Building a digital economy is one of the key strategic challenges faced by the President and Government of the Russian Federation today. A major focus is the question of how issues and aspects of digitizing the national economy can be rethought on a sector-by-sector basis. Data and the information that can be gleaned from it must be considered as an independent factor in production that can influence performance, labour productivity, and the reliability and security of energy supplies. The most significant challenge facing the electricity sector is increasing the reliability and performance of Russias power grid by introducing risk-oriented management. Digital technologies are making it possible to optimize the way that limited resources are used, and to secure an improvement in energy supply reliability indicators while maintaining current cost levels. Digitization is creating an opportunity to review how sectoral reports are compiled and presented and to automate oversight procedures, reducing the burden on business. The Russian Ministry of Energy is setting out its vision for the digitization of the electricity sector. Groups of experts are developing a targeted vision for the future of electricity, discussing the latest issues in the digitization programme, evaluating steps already taken to develop individual aspects of the digital transformation, and setting out plans to develop and validate industry-specific products and solutions created within this new technological paradigm. The results of their work will be presented for discussion. Among those contributing their opinion to the wider discussion of these materials will be heads of ministries and agencies responsible for implementing the Digital Economy programme, and representatives from technology companies and development institutes, as well as other Russian Energy Week participants.
International Mayors’ Summit on Energy Efficiency and Sustainable Growth in Cities
As a follow-up to the Moscow Mayors Meeting in 2016 and as part of the international Clean Energy Ministerial initiative, the Mayors Summit on Energy Efficiency and Sustainable Growth in Cities 2017 will be held. The session will include a discussion of international initiatives in the areas of energy-efficient lighting, implementing projects to demonstrate the application of renewable energy, and increasing energy efficiency in buildings and transport, as well as a large-scale Russian project from the Agency for Strategic Initiatives and the Ministry of Energy of the Russian Federation. The programme for the Summit includes the signing of a cooperation agreement between Russian cities and international organizations, as well as a presentation on a pilot research project to benchmark cities according to energy efficiency and sustainable development.
Available Networks: Projects, Experience, Current Issues
A factor for national and international rating agencies examining the investment attractiveness of the Russian Federation (both as a whole and regionally) is the connection of electricity consumers power receivers to electrical grids. The main criteria for determining accessibility to the power grid are the time, money and the number of steps required to be connected. Reaching high accessibility requires the direct involvement of all parties concerned. This year, the preliminary results of a five-year project (20132017) by Rosseti Group focused on the long term development of the power grid and technological connection will be shared at the Forum. Current issues related to the electric grid sector will come under discussion, in particular concerning connection services (connecting preferential consumers, shortfalls in revenue, regulating relationships with third parties), the importance of an accessible power grid infrastructure (priority development of power grids), and important matters concerning the formulation of plans and programmes to develop the power sector in the Russian regions.
Safety in the Fuel and Energy Industry: New Challenges
Fuel and energy industry facilities are viewed as targets for terrorist attack owing to their importance to the national economy and the potential scale of the destructive consequences and impact on the public of such an attack. In order to avert potential threats, a regulatory framework has been developed for these facilities and is constantly being amended. Experts are particularly concerned by the accessibility of unmanned drones which could be used to damage facilities. A need is emerging to develop solutions which will offer effective protection for fuel and energy facilities from threats of this kind.
Issues for discussion:
• Regulations for safeguarding the security of fuel and energy sector facilities
• Enforcing and improving Russian legislation on the security of fuel and energy sector facilities (Russian Ministry of Energy, RusHydro, and other companies)
• Protecting fuel and energy sector facilities from unauthorized drone use (Russian Ministry of Energy, Kobra, Vidar, Stilsoft Group, Marine Complexes and Systems)
• The role of government monitoring in safeguarding the security of fuel and energy sector facilities (Russian Ministry of Energy, National Guard of Russia)
The customary pricing mechanism for oil, which is based on the use of existing price benchmarks as a method for determining fair market price, has recently come under fire amid a significant reduction in oil recovery from fields which form the physical basis for the best-known pricing benchmark. Pricing must be improved by establishing new benchmarks based on oil streams which are more stable from the point of view of production volumes and qualitative characteristics. Establishing benchmarks through direct quotation will help to establish prices with greater precision. Russia is following this trend itself. In November 2016, trading in deliverable futures based on Urals oil was launched at the Russian Commodities and Raw Materials Exchange. These are accessible today to all major Russian oil companies and key Russian brokers, who are being joined by non-resident companies: oil traders and financial institutions. How can this project be further developed? What impact could developing exchange trading in Urals oil have on the Russian economy?
The Russian Fuel and Energy Industry: National Interests and Global Trends
Developments in technology are making the international energy sector ever more global in nature, and energy ever more accessible. At the same time, the climate agenda is aimed at minimizing any negative impact on the environment. Every country is participating in this process in its own way, as it simultaneously develops and implements new technologies. This is resulting in changes to the global energy balance, demand for energy resources and technologies, and the structure of the economy. For Russia, as for other countries, questions regarding the optimal strategy for development of the fuel and energy industry under these new conditions are becoming increasingly urgent. What does the future have in store for the cornerstone of present-day energy hydrocarbons? What are the prospects for the cleanest of the hydrocarbons gas? Is it the fuel of the future, or is its potential limited by competition with renewable energy sources? How can we best use the potential of hydrocarbons for developing the national and global economies? How can investment into energy be attracted in uncertain times? Where is the investors attention focused? How can a balance be struck between investment profitability and energy security in the global economy and the economies of individual states?
Shining a Light on New Technologies: Making Quick and Noticeable Improvements to the Quality of the Urban Environment
The presence of good-quality lighting has become an important element in the quality of life of city residents and an important part of the work of many municipal leaders. At the same time, municipalities face challenges in attracting private investment, and suffer from a lack of experience when it comes to creating an attractive environment using decorative lighting and selecting equipment based on new technologies. The discussion will consider the best global and Russian practices in transitioning to energy-efficient urban lighting, ensuring that mistakes can be avoided and the best use made of investment, as well as an initiative developed by the Russian Ministry of Energy and the Agency for Strategic Initiatives to make funds for modernizing street lighting accessible to municipalities and regions.
‘Energynet’ Projects and Initiatives: a Contribution Towards the Development of ‘New Energy’
Questions of how best to develop electrical energy are more pressing than ever before. On one hand, the sector is anticipating significant changes in the next 1015 years, with new kind of markets, active consumers, aggregators, and other market participants in one way or another combining different kinds of activity. On the other hand, already solvable challenges surrounding modernizing and intellectualizing electrical energy, renewing key funds, and improving organizational structures are no less important, and should play their part in a strategic vision of the sectors future. How will new Energynet markets and market participants affect the development of electrical energy? What effect are Energynet projects having on the formation of new energy? What correction must traditional paths of development in the sector undergo in connection with initiatives and projects being developed as part of the National Technology Initiative (NTI)? How can barriers to the development of new energy be overcome?
Petroleum Refining in Russia: Large-Scale Modernization and New Challenges
A programme to modernize petroleum refining in Russia is successfully under way. Dozens of facilities have been modernized in the last five years. The average petroleum refining depth is now close to 80%, and exceeds 98% at some facilities. New refining capacities are being installed in Leningrad Region and the Republic of Bashkortostan, and major investment projects are being realized in the Far Eastern Federal District. In spite of this rapid development, the refining sector is vulnerable to a number of risk factors which could put a brake on the investment process. These include surplus capacity in Europe and Asia, the growing popularity of the electric car, sanctions-related risks, and a planned reduction in oil export duties. What has large-scale modernization achieved for the sector and for consumers? What is the demand forecast for engine fuel, taking into account the uncertainties represented by the development of the electric car? What future directions will be taken by oil product streams?
Heating Supply Reform: New Stimuli and Initial Results
July 31, 2017 saw the enactment of Federal Law No. 279-FZ On implementing changes to Federal Law On the heating supply and other legislative acts of the Russian Federation relating to the improvement of the heating supply system. The availability of a new model for the thermal energy market is ushering in a transition from state regulation of all heating supply tariffs using the cost plus method to contractual agreement of predictable long-term heating prices for consumers. In order to protect the interests of the end consumer, the price is limited by the cost of heat estimated using the best technology available, from an alternative thermal energy source local boiler plants. The public commitment to achieving a new standard of heating supply for communities is enshrined in the Agreement on the Performance of the Heating Supply System, concluded between municipal authorities and Russias Unified Heat Supply Organization (ETO). This agreement is proving to be a transparent tool for attracting private investment into the heating supply system. A key role will be played by the ETO, which is becoming a single point of accountability within the heating supply system for consumers and government. In order to be able to perform this function, the ETO is being given the powers it needs to optimize and develop the heating supply system in accordance with the agreed plans. New quality requirements are being introduced with respect to service provision and the organization of consumer relations. At the same time, the authorities have a broader selection of tools for oversight of ETO operations, including antitrust measures. The new model on the thermal energy market is encouraging improvements in efficiency, the establishment of new standards, and the attraction of private investment into the heating supply sector. The current challenge is putting this model into action: where and when this model will be implemented in Russias regions. Major domestic energy holdings have amassed sufficient know-how and resources to use this model to invest in upgrading the heating supply of Russian towns. The decision is for regional and municipal leaders.
The discussion will consider the following questions:
• The new model on the heating market as a development tool: advantages for consumers, regional authorities, and the sector as a whole.
• Subjective factors in implementing the new model: how can effective cooperation be ensured between regional authorities and energy companies?
• Practical aspects: changing the relationship between the ETO and other heating supply organizations (heating networks, thermal energy sources) as the new model for the heating market is implemented.
• The Agreement on the Performance of the Heating Supply System a tool for increasing efficiency, establishing new standards, and transparently attracting private investment into the heating supply system.
• Key timeframes in the transition to the new model and the challenge of minimizing risks to the consumer: government powers and the responsibilities of heating suppliers.
Investment Attractiveness in the Oil Industry: A New System of Taxation
Russia is presently a leader in oil extraction, and occupies a stable dominant position globally with respect to the size of its proven reserves. Inclusion of its non-traditional oil and shelf resources could increase this figure significantly, providing a solid foundation for long-term development. Nonetheless, the potential of Russian oil reserves is among the most undervalued by the international investment community, in spite of the fact that economic indicators are at a level comparable to those of international competitors. A key factor in improving investment attractiveness is evolutionary development of the taxation system which takes into account the development of the energy sector, making it possible to maximize the positive effect on the economy. Experiments in taxing additional income are being conducted to encourage the development of new oil reserves and provide a fresh boost to the development of the Russian oil industry. How can a balance be struck between the interests of business and those of the state? How can investment be attracted into the Russian energy sector during a time of volatility in the macroeconomic and foreign policy landscapes? How can the Russian Federation ensure maximal monetization of its resource potential on an increasingly competitive market?
The Best Management Models and Practice for Major Construction Work in the Fuel and Energy Industry
Investments in Russias energy sector over the past five years have exceeded RUB 18 trillion. The sector accounts for more than 25% of all investment in the nation every year. Modernization programmes that are ambitious in size and timescale are currently being implemented in the petroleum refining and electricity industries, new petrochemical facilities are being constructed, projects to develop natural resource deposits in Eastern Siberia and hard-to-recover oil fields are under way, new pipelines are being laid, and transport capacity is being expanded to the west and to the east. Completing these projects effectively is key to ensuring the Russian Federations energy security and economic development. Yet there are a number of global and local factors that make the industrys task more difficult. Over the past 50 years, in spite of all the technological breakthroughs, global productivity in major construction has barely increased. Whilst projects have become increasingly complicated, the methods and tools used to implement them have changed very little. According to McKinsey Global Institute, the level of digitization in the construction industry sits just above that of agriculture. As a result, an overwhelming majority of projects are experiencing considerable overruns in terms of completion date and budget and, when commissioned, the finished products often underperform. The successful implementation of megaprojects in Russia is being held back still further by a complex geopolitical situation, the fact that the domestic market for engineering, procurement, and construction contractors is at the early stages of development, the turbulence on the market for general construction contractors, the limited availability of highly competent project specialists to act as clients, and a number of specific regulatory limitations. What is the primary factor that is limiting the successful implementation of major investment projects in the Russian energy sector? Considering the current global political situation and development factors in the construction industry, which major investment project models would be most effective for the Russian energy sector (or its separate subsectors) in terms of meeting deadlines, staying within budget, and delivering quality products? In your opinion, what key role should the state play in improving the effectiveness of investment projects in the energy sector? Which new technologies are most promising and relevant to Russia in terms of increasing productivity in major construction projects?
Increasing the Efficiency of Oil Extraction: Meeting the Challenges
Despite a fall in the quality of reserves at existing fields, the volume of oil extracted in Russia over the last five years has increased by 30 million tonnes annually. This is the result of the extended application of secondary and tertiary enhanced oil recovery techniques, penetration of new production regions, and more active development of hard-to-recover and shelf reserves. Within just a year, the volume of horizontal drilling in Russia increased by nearly 20% and accounted for 35% of the total volume of operational drilling, oil recovered on the continental shelf increased by 17%, and development of hard-to-recover reserves by 12%. A full set of measures have been developed and implemented in Russia in order to maintain the level of oil recovery achieved in the present economic environment and reduce reliance on suppliers of high-tech equipment. This includes government support measures for extraction from hard-to-recover reserves, an import substitution programme for critically important equipment, and new advances in scientific research and experimental design. Which technologies could help to increase the efficiency and environmental safety of Russian oil extraction? What projects that have been implemented or are being implemented are helping to reduce technology dependence? Is there potential for increasing recovery from mature and unconventional fields in the current economy?
Inevitable Growth: New Renewable Energy Projects in Russia’s Regions
Use of renewable energy resources has undergone rapid geographical expansion in recent years, becoming a key feature of the majority of regional initiatives. The active growth of this new segment of the electricity sector is due largely to the adoption in 2014 of a number of regulations at the federal level intended to stimulate the generation of electricity from renewable sources. The initial outcomes of wind, solar, and small scale hydropower projects implemented so far as decentralized energy systems have not only demonstrated their technical and environmental potential, but have also proven the economic viability of implementing energy facilities of this kind. Is it already possible to talk about the potential of replicating tried and tested solutions? Are regions ready to diversify their electricity generation infrastructure? Are renewable energy projects attractive from an investment point of view? What effect are renewable energy projects having on regional socioeconomic development?
Presentation on the Heating Supply Efficiency Ranking
In 2017 the Russian Ministry of Energy, together with the regions of the Russian Federation and the expert community, began work on creating a heating supply efficiency ranking for communities in the Russian Federation. This ranking is applied to municipalities at the regional level. At the federal level, it is applied to regions. The ranking evaluates the efforts of administrative bodies at all levels to establish conditions facilitating a reliable, failure-free heating supply, reduce levels of specific fuel consumption, apply modern technology, update heating supply systems, implement planned measures, and increase energy efficiency among consumers. The ranking seeks not only to measure progress, but also to identify and promote best practices. The results of the regional ranking will be discussed with the involvement of regional and municipal energy, housing, and utilities ministries, energy companies, and experts for future use by the Russian Ministry of Energy, as well as by experts in public oversight.
The Ecological Modernization of the Energy Sector: Russia’s Strategy and International Experience
Discussion organized in cooperation with the Russian-French Centre for Energy Efficiency and the Union of French Enterprises for the Development of Energy Efficiency and Environmental Safety (U4E). It is currently the Year of Ecology in Russia. In support of the 2015 Paris climate accord, Russias leadership has set ambitious targets to reduce mans impact on the environment, focusing primarily on industry. Government bodies are working together to introduce standards involving the best technologies currently available. The fuel and energy industry is invariably one of the worlds biggest emitters of greenhouse gasses. Characteristically, it is the global leaders in this sector which have shown the way in optimizing resource usage. Similarly, by modernizing their facilities, these organizations are facilitating the development of innovative technology, energy management systems, the green economy, the industrys application of the Internet of Things, and so on. This strategy benefits from the active support of international regulators and financial institutions. Today, environmental and energy audits are essential in order to obtain financing on the international stage. Numerous leaders in the Russian fuel and energy industry have successfully implemented ecological and energy management systems, applied environmental standards, and conducted voluntary environmental audits. By modernizing their facilities in line with best international practices, these companies will be in a better position to maximize capitalization and increase their attractiveness to institutional investors. Given this, and also the long-standing partnership between French and Russian energy businesses, this new environmental regulation in Russia is paving the way for new opportunities both in terms of technological cooperation, and business development in the sector. What strategic regulatory instruments and financial resources can already be employed? Which resource use optimization tools have the potential to attract more investment in innovative industrial-scale production? What should current priorities be, given the ecological modernization strategy in Russia and globally?
Meeting between Chief Engineers of Power Distribution Companies: ‘Technology and Investment Policy: Repair or Replace?’
A significant amount of power grid equipment has practically zero residual value, yet has remained in use thanks to periodic technical examination and repair. At the same time, companies do not have sufficient resources to completely upgrade fixed assets. Companies are faced with the challenge of finding an optimal balance between maintaining dilapidated equipment for comparatively low repair and operational costs, and replacing it with expensive modern equipment which will save money on subsequent maintenance. What are the best practices among chief engineers in distinguishing equipment that can be repaired from equipment that should be replaced? To what extent can modern digital equipment help improve economic performance indicators? In which areas is the latest digital technology already proving advantageous?