In the period since the reorganization of RAO UES, significant investment has been made in upgrading fixed assets for power generation. This has made it possible to avoid power shortages and reduce failures during the current period. As part of a proven programme of agreements to make capacity available on the wholesale market, significant capacity has been introduced in recent years, but as the terms of these agreements come to an end, investment in thermal generation is set to fall after 2020. At the same time, taking into account the amount of generating equipment from thermal power plants which has low technical and economic ratings and is set to be decommissioned in accordance with programme documents for the long-term development of RAO UES, even in the measured scenario of increased demand for capacity, reductions in the installed capacity of operational power plants will require that they be outfitted with new generating capacity. In order to achieve sustainable development in the energy sector, market mechanisms must be created to support the modernization of existing and the construction of new generating capacity. In this connection, the question of possible forms and sources of funding for modernizing thermal generation in the medium term takes on a special significance. What are the potential mechanisms for financing modernization (extending the programme of agreements to provide capacity, implementing a new guaranteed investment mechanism, improving the principles of competitive capacity selection, or some other option?) What kind of generation should we be focusing on: generating electricity and thermal energy using combined heat and power plants, or prioritizing the development of electricity production using major power stations (GRES)? Where is the balance between consumer interests and those of producers of electricity and capacity? What is the optimal balance between domestic and imported equipment when it comes to modernizing thermal generation, and what are the potential capabilities of Russian power engineering with regard to meeting the growing demand for power engineering products?