Global Environment Facility

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Global Environment Facility

• Developing Wind Power Legal and Regulatory
  Framework in Russia
• Progress Update
• July 2004

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GEF Russian Wind Project Structure
In-Kind Support for
GEF/ IFC Funds
ZAO Lidesm - GEF Grantee
GE Energy Meetings Reviews
Princeton Energy Resources International (PERI)
Project Manager
GEWE Turbine Technology Information
GECMS Financing Assistance
CMT Consulting (CMT)
Other Russian Subcontractors for Tariff tax
analysis Grid connection/Ops. Environmental
and Others
OOO Leningrad Wind Power Company (LenWind)
Developer will sign all agreements
Morse Associates, Inc. (MAI)
GEF/IFC 3.12.03
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Activity 1. Power Sector Agreements

• Power Purchase Agreement (PPA)
• Model PPA - Nearly complete
• Analysed Russian, EU and US standard PPAs
• Drafted PPA Term Sheet
• Drafting Model PPA
• Project PPA
• Two prospective off-takers Identified
• Endorsement letter from Governor Obtained
• Support from Deputy Head of Administration for RF
• Negotiations with one Underway
• Lack of understanding on wind energy Identified

4
Activity 1. Power Sector Agreements - Continued

• Grid Access Agreement
• Model Grid Integration Agreement- Nearly complete
• Defined procedures and analysis requirements
• Developed Interconnection Agreement Term Sheet
• Preparing model agreement
• Project Protocol with power company Signed
• Interconnection specifications received
• Modelling and approval by Moscow Institute
  planned
• Interconnection Agreement Drafted
• Approved wind power tariff methodology
• Process and players identified Coordination
  continuing at Oblast and Federal levels
• Model Work Plan - Completed

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Activity 2. Federal Wholesale Market Power Sector
Agreements

• Numerous meetings held with Federal Energy
  Commission (FEC), RAO UES, Federal Grid Company
  and Ministry of Industry and Energy
• FEC role transferred to Ministry of Economic
  Trade Development
• Independent Power Producers (IPP) allowed
• Russian partners participating on renewable
  energy committees
• Postponed power sector reforms (July 04)
• Outcome for FOREM PPA uncertain

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Activity 3. Develop Legislation for the Oblast
Financial Incentives

• Legislative analysis including 6 options
  Completed
• Proposed law Drafted, Reviewed and Submitted
• Passage will open doors for additional wind users
  and projects
• Need support from Federal level for large scale
  deployment

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Recommended Oblast Financial Incentive Structure
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Russian Federation Incentive for Wind Energy
Development
Russian Federation
Loan Guarantees Revolving Account with capped
amount
Long-Term Loans
Russian Commercial Banks
Oblasts
Principal Interest Payment

• Minimum risk
• Attractive rates

Recoupment Interest
Tax Credit Covers power price Gap
Results Investment in Oblasts New
jobs Industrial development Clean Energy
PPA
Industrial Wind Power Purchaser
Wind Project Developers
Tariffs
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Activity 4. Establish Land Lease/Purchase,
Payment and Concession

• Model Land Agreement
• Land ownership and access procedures defined
• US and EU examples studied
• Model Land-Use Agreement Drafted
• Wind rights during planning
• Long term use
• Model provided to Federal committees
• Project site
• Land owners Identified
• Regional and Federal land use permission Obtained

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Activities 5 and 6. Sequential Model for
obtaining Approvals and Licenses at the Oblast
and local levels

• Relevant organizations and institutes Identified
• Coordination continuing at Regional and Federal
  levels
• Step by step procedures Defined
• Turbine and equipment certification Planned
• Russian partner participation on official
  renewable energy committees at RAO UES and MoIE

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Activity 7. Environmental Assessment

• Terms of Reference for Environmental Assessment
  Defined
• Carbon offset baseline being Defined
• Bird surveys Completed
• EA delayed pending power line decisions

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Power Line Interconnection on Lenenergo Grid
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Issues and Conclusions

• Oblast renewable energy use incentive legislation
  well received with strong support
• Project completion delayed 1-2 months due to
  customer negotiations and changes in Russian
  power sector
• Growing regional power demand is driver
• Strong support and interest at all levels but
  uncertainties are a damper
• Federal role and mechanism for supporting Oblasts
  is identified
• Education needed for power off-taker customers,
  utilities and regulators
• Remote and isolated applications for wind are of
  interest to Russians at all levels