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Problems Of Legal Regulation For Development Of Distributed (Small-Scale) Energy In The Russian Federation
 
PIIS231243500021942-4-1
DOI10.18572/2410-4396-2018-1-88-94
Publication type Article
Status Published
Authors
Sergey V. Kozlov 
Occupation: Coordinator of the Working Group on Energy Law
Affiliation: German and Russian Association of Lawyers (DRJV)
Address: Russian Federation, Moscow
Journal nameEnergy law forum
EditionIssue 1
Pages88-94
Abstract

In the modern world, the electric power industry faces many challenges and problems, among which the improvement of environmental friendliness and energy efficiency, and the reliability of energy supply are of primary importance. One of the current vectors of energy reform in many countries is its decentralization and development of distributed, small-scale generation, which is also one of the means to solve the global challenges faced by the industry. Distributed (small-scale) energy generation has a number of advantages over centralized one, and its development is one of the directions of the energy policy in many states. Energy generated by small-scale power facilities is usually used by the producers for own needs, and surplus energy is sent to the grid or sold to other consumers located nearby and connected to the distribution network. At present, there is no special legal regulation of distributed energy and legal measures to support its development. To support the development of small-scale distributed energy (SDE) in Russia, it is necessary to improve a number of normative legal acts, to develop and introduce new legal mechanisms to support and stimulate development of the SDE. According to the author, it is necessary to formalize the special status of the SDE entities as participants in the electricity and capacity market in the Russian energy laws. It is practical to improve the rules for technological connection to the grids as related to simplification of the procedure for technological connection for the SDE entities, and also to develop measures to support the SDE, in the first place, with regard to the sale of the “surplus” of own generation in the market. The creation of a legal mechanism that obliges the guaranteeing suppliers (energy supply organizations) to buy “surplus” electricity from the producers is of paramount importance for stimulating development of small-scale energy, especially the one based on renewable energy resources.

Keywordsenergy law, legal regulation in the electric power industry, subjects of small-scale energy, distributed energy, distributed generation, renewable energy
Received06.02.2018
Publication date30.03.2018
Number of characters24739
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1 It was not immediately understood both in Russia and abroad what the distributed generation (DG) and small-scale distributed energy (SDE) are [1]. Distributed generation is production of energy (electricity and/or heat) by smalland medium-sized facilities (in most cases, up to 25 MW) near the places of its consumption, at the level of the distribution network or directly on the side of the consumer connected to the network. [2]
2 The world distributed energy is based on the use of cogeneration, renewable energy resources, or the use of local types of fuel (coal, gas, peat, shale, timber, solid waste, etc.).
3 The main difference between the distributed and the centralized energy is location of generating equipment near the places of consumption, which represents a number of advantages for both consumers and producers. The advantages of distributed generation may be divided into the following groups:
4 Due to location of the generating facilities near the consumer, there is no need to transfer energy over long distances, which significantly reduces losses in the grids. Moreover, at the majority of distributed power generation facilities, generation is arranged in the form of cogeneration (joint generation of electric power and heat) or on the basis of use of renewable resources.
5 Construction and operation of distributed energy facilities and its own microgrid allows the consumers to provide themselves with electricity and/or heat; therefore, to a certain extent, ensuring independence on the supply of electricity (heat) by the energy supply organizations. As a result, the consumers ensure independence on changes in energy prices, power outages and accidents at (heat) power plants. This advantage is especially evident when using distributed generation facilities in remote areas where there is no centralized power supply. Nevertheless, consuming producers often (especially when using renewable energy resources) maintain their connection to the centralized grid (macrogrid) to cover risks (for example, during bad weather).
6 Economic efficiency of development of distributed energy is manifested both for the consuming producers themselves and for the electric power industry as a whole. For the consuming producers, economic efficiency is primarily associated with a lower cost of generated energy and a higher coefficient of fuel efficiency. This useful effect, however, can be leveled while investments in the construction of the DG facilities are paid back.
7 At first glance, it may seem that development of small-scale energy can damage economic interests of large energy companies that ensure centralized energy supply (in the broad sense, that is, transmission, distribution, united dispatch control, and sales). In fact, there is a number of advantages for these companies but upon planned and controlled rather than spontaneous development of distributed energy. First of all, the need to create energy infrastructure is reduced — construction and operation of trunk transmission lines (heat supply). The costs of modernization of energy facilities are also reduced, and consequences of accidents at central power plants and power transmission lines are mitigated. Herewith, the majority of large consumers (primarily, industrial ones) and the overwhelming majority of the population keep purchasing energy from the energy supply companies. Furthermore, distributed energy, as compared to the centralized one, has great investment attractiveness due to lower financial and time costs of construction, shorter payback periods, and lower risks of non-completion of projects [3].
8 Thus, under certain conditions, distributed energy has a number of advantages. In the Russian Federation, there is a number of prerequisites for development of distributed energy, primarily: a large number of remote areas isolated from the UES of Russia, high wear and tear, moral and technical obsolescence of energy infrastructure facilities, and high growth rates of prices for electricity.
9 Russia’s energy strategy for the period until 2030 mentions insufficient development of smallscale energy generation and low involvement of local and regional energy sources in power balances as one of the problems of the regional energy policy, and development of small-scale energy in the zone of decentralized energy supply by increasing the efficiency of use of local energy resources, development of the power grid facilities, and reduction of the volume of consumption of imported light oil products as one of the tasks for achieving the strategic goals of electric power development. The Strategy also mentions widespread development of distributed generation as one of the priorities of the innovative, and scientific and technical policy in the “Electric Power Industry”.
10 In the currently discussed draft of the Energy Strategy of Russia for the Period until 2035, it is noted that small-scale distributed energy including in the heat supply sector has developed at the time of the adoption of the Strategy, and its role in the development of competition is constantly increasing. However, the draft of the Energy Strategy does not set any goals for the further development of the SDE [4]. The spontaneous and unsystematic nature of development of the SDE in Russia is currently one of the serious problems since this development entails a large number of negative consequences for the market, the producers and the consumers of energy. First of all, refusal of large consumers to use centralized energy supplies, the chaotic creation by them of their own capacities and shifting of some of the costs to the consumers remaining in the centralized electric power system (within the framework of the UEC) entail an increase in prices (tariffs) for electricity and heat. On the other hand, distributed energy projects of large consumers require maintaining a capacity reserve and ensuring reliability by maintaining a connection to the UES of Russia, which is also a factor of increase in the electricity prices (tariffs). By the Resolution of the Governmental

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1. Hansen C.J., Bower J. An Economic Evaluation of Small-Scale Distributed Electricity Generation Technologies. Oxford Institute for Energy Studies & Dept. of Geography, Oxford University, 2004.
2. Stennikov V.A., Voropay N.I. Centralized and Distributed Generation is not an Alternative but Integration in Innovative Energy — 21 book / under the editorship of V.M. Batenin, V.V. Bushuev, N.I. Voropay — Moscow : Energiya Engineering Center, 2017.
3. Draft Energy Strategy of the Russian Federation for the Period till 2035 (revision as of February 1, 2017) on the website of the Ministry of Energy of the Russian Federation: https://minenergo.gov.ru/node/1920. 
4. Award of the Chelyabinsk Region Arbitration Court dd. December 4, 2014, on case № A76-27655/2013 (the opinion of the court is confirmed by Ruling of the Eighteenth Arbitration Court of Appeal dd. March 25, 2015, № 18AP-567/2015 on case № A76-27655/2013; Ruling of the Ural District Arbitration Court dd. June 24, 2015 № F09-3836/15 on case № A76-27655/2013).
5. Award of the Chelyabinsk Region Arbitration Court on case № A76-16573/2015; Ruling of the Eighteenth Arbitration Court of Appeal dd. February 10, 2016 № 18AP-150/2016 on case № A76-16573/2015 //
6. http://static.government.ru/media/files/D7T1wAHJ0E8vEWst5MYzr5DOnhHFA3To.pdf.

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