MOSCOW, January 24. /TASS/. Russia may increase electricity exports from the Far East to the People’s Republic of China and Mongolia by a total of 2-3 bln kWh shortly as its grid infrastructure is being expanded, Head of the Economic Department at the Institute for Energy and Finance Sergey Kondratyev said in an article for InfoTEK analytical center.

Russia’s electricity exports will continue falling in 2023, the expert believes. According to the forecast by the grid operator, it will total 12.9 bln kWh this year (down from 21.77 bln kWh in 2021). To restore supplies to other countries Russia has to do a great deal in terms of developing new export directions, Kondratyev noted.

"This, first of all, concerns an increase in supplies to China and Mongolia where electricity demand exists. We could increase exports to those countries many times over. But to do this it is necessary to at least expand the grid infrastructure," he said, adding that supplies to China have been practically at their maximum possible level of around 4 bln kWh per year since October 2021.

"However, Russia could export a total of 2-3 bln kWh additionally from the Far East to the People’s Republic of China and Mongolia, but the problem here would be transmission constraints. And it will take at least 1.5-2 years for their debottlenecking (considering the necessary agreements at the intergovernmental level and power line construction - TASS). With that in mind, relatively minor investment would be required, potentially worth tens of millions of dollars," the expert was quoted as saying.

Speaking about a spike in electricity exports to Mongolia and China, apart from a serious extension of the grid infrastructure, the construction of new power stations would also be necessary, he noted, adding that it would take billions of dollars, while carrying out such a project would take at least 4-5 years.

Alternative to China

Two international projects can be implemented relatively fast and at a cheap rate, Kondratyev suggests.

The synchronization of the Russian, Azerbaijani and Iranian energy bridge is the first of them.

"The seasonal demand for electricity is quite high both in Azerbaijan and, most importantly, in Iran’s north. Meanwhile, Russia and Azerbaijan have been connected by a well-developed grid infrastructure since Soviet times. In the case of Iran, of course, grid construction will be required, though it will be offset by the entry to a new large market and load synergies," the expert explained. The energy systems have different load peak hours now, though their synchronization will make it possible to manage the load more efficiently, as well as reducing reserves without compromising the reliability of consumer supply, he added.

The second project is boosting exports to Central Asia, first of all, for ensuring growing consumption in Kazakhstan and Uzbekistan. "Russia may export electricity to those countries from the Volga Region and the Urals, with such deliveries having serious and long-term effects. But the necessity to expand grid infrastructure arises here as well. So the ball is in Kazakhstan’s court on this score," Kondratyev said, pointing out that Russia has free capacity for exports, but the capacity of Kazakhstan's networks for the transit of Russian electricity to the south of the country and further on to Uzbekistan may not suffice.

Domestic market prospects

The expert does not expect a sharp drop in electricity demand on the domestic market in 2023.

"As 2022 showed, Russia’s economy adjusts to new challenging conditions well, while remaining highly flexible. That said, the scenario of stagnation or a slight decrease in demand (by 0.5-1% in annual terms) is most likely in 2023. Much will depend on how the situation in the oil sector unfolds, whether output will go substantially down," he said.

Electricity generation may turn out to be slightly lower than last year’s level due to a high base in the first half of 2022. Kondratyev projects a decline in generation by 0.6-1.2% this year in annual terms.