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International Journal of Mechanical Engineering and Technology (IJMET)

Volume 9, Issue 12, December 2018,
201 pp. 36–44, Article ID: IJMET_09_12_005
Available online at
ISSN Print: 0976-6340
6340 and ISSN Online: 0976-6359

© IAEME Publication Scopus Indexed


Alla Viktororva Borshova
Moscow Institute of Economics, 6/1 Artyukhina St., Moscow, 109390, Russia

Viktor Vladimirovich Gorlov

Gubkin Russian State University of Oil and Gas, 65/1 Leninsky Ave., Moscow,
Moscow 119991,
Russia, Moscow Institute of Economics, 6/1 Artyukhina St., Moscow, 109390, Russia

Inna Sergeevna Gorlova

Russian University of Cooperation, 12 Vera Voloshchina, Bldg. 30,
Mytishchi, Moscow Oblast, 141014, Russia

Tatyana Mihailovna Rogulenko

State University of Management,
Management, 99 Ryazansky Ave., Moscow, 109452, Russia

Irina Vladimirovna Soklakova, Igor Lvovich Surat

Moscow Institute of Economics, 6/1 Artyukhina St., Moscow, 109390, Russia

In today’s world, a key condition for the successful development of the energy
sector is innovation-driven
driven development, which determines the positions of any nation
not only in energy development but economically overall. Fostering innovation- innovation
focused activity
ity and taking it to a whole new level is a key link in resolving most of the
objectives for the development of the energy sector. Innovation-driven
Innovation driven development is
one of the most significant focus areas for the present-day
present day energy sector both in
Russia and elsewhere around the world. Indispensable to it is developing whole new
areas of energy development and creating unique technology based on research.
Renewable energy is not new to the Russian and international energy sector.
However, only recently have renewablerenewable energy sources been recognized as
economically implementable energy, which is also eco-friendly.
eco friendly. Today, throughout the
world, renewable energy sources are being actively developed and incorporated into
the national fuel mix.
Keywords: Energy Development,
Development, Renewable Energy Sources, Prospects For The
Development Of The Energy Sector, Analytics, Fuel-And-Energy
Fuel Energy Sector.
IJMET/index.asp 36
The Management of Renewables In The Russian Federation

Cite this Article: Alla Viktororva Borshova, Viktor Vladimirovich Gorlov, Inna
Sergeevna Gorlova, Tatyana Mihailovna Rogulenko, Irina Vladimirovna Soklakova
and Igor Lvovich Surat, The Management of Renewables In The Russian Federation,
International Journal of Mechanical Engineering and Technology, 9(12), 2018, pp.

Educational By 2016, the technological capacity and payback of renewable energy provided
major boosts for its attractiveness. Among the key factors which have facilitated the advanced
development of renewable energy sources are the following:
1. The cost of electricity generation from renewables is now almost the same as that from the
traditional resources.
2. The cost of electricity generation from renewables has dropped to 2 cents per kWh and
continues to fall. Based on a report from the International Energy Agency (IEA), the cost of
electricity generation from solar power has dropped 80% [8]. According to projections from
the International Renewable Energy Agency (IRENA), the average cost of electricity
generation from wind and solar power will have dropped an additional 26–59% by 2025 [6].
3. In Europe, there are plans to gradually drop the traditional power generation model by
2050, while the US, Canada, and Mexico are planning on making renewables account for half
of all their power by 2025. By contrast, in Russia renewables are projected to account for just
2-3% by 2035.
4. Increases in labor supply in renewables enterprises.
5. The “power of the future” is providing job openings 12 times faster than the traditional
sector. The number of jobs within the solar and wind power sectors is growing nearly 20%
per year [4].
6. The coefficient of performance has risen double. Owing to the use of optical technology by
Japanese scientists, the capacity of solar batteries has increased 2 times, which is the best
indicator of performance among today’s renewable resources.
7. The “power of the future” has attracted significant investment. Owing to the government’s
competently organized policy, renewables have been able to attract investment that now
surpasses investment in the traditional energy sources.
Among the most prominent examples is the creation of the Breakthrough Energy
Coalition fund, launched by a number of major business figures from around the world (e.g.,
B. Gates, J. Bezos (Amazon), R. Branson (Virgin Group), J. Ma (Alibaba Group), etc.), with
total assets of $1 billion.
The primary purpose behind the fund is to boost investment in highly risky technological
projects that would help reduce greenhouse gas emissions.
Additionally, there is currently a trend of major world investors selling their assets within
the traditional energy sector and investing in renewable energy sources.
For instance, right now the Rockefeller Foundation (USA), Amalgamated Bank (USA),
Aegon (USA/Great Britain), Allianz SE (Germany), and a number of major cities, like Oslo,
Berlin, Paris, and Washington, are actively selling their assets within the sectors dealing with
traditional energy resources. Their total capital, worth $5 trillion, has surpassed the value of
all oil-and-gas companies registered on the stock exchange. 37
Alla Viktororva Borshova, Viktor Vladimirovich Gorlov, Inna Sergeevna Gorlova, Tatyana
Mihailovna Rogulenko, Irina Vladimirovna Soklakova and Igor Lvovich Surat

According to the ‘Annual Energy Outlook 2017’ report from the U.S. Energy Information
Administration (EIA), power output from renewables is projected to grow at an outperforming
rate [1]. (Figure 1).
The same report states that, based on the Clean Power Plan, demand for wind and solar
power will be growing at an outperforming rate, even if there are no tax concessions provided
with respect to these types of the “power of the future”.

Figure 1 US net electricity generation from select fuels.

The most rapid growth will be achieved by the solar energy sector specifically (Figure 2).

Figure 2 Renewable electricity generation.

Significant drops in costs, increases in productivity, and continual (financial and social)
support will help stimulate solar energy development across Europe.
Renewables consumption around the world has been steadily going up (Figure 3).
Significant boosts have been observed in solar and wind energy consumption. 38
The Management of Renewables In The Russian Federation

Figure 3 US renewables consumption.

To compare the costs of extracting the various mineral resources, based on data from
Lazard, at year-end 2016 the cost of producing 1 MWh of electricity within the coal sector
was $60–143, the nuclear power sector – $97–136, and the natural gas sector – $48–78 [2].
Already today, the cost of electricity from wind power is $32–62, with solar power
generation becoming in some countries more cost-efficient than extracting the traditional
resources, as has already been mentioned above.
Most prominent think tanks around the world are convinced that the cost of electricity
from renewables will keep decreasing going forward. According to projections from the
International Renewable Energy Agency (IRENA), the average cost of electricity generation
from wind and solar power will have dropped 26–59% by 2025.
It is, lastly, worth noting that the key objective for the development of renewable energy
sources in advanced countries, particularly those within the EU, is, along with environmental
and societal protection, reducing the costs of electricity generation from renewables and
totally discontinuing the subsidizing of renewable energy sources. Russia.

According The development and spread of breakthrough technology around the world may
not just stiffen competition but transform significantly the structure of international energy
flows, which, on the one hand, is fraught with certain threats, but, on the other hand, may also
open up new vistas of opportunity for Russia’s fuel-and-energy complex.
The acceleration of scientific/technical progress and the high likelihood of a new
technological revolution occurring are suggesting that the global energy market will
inevitably shift to a whole new technological paradigm.
It may help for the Russian fuel-and-energy complex to be sensible about its chances with
regard to the energy-efficient production of resources, including in the area of renewable
energy development.
In order to get a proper insight into the current state of affairs in terms of renewables
development in Russia, inclusive of all relevant strengths, weaknesses, opportunities, and
threats, it may help to conduct a SWOT analysis (Table 1).
The strengths of renewable energy sources in Russia include the renewable energy
sector’s accessible resource base, its being spread wide geographically, as well as their
diversity across Russia. The nation’s various regions possess unique sources of renewable
power. Russia is rich in renewable energy sources no less than it is in the traditional ones. For 39
Alla Viktororva Borshova, Viktor Vladimirovich Gorlov, Inna Sergeevna Gorlova, Tatyana
Mihailovna Rogulenko, Irina Vladimirovna Soklakova and Igor Lvovich Surat

instance, apart from oil, Eastern Siberia is also rich in tidal power and wind power. Looking
ahead, the region could achieve self-sufficiency in power based on renewable energy sources.
There is so much water, solar, tidal, wind, and other types of power in Russia that its
volumes exceed the needs of its own population and it may even be exported to other
countries if a proper effort is put in in terms of technology development.
The current unabated trend of declines in the cost of electricity generation from
renewables, as was already mentioned above, may, in the near future, result in the “power of
the future” getting cheaper than oil and gas.
The development of renewables, as an innovative business sector, in Russia may result in
not just greater levels of investment coming into the Russian Federation, but boosts in the
number of new jobs created and the development of technology and machinery, which is
attested by multiple examples where other nations are actively engaged in the development of
the “power of the future”.
A natural consequence of this development is improvements for the environment, declines
in harmful emissions to the atmosphere, increases in fertile land, etc.

Table 1 A SWOT Analysis of Renewable Energy Sources in Russia

Accessible resource base. Developing relevant programs and
General geographical strategies at the government level to
availability. stimulate the development of
Trends toward lower cost. renewable energy sources in Russia
and commercialization of research
Increasing investment
Monitoring continually the execution
Human potential.
of planned activities.
Strengths Improvements for the
Improving the environment through Opportunities
discontinuing the use of primary
energy resources
The renewables sector Russia sticking to its raw-materials
lacking legal protection. export model of development.
Technological backwardness Low economic growth rates.
in the area of renewable Poor headway being made in terms of
energy sources (compared upgrades to infrastructure and plant
with the EU, the US, etc.). and equipment.
Lack of state support. Primary energy resources being
Having to develop subsidized.
technology for reducing the Technological backwardness.
costs of production of Sanctions getting toughened.
Weaknesses renewable energy sources. Threats
Lack of interest in the development of
renewable energy sources on the part
of the government.
Note. Compiled by the authors.

The weaknesses of renewable energy sources include the nation’s poorly developed legal
environment, which does little to encourage renewable power development, lack of
domestically developed technology capable of competing with international solutions, and
only formal support for innovation within the renewables sector on the part of the
government. 40
The Management of Renewables In The Russian Federation

By contrast, the developing world is currently witnessing boosts in the diversification of

activity through expanding the use of noncarbon energy sources, as well as transformations in
the way the world’s energy markets are regulated, including changes in contract terms and
conditions and the way stock exchanges are regulated, with demand for the traditional energy
sources gradually declining [10].
According to ‘Russia’s Energy Strategy for the Period through to 2035’, most investment
in the innovation-driven development of the fuel-and-energy sector will be of a nonbudgetary
nature [10].
However, to get the private sector (including the foreign one) interested in the
development of innovative technology, the government needs to create a comfortable
investment environment that will protect investors from risks, provide relevant subsidies, as
well as provide tax and legal concessions.
Among the key issues in the development of the domestic energy sector are its low
competitiveness levels and the nation’s focus on the raw-materials export model of
development, which is resulting in increased tax and customs-tariff strains on the fuel-and-
energy complex.
The nation’s low rates of internal growth are inhibiting growth in demand for fuel and
energy, while there are also declines in investment activity within the fuel-and-energy
In 2016, Russia’s GDP dropped 0.2%, while other countries saw some, if slight,
improvement in economic growth, despite the ongoing downturn (e.g., the US – 1%, and the
EU – 2%) [7].
When it comes to possible solutions for countering the threats, it may help to draw upon
best practices from advanced European nations which are continually developing various
programs and strategies aimed at stimulating the development of renewable energy sources, as
well as the proceedings of major conferences and summits, which involve discussing work
carried out with regard to the development of renewable energy sources, discussing the
outcomes, drawing up new plans, and adjusting existing ones. Another crucial objective for
these summits is informing the population of the significance, and most importantly the
benefits, of renewable power development.
It may help for Russia to follow that example too. For many people simply do not know
that it is possible to obtain energy by using not just the traditional ways and without harm to
the environment.
Also, it would be quite effective to encourage the nation’s largest oil-and-gas companies
to boost the share of renewable energy sources in their business – most importantly, step up
the development of competitive technology in the area.
It may help to set up a special independent commission which would oversee the
execution of objectives set before the company and take appropriate disciplinary measures in
the event these objectives are not fulfilled in an appropriate manner.
There are a number of threats that are impeding the development of renewable energy
sources in the Russian Federation at the moment. One of these threats is the subsidizing of
oil-and-gas companies at the federal level. If this measure was employed to develop the
renewables sector, it would result in a lot more effective solutions, as it is new and vulnerable
sectors within the economy that need to be subsidized above all.
Russia’s technological backwardness may affect its energy independence significantly in
the near future, as it is technology and a focus on enhancing it continually that will drive the
development of renewables and the entire energy sector at large. 41
Alla Viktororva Borshova, Viktor Vladimirovich Gorlov, Inna Sergeevna Gorlova, Tatyana
Mihailovna Rogulenko, Irina Vladimirovna Soklakova and Igor Lvovich Surat

Increasingly tougher prohibitive measures imposed against Russia may render impossible
cooperation on various issues related to renewable energy development (including the export
of power and import of technology).
Finally, the authors are convinced that the biggest issue with respect to renewable energy
development in Russia is the lack of interest at the government level, the lack of control and
monitoring of the execution of planned activities, as well as the lack of appropriate
disciplinary measures for failure to fulfill the objectives set.
For instance, among the targets set under the Strategy for the Development of Science and
Innovation in the Russian Federation for the Period through to 2015, less than a third were
achieved in the first stage (2006–2007). Above all, this holds for indicators that are
substantially associated with demand for innovation within the real sector. In the second stage
(2008–2010) in the implementation of the Strategy for the Development of Science and
Innovation, significant declines in demand for innovation on the part of companies within the
real sector during a recessionary period, as well as major cuts in budgetary funding for the
systemically important federal special-purpose program ‘Research and Development on
Priority Areas for the Development of the Scientific/Technological Complex of the Russian
Federation for the Period 2007–2012’, led to failure to attain the target levels on a whole lot
of indicators.
In the authors’ view, it will definitely help to implement in the operation of enterprises
within Russia’s fuel-and-energy complex relevant internal corporate control systems. A study
has found that one of the key positive factors for innovation activity by business entities is
providing potential investors with all information about projects carried out in a highly
efficient manner. For instance, this includes information that covers all internal corporate
control outcomes – in particular, detected project finance violations and relevant measures for
preventing them [11].
On the whole, Russia has failed to overcome a number of negative trends in innovation-
driven development. The nation has failed to tangibly speed up the process of integration of
its innovation system into the global one. It has failed to achieve substantial boosts in the
innovation activity and performance efficiency of companies, including state-run ones, and
create a competitive environment that would stimulate the use of innovations. There is still a
lot that needs to be done to foster meaningful interaction between science and business and
raise the level of commercialization of research discoveries from Russia’s state research
academies and colleges to that of nations within the Organisation for Economic Cooperation
and Development (OECD). Public funds allocated toward R&D are not being expended
effectively in most sectors of the Russian economy at this time 9].
Evidence from practice indicates that, despite the availability of formal decrees (strategies
and provisions), the targets of which are much lower than those set in European countries and
those within the OECD, even minimal targets set under a strategy tend to fail to be attained.
Thus, one of the key roles in developing the “power of the future” is played by the
development of new technology. This holds both for the development of technology for the
production and transportation of energy and that for the development of “new energy”, which
is based on renewable energy sources.
The development of this kind of technology should lead to stiffer competition within
traditional and potential markets for energy, providing renewable energy sources with
increasingly more opportunity.

The Management of Renewables In The Russian Federation

According to ‘A Review of the Potential for Implementing Renewable Energy in the Russian
Federation’, “every third ton of oil and cubic meter of natural gas burnt in Russia could be
substituted for by wind power, solar power, and biomass power. The technical potential of
renewable energy resources is 5 times greater than the annual consumption of primary energy
resources in Russia” [5].
In 2017, Russia’s Ministry of Energy undertook to put in place a set of renewable energy
facilities with a total capacity of 120 MW, with power derived from the energy of the sun
accounting for 90 MW of the figure [3].
In addition, in 2017 Rosatom was awarded several contracts for projects with a total
capacity of nearly 610 MW.
However, it is worth noting that renewable power production is currently twice as
expensive in Russia as natural gas production, although there are some exceptions to this
regionally (e.g., Sakhalin).

With a large resource base in place, the share of the “power of the future” in Russia’s overall
fuel-and-energy balance is projected to total by 2035 just 2-3%, while the same figure is
expected to reach 19% elsewhere around the world [10].
Thus, technological backwardness is a major barrier to the innovation-driven development
of renewable energy sources in Russia, which needs to be overcome.
At the moment, it may be possible to resolve the above issue through working together
with other advanced nations around the world (e.g., Germany, Norway, France, the US, etc.)
which have extensive experience developing the renewables sector.
Despite a number of restrictions, which mainly are of a political nature, Russia should still
be able to attract potential investors due to its rich resource base and based on increased
investor interest in the “power of the future”.
Based on the World Bank's RISE (Regulatory Indicators for Sustainable Energy) report, in
terms of having in place a regulatory environment supportive of renewable energy sources,
Russia scored 61 out of 100 and is currently inside the rankings’ “yellow” area [2].
If Russia is to remain ahead and be a world leader in energy, the nation absolutely needs
to pursue innovation-driven development in the area of renewable energy sources.


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2050, 2017.
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down on you in Russia], 2017, (in Russian).
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energetiki-v-rossiyskoy-federacii.html 43
Alla Viktororva Borshova, Viktor Vladimirovich Gorlov, Inna Sergeevna Gorlova, Tatyana
Mihailovna Rogulenko, Irina Vladimirovna Soklakova and Igor Lvovich Surat

[6] Podosenova, O. Prevoskhodya ozhidaniya: Povorotnyi moment v razvitii VIE [Going

beyond expectation: A turning point in the development of renewable energy sources],
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ekonomik [Russia is the “year’s biggest failure” in the rankings of innovative economies],
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