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Legal Support of the Operation of Alternative Generation on the Wholesale Electricity and Power Market
 
PIIS231243500022497-4-1
DOI10.18572/2410-4396-2021-4-120-127
Publication type Article
Status Published
Authors
Koropets Nadezhda V. 
Occupation: Leading Specialist of the Regulatory Legal Directorate at Unipro, PJSC
Affiliation:
Kutafin Moscow State Law University (MSAL)
Unipro, PJSC
Address: Russian Federation, Moscow
Journal nameEnergy law forum
EditionIssue 4
Pages120-127
Abstract

The author of the article reviews the issues of the legal support of functioning of generating companies that use generating facilities producing the least negative impact on the environment, in particular, facilities functioning based on renewable energy sources. The article analyzes regulatory acts governing the use of renewable energy sources. Examples of foreign legal regulation (European Union, PRC) are given. The author concludes that there are gaps and discrepancies in the current regulation and that it is necessary to continue improving energy laws.

Keywordsenergy law; legal regulation in the use of renewable energy sources; wholesale electricity and power market, generating companies
Received01.12.2021
Publication date20.12.2021
Number of characters27813
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1 According to the forecast about the development of the world energy industry made by the International Energy Agency, the temperature on the planet will inevitably rise as much as by 2 °C if the current energy infrastructure continues to operate in the same way as it has operated in the past [1]. The environmental agenda is undoubtedly the leading driver in the development of the alternative energy industry. The global energy landscape needs to be deeply transformed in order to reach climate goals; in particular, there has to be organized a transition from fossil fuel consumption to cleaner renewable energy forms. Decarbonization of the energy sector is the key goal of energy transformation roadmaps of the International Renewable Energy Agency [2].
2 Apart from the climate agenda, a less tangible aspect speaks in favor of alternative generation: energy deficit in some regions of the country. Russia has a significant volume of territories isolated from the unified energy system; the gas infrastructure is available by far not in every inhabited locality. Thus, objectively, there exist districts where the opportunities of the renewable energy industry can be implemented to maximum effect.
3 At the same time, the development of alternative generation entails high financial burden on energy markets, demands support from the state and requires the elaboration of special support mechanisms. The RES share in the electricity generation structure in Russia is just 0.15 %, and as much as 1.3 % in the structure of consumers’ costs on the wholesale market. Thus, the financial burden on the market produced by RES exceeds their share in generation by almost 9 times [3].
4 Raising the RES share in the energy balance remains one of the priority tasks of the Russian energy industry. The Energy Strategy of the Russian Federation for the Period up to 2035 links the increase in the stability and reliability of energy supply to the efficient use of renewable energy sources.
5 Alternative generation development project keep receiving large-scale state support. In March 2021, Resolution of the Government of the Russian Federation No. 328 of March 5, 2021 On the Amendments to Some Acts of the Government of the Russian Federation on the Encouragement of the Use of Renewable Energy Sources on the Wholesale Electricity and Power Market has come into effect; this resolution kicked off the RES PSA (power supply agreement) program for 2033–2035.
6 The state has set the task to diversify the electricity industry, in particular, by raising the number of alternative generating facilities. The alternative energy industry in Russia is at the development phase and requires advanced legal regulation.
7 The current laws are uncertain about the list of generating facilities referred to alternative generation. Let’s have a look at and analyze the existing approaches.
8 Generation companies can be classified depending on the means of electricity production: by hydrocarbon combustion (thermal power plants), by the use of water energy (hydro power plants), by the use of nuclear materials (nuclear power plants), by the use of renewable energy sources (RES).
9 It is commonly agreed that the thermal energy industry that uses burning fuel (gas, coal, fuel oil, peat, etc.) in its production cycle is the traditional one. The alternative, renewable energy industry is primarily expected to reduce the negative impact on the environment.
10 In this respect, the relevant question is whether “alternative” generation can include facilities using nuclear fuel to produce energy or modern steam-gas plants or coal stations that are located in close proximity to a coal field and use the best available emission reduction technologies?
11 The legislator proposes the definition of the "renewable energy source" concept in the Law On the Electricity Industry by listing energy resources: solar energy, wind energy, water energy (including wastewater energy).
12 At the same time, GOST R 54531-2011 gives a more detailed list of renewable energy sources.
13 The legislator’s inconsistency is also proven by the fact that there is no uniform understanding of an “alternative energy source”. According to the policy maker’s approach, the concepts of an “alternative energy source” and a “renewable energy source” are not identical. Thus, alternative energy sources in GOST R 54531-2011 are all energy sources except for oil, gas, coal, river water flows and nuclear energy.
14 The list suggested in the Law on the Electricity Industry is exhaustive, so no other energy resources can be referred to renewable energy sources without amendments to the federal law, which is a resource-intensive and long-term procedure. At the same time, scientific publications have brought forward a rather rational opinion that the indicated legislator’s approach pursues a purely practical objective: restriction of generating facility types to be supported. Since alternative generation in Russia is at the early development stages, support is now provided only to a generating facility that functions based on the use of RES included in the list enshrined in the Law on the Electricity Industry and has undergone the qualification procedure. At the same time, taking into account the active scientific and technological development and the origination of efficient technologies for the obtainment of “green” energy from sources not referred to RES by the legislator, the doctrine representatives suggest defining renewable energy sources based on energy resource characteristics (ability to be renewed, nondepletability, ecological cleanliness) and even consequences of the use thereof for the energy balance of the planet and the energy security of the state. The issue of the admissibility of use of each of the above mentioned criteria is debatable and we believe that their inclusion in the Law will inevitably trigger legal uncertainty. Enshrinement of generating facility classification criteria is of great importance for the correct application of "green" financing mechanisms, determination of the level of negative impact on the environment.

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