to agriculture and forestry or the manufacturing sector (especially industry and the building trade). 9 The Joint Electric Power Alternatives Study was commissioned by the Energy Policy Committee of the US and the Russia Joint Commission on Economic and Technological Cooperation. 10 No consistent reference figures are available for 1990. 11 The specific electricity consumption is shown in Figures 17 to 20 as different to the average. The bar to the left (right) indicates when consumption is less (more) than average. The average consumption is shown at the upper axis. 12 In Karelia, for example, very energy-intensive paper production or iron ore and aluminium mining play a major role. Moreover, some sub-regions are traditionally characterised by above-average shares in the armaments industry. 13 At this point it should be pointed out that the high average value for household electricity consumption in the OECD reference countries is principally due to the widespread use of room heating in Scandinavia and North America. In view of the well-developed district-heating systems in Northwest Russia a similarly widespread use of electrical room heating is highly unlikely. Nevertheless, a moderate spread of these heating systems is allowed for in the reference scenario. 14 Tretyakova/Sagers 1990, Sinyak 1991+1992, Cooper/Schipper 1991+1992, LBL 1991, Makarov/Bashmakov 1991, Dobozi 1991, Lithuanian Ministry of Energy 1991, Gricevich 1992, Bashmakov 1992, Oder/Haasis/Rentz 1992 15 This saving rate can also be achieved with a sharp increase in the use of household appliances. Examples from the new federal states in Germany show that electricity consumption in private households as a result of the widespread use of household appliances can be compensated for by the greater efficiency of these appliances. Furthermore, the phasing out of heating applications such as room heat or hot-water preparation is one of the lowest-cost and socially acceptable methods of saving electricity. 16 The scenarios by the Russian government and the World Bank /IEA refer only to the development of electricity demand in the Russian Federation overall. Regional electricity demand was calculated by means of projected shares for the region of Northwest Russia (IEA 1995, p. 206) in total electricity demand in the Russian Federation. 17 As only reference points for 1995 and the year 2000 are available here, it is not possible to localise the turnaround more exactly. Although in this scenario electricity demand in the year 2000 is below that of 1995, it must be assumed that in this scenario too, electricity demand will start to increase again before the year 2000. 18 For comparison: EPC (1995, pp. 1-11) assumes an average capacity utilisation of 5,900 h for Northwest Russia and 6.100 h for the UPS. The capacity utilisation assumed here is a conservative one, implying the availability of large potential reserves. 19 Here it should be expressly pointed out that the level of knowledge in the West is in practice based principally on analyses of RBMK plants of the 3rd generation (Weber and others. 1995). However, the RBMK reactors at Leningrad belong to the 1st and 2nd generation and must be classified amongst the worst with regard to their safety parameters. 20 Here it should be expressly pointed out that the authors by no means regard a "western level of safety" as a sufficient criterion for proving adequate safety. In this context it is taken more as an indication that the continued operation of both the RBMK and the VVER-440 reactors - disregarding all other controversies on the subject of the use of nuclear energy - is considered irresponsible by the vast majority of scientific experts. 21 The building of a further 4 blocks of the VVER-640 is planned for the location at Dalnovostotchnaya (Minatom 1996). 22 The present situation regarding the complete new building of nuclear power plants in Sosnovy Bor renders the presentation of the arguments and the different methodological approaches superfluous here. 23 Similar improvements in efficiency were achieved as a result of rehabilitating lignite power plants in the new German federal states. 24 In the Joint Electric Power Alternative Study (EPC 1995) those power plant locations are named which would be particularly suitable for retrofitting. No figures are given on the possible efficiency improvements. It can be assumed that the possible technical improvements in the level of efficiency lie in the same range as for the plants at Nizhne-Tulomskaya and Volkhovskaya, which were studied in greater detail. 25 The basis for the present-value calculation is a 25-year period of review and a discount rate of 10 %. 26 For comparison: in Germany total gas consumption in 1995 amounted to 2,837 PJ or 35 GJ/inh. 27 With primary energy consumption of approx. 177 GJ/inh. for 1990 in Northwest Russia and 174 GJ/inh. for 1995 in Germany, one can say with considerable certainty that there is a substantial saving potential for natural gas as well. 28 For example, the interest on credits for energy saving required by Russian private banks in 1996 stood at approx. 25%. This situation induced the EBRD, for instance, to draw up their own programme with an interest rate of approx. 14%. Here there remains the urgent question as to the extent to which the Russian government is able to provide favourable financing resources for risky and by no means optimal-cost electricity generating options, and to what extent the creation of affordable financing instruments for both macro- and microeconomically attractive and almost risk-free measures should be left to international development banks.