The Russian power sector is one of the fastest growing sectors in Russia. The sector will need an investment of around $20 billion on an annual basis to reach a growth of around 5% in the coming years. Most of this investment will go for establishing transmitting systems, modernization of the power stations and building new generation capacities.
Russia’s wholesale power sector is on the verge of liberalization driven by the various favorable conditions that are attracting investments in the market.
Why invest in Utilities
- Increasing demand
There is a huge demand for power in Russia. This demand is expected to grow by 5% on an annual basis.
- Need of investments
Owing to the huge supply interruptions, blackouts, supply rationing and unfavorable weather conditions, there is a dire need of investments in the power sector of Russia. This has also paved the path for privatization of all the thermal generation units.
- Vibrant Water resource sector
After the liberalization in the year 2003, there has been tremendous investment potential in the water sector of Russia. The performance of the water sector of Russia has been far from being satisfactory and has hence opened many opportunities for foreign investors. These opportunities are evident in almost all the entire water supply chain. Right from specialist equipment and structuring to engineering, there are opportunities in financing the build and operate transfer projects. It is estimated that the water sector will require an investment of a mammoth $459 to complete all the planned areas.
- Huge Power Sector:
The Russia power sector is huge it has over 440 thermal and hydropower plants spread across the country. The country also has 30 nuclear power plants. These power plants generate about 205.6m kilowatts of electricity. However, the amount of electricity generated by these plants is not enough to satisfy the overall power needs. Majority of the power plants in the country were not operational in its full capacity and were governed by Government authorities. Post 2003 the Putin government took initiatives and passed bills to reform the industry. The reformative steps by Putin have made the sector open for foreign investment. Foreign investors can invest in power, which is an important utilities sector, and earn tremendous profits. The Federal government has ambitious plans to modernize the sector and increase the efficiency of the power plans. The governments major thrust is one development of hydro power plants. Thus, there is good investment opportunity for foreign players to invest in the Russian power sector, resurrect the industry, and earn profits.
- Government encouragement
The Russian power sector is on the verge of undergoing rapid reforms and unbundling and upgrading, thanks to all the useful government measures. The government of Russia plans to attract a total investment of as much as $85 billion in the power sector till the end of 2010. It mainly plans to do this by enacting several market driven reforms and establishing new pricing structures.