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Innovative approaches to finance energy efficiency projects in Russia

Panel: Panel 1. Energy efficiency – a strategic choice for Europe

Author:
Petra Opitz, Deutsche Energie Agentur

Abstract

Russia has an enormous potential for improvement of energy efficiency, most of which is located in the energy sector and in communal heating. Especially the potential in communal heating is still wasted mainly because of low tariffs for the residential sector, which do not cover long term marginal costs, and of high investment risks in Russian regions and towns. However, in 2002 the Russian government made some first steps in order to improve conditions for investment into this field. Adjusted schemes of performance contracting involving credits from the West might start working under certain conditions in order to increase energy efficiency on the supply side. The problem still remains how to secure the uncertainties and risks.

Practical experience with modernisation of small scale local heating systems, using old-fashioned boilers, in one Russian region gives an idea, how to overcome the still existing barriers. The presentation will explain innovative opportunities of risk assurance and institutional models of performance contracting, which were adjusted to the conditions in Russia for an individual case. It would be useful to reduplicate this experience and to implement these models in different Russian regions. However, it is a big challenge to reach that purpose in a society, where individual conditions and relationship still are prevailing. Private Western institutions and companies could play a crucial role in order to make those models work. How could they be interested in participating in such models? Would risk assurance by natural gas exports be a sophisticated solution? Could shared emission reduction certificates be an incentive? Some considerations in order to answer these questions will be presented.

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