Russia is a dwarf in the PV landscape, but one that wants to step up its participation in the area of silicon production
Huge, full of both opportunities and contradictions — that is Russia. These words also characterize the energy market in the world‘s largest country. The potential to capture electricity and heat from renewable energy sources is enormous, and the future of the still tiny solar sector is full of opportunity — if the political class wants to take advantage of it.
The chemicals industry has had a foothold in Usolie-Sibirskoye for more than 70 years. During the Soviet period, liquid chlorine, hydrogen-peroxide, and nitrogen were made in a chemical conglomerate in the Siberian city. When the empire collapsed in 1992, the sector was thrown into a very difficult period. And that left its mark on the local community. «Our people had work, but they earned too little on which to live,» explains Mayor Anatoly Krushinsky. Three years ago, the solar company Nitol bought the industrial complex and started investing in the location — which is a blessing for Krushinsky and his city of 80,000. Now 5,500 of the 40,000 working-aged residents are employed at the company, earning respectable wages, says the mayor. «Every person here is linked to the company,» he says. The city‘s tax revenues have risen sharply in the past year and a half. With the coming of the silicon manufacturer, a new and better era seems to have emerged for the city of Usolie-Sibirskoye.
But anyone who thinks that the move has brought the PV industry closer to Usolie-Sibirskoye and the area‘s ample hours of sunlight is mistaken. The city is by no means discussing the possibility of putting up solar installations. «The economy doesn‘t allow for it,» says Krushinsky. «Our interests lie with silicon,» he continues. «We want to develop this production.»
Russia has immense natural resources at its disposal for generating solar electricity. In the regions around the Black and Caspian seas, the solar irradiation is at 1,400 kWh per m². In southern Siberia and the far eastern part of the country, it‘s at 1,300 kWh per m² at least. When the Russian government was preparing a law to promote renewable energies in 1999 — one that was ultimately vetoed by President Boris Yeltsin — it determined the technically feasible potential for solar energy to be about 19,000 TWh per year. That is equal to 20 times the country‘s current electricity usage. From an economic viewpoint, the sun could contribute the equivalent of 12.5 million tons of coal (enough for around 100 TWh) per year, according to calculations made by the Moscow Energy Technology Centre. But the country remains very far from generating reserves out of this potential. Aside from hydroelectricity, all of the renewable energy sources play only a marginal role in supplying electricity, heat, and fuel (see box, p. 32). They combine to account for less than 1 percent of all electricity provision. The Russian renewable energy association Intersolarcenter estimates the installed PV capacity at a paltry 100 to 150 kW. «Photovoltaics is simply too distant for us. We have to worry about our social problems. Only after these are solved will we be able to think about renewable energy sources,» says Art Tolokonnikov, a board member and marketing director at the publicly traded company Podolsk Chemical & Metallurgical Plant (PCMP). The company makes wafers and ingots, and also plans to build a silicon production plant.
The sector is still small and manageable for now, but over the past two years, and especially in the area of silicon production, more and more companies have been announcing their intentions to produce the raw material needed to make solar cells. Some of them have even secured federal subsidies. Russia is looking to get into the fast-growing solar market without having used the technology itself up till now. «To be honest, I wouldn‘t really understand it if the government established a feed-in tariff instead of, for example, not fixing the situation in our hospitals first — although I naturally am very familiar with the benefits of photovoltaics,» explains Tolokonnikov. Sooner or later, though, he adds, renewables will also make their way to Russia.
State aid in sight
The current situation, however, indicates that Russia could soon have a law that promotes renewable energy sources. President Vladimir Putin has issued the mandate. The law was debated in the committees in the lower house of parliament, the Duma, until the middle of August. The Nobel Prize recipient Zhores Alferov played a primary role, having been a member of parliament for more than 10 years representing the Communist Party. He argued in favor of a strong role for PV. «The government has made its position clear on supporting renewable energies. Now everything is prepared and is ready to be presented to the Duma,» says Akhsar Pinov. He is co-director of the Technology Centre and general director of Intersolar. The draft legislation is similar to the German Renewable Energy Law (EEG) in its key elements, although at a considerably lower level. One point of contention, for example, was the topic of a feed-in tariff. Representatives of the PV industry demanded different rates for the individual types of energy. But the draft calls for a uniform rate for all sources, about 10 euro cents (14¢) per kWh, Pinov says. «That will be enough for wind, but too little for PV,» says Vladimir Karghiev, his colleague at the Technology Centre. But before the draft legislation is presented to the parliament, national elections will be held on Dec. 2. The draft is set to be presented to the newly sworn-in representatives in spring.
The individual regions of the Russian Federation are already waiting for the law, because they want to increase their use of alternative energy sources. In the Krasnodar region on the Black Sea, which is home to the future Winter Olympics host city of Sochi, the administration has already prepared a program to give financial support to all renewable energy sources. It foresees, for example, spurring solar energy development through a tax law and bank loans. «We are ready to act but without special legislation accepted by the Russian Government we have no opportunity to allocate money toour program,» says Elena Alekseeva, from the Krasnodar regional Department of Trade. The goal of the local political class is to reduce air pollution through the use of renewable energy sources. Alekseeva is counting on solar energy to be able to meet 30 percent of the region‘s power needs on its own.
Environmental protection, however, is less of a motivating factor behind the planned support (even if Russia signed the Kyoto Protocol in 2004) than is the desire to take advantage of available potential. The Russian Federation is currently undergoing sustained growth. The economy grew by about 7 percent last year, and the forecasts for this year and next are for growth of at least 6 percent. That means that energy demand is to the tune of about 4 percent per year, according to estimates by the majority state-owned energy company RAO UES Rossii, which has responsibility for the hydro-electric, gas, and coal-fired power plants. In contrast, the currently installed power plants are mostly in a state of relative disrepair, according to the latest Russian study issued by the German Energy Agency. «The dilemma is simple: either the energy sector won‘t be able to satisfy demand, or it will not only be able to satisfy the required increase in electricity consumption, but also provide an impetus to development in all economic segments of the country,» RAO UES Rossii wrote in its investment manifesto, which was approved by the government last year. This platform calls for the construction of new thermal and hydro-electric power plants with a generation capacity of 10 GW by 2010. And there is also room for renewable energy sources. The alternative resources are important, Deputy Prime Minister Sergey Ivanov told PHOTON International at an exposition in Irkutsk, in Siberia. «We understand that the era of coal and oil will end one day. So we have to diversify in the energy sector and place more emphasis on renewable resources,» Ivanov said.
Cheap fossil raw materials
The need to develop new energy sources certainly has not existed in the past. Russia is supremely endowed with oil, gas, and coal reserves. On top of that, the costs for electricity and heat have been held so low by the state, that renewable energy sources never would have had an inkling of a chance on the open market. But the country is currently in the middle of liberalizing its energy market, with an eye on deregulating it by 2011. Until then, prices are slated to rise year after year at disproportionate rates. Even if renewable sources still aren‘t able to compete with the soon-to-be-higher prices, off-grid systems based on wind and PV installations are still viable alternatives for people who live far away from the central power grid — and that applies to more than 20 million residents who live on the island of Sakhalin, on the Kamchatka Peninsula, in eastern Siberia, and in the Far East. In most cases, electricity supply in these areas has been secured using diesel generators, with the subsidized fuel delivered to the remote locations by helicopter or truck.
Off-grid systems appear to be an adequate solution for supplying power to the weekend cottages, or dachas, that are also very popular in Russia, says Akhsar Pinov from Intersolarcenter. Most of the owners do have access to the power grid, but wanted to have alternatives. «If 10 million houses that are mainly connected to the central grid — but would like to have an alternative — have a module with 100 W capacity, then the market potential would be 1 GW — at least that is the minimum of the economic possibilities,» he says. So far, though, systems are only rarely installed. The Krasnodar region is the only one that can claim several large projects. In the town of Chernomorskaya, a 40 kW installation was set up on the roofs of public buildings, but it is not yet at full operation. A model installation is generating electricity on the roof of the public University for Tourism in Sochi. A hybrid system between Krasnodar and Sochi supplies cellphone towers with electricity so people are able to have wireless communication everywhere in the region.
«The photovoltaic market will be interesting in three years,» says Boris Burchenko, whose company Solar Motors Ltd. provides solutions for off-grid systems, hybrid installations with wind turbines and solar modules, along with pure PV installations. It is a very interesting market niche for him, one he plies not just for the profits, he says. The market is in fact growing each year, but «the customers aren‘t ready yet,» he said. «They prefer oil or diesel generators if they don‘t live on the central power grid. The problem is simply that the raw materials are too cheap.»
The country‘s module and cell producers, therefore, are focused on the export market. But that bothers them considerably less than another topic: the scarcity of silicon. The majority of solar companies have been active in this sector only for a maximum of 15 years. And hardly any company in Russia has a long-term supply contract with the silicon suppliers. As much as the companies would like to expand their production, they just aren‘t able to. The result is that total cell and module production in the massive country plods along at about 13 MW of modules this year.
Ryazan Metal Ceramics Instrumentation Plant (RMCIP) is one of these producers. During Soviet times the company exclusively made reed switches, but 10 years ago, chief executive Sergey Karabanov decided to enter the solar sector. He built a 1 MW module production line, most of which was handmade. In one or two shifts, (depending on the order volume), his 20 workers make the modules, cut contact bands, solder the solar cells to strings, affix them onto the module‘s glass surface, fill the extra space with resin, and finally place the module under UV light to harden the resin. «We have good customers in Germany and the US,» explains Karabanov.
Very own silicon production plant
The state-run company has also taken up production of solar cells, but the segment‘s development has stagnated. A privately run company that set up shop in the same building would be able to produce the necessary wafers — about 220,000 pieces per month — but that is considerably more than it gets in raw materials. At the present time, the wire saw is actually completely idle. Only 300 to 400 kW of capacity in RMCIP modules are set for production this year. «We have a problem buying silicon,» says Karabanov. The producers want to get $250 per kg, he says. «No one can make a price-competitive cell at those prices,» he adds. That‘s why the company wants to solve the silicon problem itself in Ryazan, a city 200 km southeast of Moscow, where it plans to set up its own raw material plant using money from the government. The investment plan approved this year is valid from 2008 to 2014. By the time it ends, RMCIP wants to be operating a production chain that ranges from silicon procurement through to module manufacturing, bringing 100 MW a year to market. The company started conducting research this year related to establishing silicon production. Once all of the details regarding technology are clarified, the company will set up the industrial plant. Meanwhile, RMCIP wants to expand module assembly capacity to 2 MW in 2009. The following year, modules are planned to be mass-produced — the company has already ordered an automated assembly line from US company Spire with a targeted output of 12 MW. Partner companies from Europe will supply the cells that will be used in the modules. RMCIP wants to hit €35 million ($50 million) in revenue in 2009, half from solar technology and half from reed switches. «I believe in PV,» says Karabanov. «We can solve the world‘s energy problems with it.»
Solar Wind Ltd., which counts as a big module producer in Russia, has the same problem that Karabanov describes. «Because of the silicon scarcity, our capacity is still at 5 MW» says Akhsar Pinov, who is vice president at Solar Wind Europe in addition to his duties at Intersolarcenter. Because of that, Solar Wind also wants to set up a complete production line — from the raw material to wafers, to cells, and right on up to modules. «All the reserves of crystalline silicon are being used, so we‘re going to have to find new sources,» he says succinctly. The ingot and wafer maker PCMP is also a member of the group of would-be silicon procurers that have declared their intentions. This company wants to get into the business not only because the entry has been approved, but much more because it wants to become really large. «In five years we‘re either the company that sells ingots and wafers to the successful big players in the industry, or we‘re among the sector‘s big silicon producers,» says board member Art Tolokonnikov.
The enticing aspect of making lots of money with silicon has brought another six projects to the drawing board. PCMP is only one of the companies that, unlike RMCIP and Solar Wind, want to enter the market independent of any cell or module production (see map, p. 34). All of the projects are still in the planning stages; they are either privately financed or promoted by state subsidies. Companies are planning and calculating, and in some cases they are building and testing. But all nine companies are for the most part entering uncharted territory.
PCMP is the only company that has any experience with solar silicon production, although that business was halted in 2003 because of technical problems with its machines. The annual output was at about 150 to 200 tons, but the company doesn‘t have any experience with trichlorosilane production because the required chemicals were always bought from other producers. On the other hand, Khimprom and Nitol do have experience working with trichlorosilane (see article, p. 44), but they‘ve never refined silicon in a reactor.
The mining and chemicals company Mining Chemical Combine (MCC) in Zhelesnogorsk got its supply of the highly explosive material from Nitol. In 2005, at the Moscow conference on the potential of Russian polysilicon production, the company announced plans for test procedures and an annual production of 200 tons in 2006. Since then, the company has not released any news. The chemicals company OJSC Silan in the central Russian city of Dankov has at least plenty of experience in working with silicon compounds, and the project can be considered financially secure, but neither trichlorosilane nor solar silicon have been among the company‘s products up till now.
The conglomerate Basic Element Company (BasEl) is completely starting from scratch. The company is owned by the oligarch Oleg Deripaska, who has an estimated net worth of around €9 billion ($12.8 billion). The 39-year-old is considered the second-wealthiest Russian and is ranked 40th on the Forbes list of the world‘s richest people. Basic Element‘s primary business is aluminum production.
But its Baltic Silicon Valley, which has the grandest ambitions with its polysilicon project in Sosnovy Bor. The factory, not far from St. Petersburg, is slated to produce up to 20,000 tons of solar silicon per year by 2015. The project is expected to start in two years with an initial annual output of 500 tons. Industry insiders attest that the company has not advanced with its plans in years. But at least the location would have one advantage: the project managers are sitting on a cheap energy source as four nuclear reactors are located in Sosnovy Bor, insiders on the silicon scene emphasize.
Regardless of whichever project winds up succeeding, the importance of Russian companies to the photovoltaic market is clearly in the area of silicon production. The country has the knowledge of engineers who processed this raw material in the Ukraine during Soviet times. And Russia has massive energy resources as well as the necessary skilled workers in the chemicals sector to build up the industry — not only in Siberia.Ines Rutschmann
Photocaption:
The economic crisis is yesterday‘s news. Russia is on its way to glistening in its newfound splendor.
Cheap energy: 19.20 RUB (77¢) for a liter of diesel, 21.70 RUB (87¢) for a liter of super unleaded. Fuels, electricity and heat, cost very little in Russia.
First Deputy Prime Minister Sergey Ivanov spoke to the press at the Baikal Business Center in Irkutsk: «Alternative energy sources are important to Russia.» The potential candidate for Putin‘s successor is considered a proponent of the planned renewable energy law.
Module assembly at Ryazan Metal Ceramics Instrumentation Plant (RMCIP): Production levels are too low to justify automation. Employees handle all steps of the process by hand. This woman is cutting contact bands.
A rare view of the largest country in the world: A PV installation under construction on the property of RMCIP. This unit is not yet functional.
«We want to construct a whole production line — from the production of the raw material, to the production of wafers, cells and modules.»
Art Tolokonnikov,
member of the board at Podolsk Chemical & Metallurgical Plant
«We want to construct awhole production line — from the production of the raw material, to the production of wafers, cells and modules.»
Akhsar Pinov,
vice president of Solar Wind Europe
«We have goodcustomers in the US and Germany, but we have a problem buying silicon. At $250 per kg, no one can make aprice-competitive cell.»
Sergey Karabanov,
general director of RMCIP
Infobox:
The Russian electricity market: PV is unknown
Russia is only really aware of one form of clean energy: hydropower. Nearly a fifth of its electricity is produced on the country‘s long coastline, or by its lakes and large rivers. By 2020 the country aims to increase the share to 30 percent. While the other renewable energies have not gotten much attention up to now, the country has a variety of options to generate green electricity — from biomass, wind, solar irradiation, geothermal, and tidal power. A quarter of the forestry worldwide can be found in Russia — that‘s a real advantage, as any wood waste could be processed into pellets. In addition, the regions in the East of the country, such as the Kamchatka Peninsula, have significant potential with regard to geothermal power. It would also be worthwhile installing wind power systems in the Far East and on the entire northern coastline. Solar power could also be a large energy source. In the southern regions, at the Caspian Sea and the Black Sea, the solar irradiation is partially as high as 1,400 kWh per m² per year. The southern parts of the Far East and in Siberia also achieve 1,300 kWh per m² per year.
Despite this potential, the Russian government has not turned away from its existing energy policy, which concentrates on five resources: gas, oil, nuclear power, coal, and hydropower. But the opportunity to invest in alternative energies would be more than fitting, as the country urgently needs new power plants.
After the dissolution of the USSR, industry likewise collapsed. That meant that electricity usage fell by a quarter between 1990 and 1998. As a result the state did not invest in new power plants, failed to maintain the existing ones, and did not take care of the infrastructure — even as the demand for electricity and heat slowly began to increase again. According to the German Energy Agency, three of five power plants are worn out and two thirds are technically outdated. Moreover, the International Energy Agency (IEA) sees the need for a great deal of investment in the pipe and distribution network. The IEA estimates that over the next 25 years $200 billion will be required — that‘s even more than must be invested in building new power plants.
On top of everything, the country‘s energy demand has increased in the meantime: the energy usage in 2006 alone grew by 4.2 percent. The majority state-owned electricity provider RAO UES, which owned nearly all of the around 440 hydro power plants and cogeneration plants in Russia before it was restructured, also believes growth will be similar in the coming years. Between 2006 and 2010, the company wants to invest 695 billion RUB ($30 billion) to install power plants with a power of 41 GW. Further hydro, gas, and coal power plants are planned, whereby the share of energy generation from coal compared to gas is meant to increase in terms of percentage: the share of non-traditional — or alternative — energies should be at 1 percent by 2015. There is no roadmap of how to achieve this goal.
RAO is not responsible for the 31 nuclear reactors, which are mainly located in the European area of the Russian Federation. These are mainly administrated by the state-owned monopolist Rosenergoatom. The Ministry of Industry and Energy is only responsible for four reactor blocks in Sosnovy Bor near St. Petersburg. At the beginning of 2006, the government announced its plans to build 40 new reactors by 2030. By 2010 four power plants with a power rating of 4,000 MW are scheduled to go on line.
However, the Russian electricity market still has the largest revolution in the works: the privatization of the market and the adaptation of prices to the marketplace. Up to now, the Russian state subsidizes energy prices. In the 1990s, the prices only increased half as much as consumer goods; since 2000, however, the increase has exceeded the inflation rate. Since 2005 there has been a «sector for free trade,» which electricity generators can use to sell their electricity at unregulated prices — though the amount of sales is restricted. The market should be fully privatized by 2011 and the prices should be deregulated. Therefore, in the coming years the prices will gradually increase, says a RAO spokesperson. At the moment companies pay a national average of around 1.10 RUB (4¢) per kWh and private households pay between 1.40 and 1.70 RUB (6¢ and 7¢).
The privatization will also be accompanied by a restructuring of the electricity sector, though three areas will remains under state control: the grid, power plant operation, and nuclear power plants. However, gas, coal, and hydropower plants are being sold. The RAO began its restructuring process in 2003, and next year it is set to be completed. The company has created 21 independent energy providers, which will be gradually auctioned off. The proceeds will be put in the investment program. RAO originally calculated proceeds of 422 billion RUB ($17 billion) from the first 15 sales. From the eight auctions that have taken place so far, proceeds have totaled 285.2 billion RUB ($11.5 billion). Buyers so far include the German company Eon AG and the Italian Enel SpA. In several steps by the end of October, the latter has now secured 37 percent of the company OGK-5, which owns power plants with a capacity of 8.7 GW. Russian legislation requires Enel to bid for the remaining shares. If Enel completes the purchase, it would be the first foreign company to completely own a Russian energy corporation. Eon AG has secured 61 percent of OGK-4 up to now. iru
Key data
Inhabitants: 142 million
Electricity production (2006):
991 TWh
è 6.97 kWh per capita
Electricity consumption (2006):975.5 TWh
è 6.87 kWh per capita
PV capacity (2006): 100 to 150 kW, only stand-alone systems (estimate from Intersolarcenter)
PV electricity production (2006): 100 MWh (own estimate)
è 0 percent solar electricity
Photocaption:
The Sosnovy Bor nuclear power plant near St. Petersburg should get some company — Russia wants to build 40 new reactors by 2030.
Infobox:
Financial support: Feed-in law coming soon
The Russian state does subsidize electricity, but there has not been any support on offer for renewable energies up to now. In 1999, a draft bill was designed for which the potential of renewables in the Russian Federation was determined, but Boris Yeltsin, the former president, rejected the draft. His successor, Vladimir Putin, ordered another draft be made, which is expected to be voted on in the lower house of parliament (Duma) next year. It would put a uniform feed-in tariff in place, which would be set at around 10 euro cents (15¢) per kWh. The law should also clear up the question as to whether, and indeed how, electricity can be fed into the central grid. PV sector representatives in Russia are optimistic that the draft will be adopted in 2008. Several regions of the Russian Federation, such as Krasnodar and Kaliningrad, are waiting for a law for renewables, as they have noticed the potential for wind, solar, and bio-energy — and wish to make use of it. iru
Key data
Type of installation:
stand-alone systems.
Price per kW:
as there are no on-grid systems, this is the price for stand-alone systems that the Russian installer Solarhome offers: €6,960 ($9,930) per kW.
Price of solar modules:
from around €4.50 ($6.40) per W.
Grants / subsidies:
none.
Feed-in tariff:
none.
System yield:
in sunny areas up to 1,200 kWh per year. The solar irradiation in the whole of Russia is between 800 and 1,400 kWh per m².
Price for household electricity:
between 1.40 and 1.70 RUB (6¢ to 7¢) per kWh.
PHOTON International 2007-11 November, page 30
The paper with this article can be ordered at a price of 26,75 €.
