Russia as an effective and clear global energy supplier

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Russia as an efficient and clean global energy provider

Russia has enormous potential to be both an efficient and clean global energy provider. Although Russia has a global image as an oil and gas supplier, the "tide is turning" as clean energy initiatives and strategies give rise to investment opportunities and a New Energy Russia.

Why should Russia be interested in efficient and clean energy and what are the benefits?

Russia is one of the largest energy providers in the world and also one of the world's most inefficient energy users and producers. Increasing efficiency will lead to cost savings which can then be channeled into clean and alternative energy projects to capture new and growing market share in the global energy market.

The global demand for alternative and clean energy is growing every year and Russia has a chance to capitalize on this demand with a country full of opportunities to provide clean energy not only domestically, but globally. To do this Russian companies and the Russian government must reverse the relaxed and short-sighted view that Russia will forever live and prosper from the sale of oil, gas, and coal.

Russia can also benefit from positive PR as being a reliable, efficient, and also clean energy provider which is well positioned for life after oil.

Implementation Strategies for clean energy in Russia

Knowledge and technology exchange - This can include scientists, engineers, companies, and governments sharing information and collaborating together to create new energy solutions and technology. As the Russian government plays a key role in Russian energy, their support is the key to driving growth in the market.

Funding of projects, companies, and research - Long-term capital and funding for alternative energy projects and companies is a major necessity as new energy projects can require large up-front investments. Again, the Russian government will be crucial for this strategy as it controls a large share of the Russian energy market.

Public awareness and acceptance including subsidies and tax incentives - The average Russian person, much like the average Russian company and government official, is indifferent at best to implementing clean energy solutions. The best way to change this perception would be a PR campaign aimed at creating awareness and a call to action for citizens and companies to implement clean energy solutions. The Russian government could also offer subsidies and tax incentives for investors to promote the growth of new companies, technology, and production of clean energy in Russia.

Legal Restructuring - Re-working and re-writing laws in Russia to support clean energy initiatives is essential for opening the energy market for growth in clean energy solutions.

Alternative Energy Options

Biofuel - As Russia has a large and growing timber industry, companies can process timber waste as bio-fuel. Russia can also exploit wheat, rye, and corn and utilize it's large land resources to supply bio-fuel. The demand for bio-fuels is growing and the price makes it competitive with less clean alternatives such as diesel oil. Russia's Biotechnology Corp believes that Russia is capable of exporting nearly 40 Million Tons of bio-fuel per annum, with up to 7 Million Tons after the processing of Russian timber.

Wind - Russia's seaside areas such as Sochi provide ample area for large wind farms. Greta Energy of Canada has an ambitious program to develop wind farms across multiple regions of Russia with an expected capacity of 394 MW.

Geothermal - This is one area where Russia has already implemented successful projects and has had the most development. There is vast potential in Kamchatka and the Kuril Islands for geothermal projects. Geothermal energy is utilized for heating and electricity production in the Northern Caucasus and the Russian Far East.

Water - Untapped Siberian rivers could be utilized for hydro-electric power stations and tidal projects along the Pacific coast could make this a very natural progression for companies such as RusHydro. In fact, RusHydro is Russia's largest hydro-generating company and the second biggest in the world. They are also utilizing renewable energy sources such as water flows, wind, tidal, and geothermal energy to generate a total capacity over 25,000 MW.

Solar - Although many do not consider this as a viable option for Russia, consider Rusnano, which is currently investing in the production of high-efficiency solar power plants in Russia. Also, the Russian company Nitol is hoping to increase its' production silicon wafers to a capacity of 60 MW. Russia is the largest country in the world and has ample land for solar energy generation and production facilities.

Nanotechnology - The Kremlin's bet for the future of Russian energy lies with nanotechnology and the Russian government has invested billions of dollars for the development of this sector. "Nanotechnology will be the (foundation) for all industries in a science-driven economy," said Mikhail Kovalchuk, director of Moscow's Kurchatov Institute. "Nanotechnology will be the driving force of the Russian economy - if it can overcome the legacy of the recent past."

Efficiency Strategies

Oil well and refinery efficiency - Not only can Russia become more efficient with this expensive process, but it can also sell the added energy to the markets and keep pace with the ever increasing global demand for oil and gas. New technologies, drilling techniques, and equipment can improve the efficiency, but usually requires large capital investment.

Natural gas and subsequent distribution efficiency - As gas is transported along hundreds of kilometers much of it is lost in transit. Here again, a large up-front investment is required.

Improving domestic heating and electricity transmission - Russia has one of the largest energy intensity ratings in the world, and 2 times more than the US. This inefficiency can affect economic growth and is partly due to the harsh climates experienced in many parts of Russia. The savings can be used to fund alternative energy programs or further increase efficiency of domestic resources. As an example, Russia's heat production loses half of the available energy during the creation and transportation process.

Program and incentives for energy efficient consumers - PR, tax incentives, and the availability of energy efficient products and technologies can push Russian consumers to start being more energy conscious. This can offset the gradual increase of domestic energy prices.

Barriers

Energy Efficiency - Currently Russian's enjoy artificially priced energy far below the level of world market prices and the costs are subsidized by the Russian Government. Inefficient infrastructure such as central heating for the majority of Russia's population also complicates the problem of creating more efficient domestic energy production

Alternative Energy - Lack of public support and a relaxed, short-term view of Russian Government officials and Russian energy companies regarding energy and natural resource utilization. As strong public policy is required from the Russian Government to implement sweeping changes to legislation, investment, taxation, and public support, alternative energy could be on a very slow growth path in Russia.

Outlook for Investors

With the exception of a few companies such as RusHydro and Rusnano, the Russian alternative energy market can certainly be considered in an infant stage. The growth of Russia as an efficient and clean global energy provider is almost certain to present investors with a wealth of opportunities.

What do you think about the future of Russia as an efficient and clean global energy provider? Send us your comments.