Russia is one of the world’s top producers of electrical energy. In 2012, Russia’s total electricity generating capacity increased by 2.2% year o year, reaching 223.1 GW, ranking fourth globally, just behind the USA (1,158 GW), China (1,140 GW) and Japan (226 GW). The country’s installed capacity expanded by 3.8% over the past 10 years, while electricity consumption surged by 20%. Electricity generation in Russia is primarily based on fossil fuels, with gas being dominant. Thermal power plants (TPPs) make up 68.1% of the total installed capacity of the Russian energy system, followed by hydroelectric power plants (HPPs) with 20.6% and nuclear power plants (NPPs) contributing the remaining 11.3%. The share of renewable energy that comprises geothermal and wind power plants is relatively small and accounts for less than 1% of the total installed capacity.
The Russian power sector is plagued by several problems, notably: high degree of deterioration of generating and distribution assets, high transmission losses, high energy intensity, cross-subsidies between heat and electricity, an inefficient tariff system, and interventionism by the government. Most generating capacity is outdated. About 70% of the country’s installed capacity is in use for more than 30 years, including 19% was activated at least 50 years ago. Electricity transmission and distribution network, which includes grids and substations, is not in a better shape as well. About 60% of this network has reached the end of its engineered lifespan.
Currently, the Ministry of Energy is implementing the Power Sector Modernisation Programme for the period up to 2020; the initiative calls for the modernisation of outdated facilities, the construction of new generating capacities, and the implementation of energy saving measures based on advanced technologies. The programme outlines plans for a total investment of RUB 11.4tr (€264bn) by 2020.