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Sanctions hurt but don’t cripple Russian renewables, says industry group

The Russia Renewable Energy Development Association (RREDA) said in a new report that investors are still interested in building new renewables projects in the country, despite harsh market conditions related to Western sanctions.

Most renewable energy projects in Russia face risks caused by “geopolitical instability,” said RREDA, adding that foreign suppliers refuse to deliver equipment, even under signed contracts. There are also difficulties in sourcing foreign specialists for the commissioning of installations, it said.

Russia is struggling to establish the necessary infrastructure and legal frameworks for the replacement of imported components and technologies. However, Western sanctions threaten to disrupt both power generation and the prospect of localized equipment manufacturing, warned RREDA.

Several international companies have suspended new investments in the Russian renewable energy market, but no projects have been canceled yet. RREDA noted that the largest Western businesses with localized capacities in Russia – Fortum, Enel and Vestas – have opted to pull out of the country. But it said they are doing this in “a responsible manner” by respecting previously signed agreements.

Russian renewables companies now face a long list of challenges. Due to a lack of Western software, clean energy developers experience difficulties in building IT infrastructure. In addition, investors have been warning about the risk of defaults with some projects, due to higher interest rates on bank loans, according to RREDA.

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Against this backdrop, the Russian government has delayed the competitive selection of new projects for construction under so-called “electricity provision agreements” from the second half of 2022 to the first half of 2023. However, RREDA expressed confidence that the construction of new renewable energy projects under the next stage of the electricity provision agreement program would continue as scheduled in the years ahead.

Russia currently has 2 GW installed solar capacity, including 1,650 MW that was built under electricity provision agreements. If all approved projects eventually see the light, the nation’s installed solar capacity will grow to 4 GW by 2025, according to RREDA.

By Ian Skarytovsky

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Source: pv magazine