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Shutting down inefficient power plants may cut coal demand — paper

October 29, 2014, 11:24 UTC+3 MOSCOW
Six power plants with a combined capacity of 2.3 GW, where coal is a main fuel, and seven thermal plants with a capacity of 1.17 GW, where coal is a reserve fuel, did not pass through the tenders
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© ITAR-TASS/Yuri Smityuk

MOSCOW, October 29. /TASS/. Russia’s domestic demand for coal may fall by 4.7% if all inefficient coal-fired power facilities of the first price zone, which covers European part of Russia and the Urals area, are shut down, Kommersant business daily reported Wednesday, citing industry experts.

A total of 15 gigawatts (GW) of power capacities, including 4.8 GW of coal-fired plants, did not pass through Russia’s tenders for capacity supplies in 2015 and thus will not receive a fixed payment for capacity, which accounts for around 30% of their revenue, next year. According to dispatching company System Operator, in the first price zone, six power plants with a combined capacity of 2.3 GW, where coal is a main fuel, and seven thermal plants with a capacity of 1.17 GW, where coal is a reserve fuel, did not pass through the tenders.

If these capacities are not recognized as “forced mode” generators guaranteeing compensation to the owners for their operation, the owners will have to shut down the facilities.

The government’s energy commission will decide whether to provide capacity payments to these facilities by the end of the year.

If power companies do not receive compensation and have to shut down the facilities, only Gazprom Energoholding, one of the largest coal consumers in the first price zone, may reduce coal purchases by 1.5-1.7 million tons a year, Deputy CEO Pavel Shatsky said. He also believes that a lower share of coal-powered generation will disrupt energy balance in the first price zone. There are not many coal-fired power facilities in the European part of Russia and their chances to pass through capacity tenders are low, but they allow Gazprom to fulfil gas export obligations in cold winters, Shatsky said.

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