Chapter 1.

Strategic review

СТРАТЕГИЧЕСКИЙ ОБЗОР

LEADERSHIP

38,868.1 MW installed capacity
3rd place among the world’s largest hydrogeneration companies*

STRATEGIC VIEW

In 2016, the Development Strategy of the RusHydro Group was approved for the period until 2020 with a perspective for up to 2025. It defined the goals and development directions for the entire RusHydro Group, including its Far Eastern assets

SOCIAL RESPONSIBILITY

In January 2017, the stocks of the RusHydro Group were included into the FTSE4Good Emerging Index

INTERNATIONAL COOPERATION

DIALOGUE WITH STAKEHOLDERS

In 2016, the public hearings were held on the 2015 Report on Corporate Social Responsibility and Sustainability of RusHydro Group. The event was attended by representatives of the key Group stakeholders. Their recommendations were included in the 2016 Report on Corporate Social Responsibility and Sustainability

«In 2016, our main goal was to increase the efficiency of the Group’s activities with an emphasis on the development based on own resources. The optimization was launched to cover hundreds of business processes, the efficiency of procurements was increased, the operational and inefficient investment costs as well as non-production costs were reduced. The second task was to improve RAO ES of the East performance. We implemented a number of measures to stabilize the work of energy assets in this region – both in terms of restructurisation of the debt burden, and improvement of tariff regulation».

N. Shulginov,
Chairman of the Management Board –
General Director of PJSC RusHydro

1.1 About RusHydro Group

1.1.1 RusHydro in 2016

Public Joint-Stock Company «Federal Hydro-Generating Company – RusHydro» (RusHydro Group, RusHydro, Group, Company) is the largest Company in the field of power generation, the first nationwide and the third worldwide in terms of hydro power generation. RusHydro Group is the leader in renewable sources-based electricity production. The Company develops generation on the basis of water stream, tide, solar, wind and geo-thermal energy.

The RusHydro Group companies are core companies and key state institutions of the electric power industry. In accordance with the Presidential Decree No 1009 of 04.08.2004, since 2012, PJSC RusHydro is included in the list of strategic enterprises and strategic joint-stock companies.

Operating PPs

1. Boguchanskaya HPP
2. Byreyskaya HPP
3. Cascade of Verkhnevolzhskiye HPPs
4. Cascade of Viluysky HPPs
5. Volzhskaya HPP
6. Votkinskaya HPP
7. Dagestan branch
8. Zhigulevskaya HPP
9. Zagorskaya PSHPP
10. Zeyskaya HPP
11. Kabardino-Balkarian Branch
12. Kamskaya HPP
13. Zelenchukskaya PSHPP
14. Kolymskaya HPP
15. Cascade of Kubanskiye HPPs
16. Nizhegorodskaya HPP
17. Novosibirskaya HPP
18. Saratovskaya HPP
19. Sayano-Shushensky Branch
20. Sevan-Razdan Cascade
21. HPPs of the Northern Ossetian Branch
22. Tolmachyovskiye HPPs
23. Cheboksarskaya HPP

Geo PPs

26. Verkhne-Mutnovskaya GeoPP
25. Mutnovskaya GeoPP
24. Pauzhetskaya GeoPP

HPPs under construction

27. Zaramagskye HPPs

28. Zagorskaya PSPP
29. Nizhne-Bureyskaya HPP
30. Ust-Srednekanskaya HPP

Retail companies

31. Far-Eastern Energy Company
32. Krasnoyarskenergosbyt
33. Ryazan retail energy company
34. Chuvash retail energy company

Thermal PPs

35. Amurskaya CHPP
36. Anadyrskaya Gas Engine CHPP
37. Anadyrskaya CHPP
38. Artyomovskaya CHPP
39. Blagoveshenskaya CHPP
40. Vladivostok CHPP
41. Kamchatskiye CHPPs
42. Komsomolskiye CHPPs
43. Kyzym (Mobile PP)
44. Labytnangi (Mobile PP)
45. Magadanskaya CHPP
46. Mirninskaya TPP
47. Nerunginskya TPP
48. Nikolaevskaya CHPP
49. Partizanskaya TPP
50. Primorskaya TPP
51. Raychikhiskaya TPP
52. Sakhalinskaya TPP
53. Urengoy (Mobile PP)
54. Khabarovskiye CHPPs
55. Chulmanskaya CHPP

56. Egvenkinotskaya TPP
57. Yuzhno-Sakhalinskaya CHPP
58. Yakutskaya TPP
59. Arkagalinskaya TPP
60. Maya TPP
61. Chaunskaya CHPP
62. Yakutskaya TPP

Thermal PPs under construction

63. Vostochnaya TPP
64. Sovgavanskaya CHPP
65. Sakhalinskaya TPP-2
66. Yakutskaya TPP-2

Tidal PP

67. Kislogubskaya Tidal PP

Wind PPs

68. WPP in Ust-Kamchatsk
69. Nikolskoye Wind PP
70. Novikovo sett. WDS

Solar PP

71. Batagai solar PP

Research and design organizations

72. Mosoblhydroproject
73. Vedeneyev VNIIG
74. Hydroproject institute
75. Lenhydroproject
76. NIIES

Electric grid companies

77. Far Eastern Distribution Company

RusHydro business

The main economic activities of the RusHydro Group companies are production of electricity by hydro-power plants, production of electricity by thermal power plants, transmission, distribution and supply (retail) of electrical energy.

The RusHydro Group’s activities are characterized by a vast geographic footprint: from Murmansk Region to Primorsky Krai, from Chukotka to the Republic of Dagestan. The Group is also engaged in international operations managing the Sevan-Hrazdan Cascade of HPPs in Armenia. The Company is registered in Krasnoyarsk, but the headquarter is located in Moscow.

The RusHydro Group operates within the Unified Energy System of Russia (UES). The installed capacity of the Group’s assets amounts to 38.9 GW, including electric energy of PJSC RAO ES of the East and the newest hydropower plant in Russia – Boguchanskaya HPP built and operated together with UC Rusal.

Installed capacity3, MW

1-1-1_1

Actual energy production by energy sources and control modes

Primary energy sourcesEnergy production, GWh
Heat production, GJHeat supply, thousand Gcal
Water source108,985.5917,179.1
Other29,824.7131,866,182.031,494.2
TOTAL138,810.2132,783,361.1
Control mode/geographical regionEnergy production, GWhHeat production, GJ
Siberia43,177.5
Far East47,615.9132,783,361.1
Centre of Russia39,372.2
South and North Caucasus8,644.6
TOTAL138,810.2132,783,361.1

Nowadays, the Group integrates 400 electric energy facilities. Among them, there are more than 90 renewable energy source (RES) facilities, including the largest Sayano-Shushenskaya HPP, whose capacity amounts to 6,721 MW (together with Mainsky hydro-power complex). RusHydro also includes nine plants of Volga-Kama Cascade with a total installed capacity of more than 10,000 MW, Zeiskaya HPP (1,330 MW), Bureiskaya HPP (2,010 MW), Novosibirskaya HPP (475 MW). The Company’s assets also feature geothermal power plants in Kamchatka, Kislogubskaya power plant, the only tidal power generation facility in Russia, and a highly manoeuvrable Zagorskaya Pumped Storage Hydropower Plant (PSPP) in the Moscow Region.

One of the most important Group assets is RAO ES of the East – a subgroup representing the energy system of the Far East of Russia. The installed electric capacity of the Far East power plants of PJSC RAO ES of the East is 9,023 MW, the installed thermal capacity is 18,133 Gcal/h.

The Group also includes CJSC IEC that owns Sevan-Hrazdan Cascade HPP in Armenia (seven power plants with total installed capacity of 562 MW).

Installed capacity of RusHydro Group’s assets as of December 31, 2016 (excluding Small HPPs), MW

установленная мощность производственных активов

Installed capacity of RusHydro Group by control modes

Control modeInstalled capacity, MW
The first price zone17,927.4
The second price zone10,398.3
Non-price zones and isolated power systems9,981.1
Armenia (market zone)561.4
Total38,868.1

Installed capacity of RusHydro Group by primary energy sources

Energy sourceInstalled capacity, MW
Water source30,233.6
TPP, total8,340.5
RES294
Total38,868.1

According to the results of the year 2016, the total installed capacity of the Group increased by 237.1 MW and as for 31.12.2016, it was 38,868.1 MW. The installed capacity of RAO ES of the East is 9,022.9 MW. The increase in the installed capacity of PJSC RusHydro branches was due to the commissioning of the new hydroelectric power plants: Zelenchukskaya HPP-PSPP (140.0 MW) and Zaragizhskaya HPP (30.6 MW).

Moreover, in 2016, the increase in available capacity was also ensured by completion of works on technical re-equipment and reconstruction.

In 2016, the second phase of Blagoveshchenskaya CHPP construction was completed. In August 2017, Nizhne-Bureyskaya HPP (320 MW) was put into operation in the Amur Region, also it is planned to launch the first stage of Yakutsk TPP-2 with the electricity generation capacity of 193.5 MW and thermal capacity of 467 Gcal/h. In 2018, it is planned to launch the first phase of the Sakhalin SDPP-2, as well as the TPP in Sovietskaya Gavan in the Far East.

In 2016, the electricity output of RusHydro Group amounted to 138.8 billion kWh, which is 9.2% higher than in 2015. The increase in production is due to the actual hydrological conditions developed during the reporting period and caused by high inflow to the reservoirs of Siberia and the Far East.

The total revenue of the Group in 2016 increased by 8.2 % compared with the year 2015, from 361,826 million roubles to 391,322 million roubles.

To ensure the main activities, the Group constructs new generating facilities, repairs and maintains operating facilities, and carries out scientific and project activities.

Planned capacity in accordance with the projected demand for electric energy by energy sources and control modes thousand kW

 2017201820192020202120222023
Total by Energy System of Russia
Demand for capacity183,704185,337187,311189,214191,019192,88194,652
Satisfying the demand216,243.9219,796.5222,304.3220,881.1222,802.9222,572.9224,081.9
Own surplus (+) deficit (-) of reserves32,539.534,459.734,993.431,667.531,784.329,692.529,430.2
Unified Energy System of the Centre
Demand for capacity19,192.019,332.019,418.019,518.019,682.019,872.020,038.0
Satisfying the demand216,243.9219,796.5222,304.3220,881.1222,802.9222,572.9224,081.9
Own surplus (+) deficit (-) of reserves32,539.534,459.734,993.431,667.531,784.329,692.529,430.2
Unified Energy System of the Northwest
Demand for capacity19,192.019,332.019,418.019,518.019,682.019,872.020,038.0
Satisfying the demand20,193.021,168.821,417.620,611.621,829.421,851.421,873.4
Own surplus (+) deficit (-) of reserves1,001.01,836.81,999.61,093.62,147.41,979.41,835.4
Unified Energy System of the mid-Volga Region
Demand for capacity19,01619,10419,17219,24319,3919,52219,641
Satisfying the demand25,632.925,538.325,774.325,501.125,526.125,526.125,526.1
Own surplus (+) deficit (-) of reserves6,617.06,433.96,602.26,258.36,136.16,003.75,885.3
Unified Energy System of the South
Demand for capacity17,956.018,168.018,484.018,68218,907.019,193.019,355.0
Satisfying the demand20,402.421,806.822,338.822,338.822,338.822,338.822,338.8
Own surplus (+) deficit (-) of reserves2,446.43,638.83,854.83,656.53,431.83 145.82,983.8
Unified Energy System of the Ural
Demand for capacity43,194.043,463.043,804.044,057.844,494.344,959.045,364.0
Satisfying the demand49,399.649,352.249,438.849,409.549,587.550,097.550,274.5
Own surplus (+) deficit (-) of reserves6,205.65,889.25,634.85,351.75,093,25,138.54,910.5
Unified Energy System of the Siberia
Demand for capacity32,851.033,376.034,224.035,1635,4635,61835,772.0
Satisfying the demand37,783.638,328.538,747.539,289.539,539.539,777.539,837.5
Own surplus (+) deficit (-) of reserves4,932.64,952.54,523.54,129.24,079.64,160.04,065.5
Unified Energy System of the East
Demand for capacity6,944.07,397.07,536.07,627.07,757.07,918.08,234.0
Satisfying the demand10,762.411,268.911,238.911,171.911,422.911,422.911,422.9
Own surplus (+) deficit (-) of reserves3,818.43,871.93,702.93,544.93,665.93,504.93,188.9

1.1.2 Electricity and capacity market overview

Installed capacity of the world’s major peer group companies in 2016, GW, ГВт4

Installed capacity of the world’s major peer group companies

WMEP price and non-price zones

Ценовые и неценовые зоны ОРЭМ

1 – The first price zone;
2 – The second price zone;
3,4,5 – The non-price and isolated power systems.

The assets stock makes RusHydro Group a unique generating company in the world ranked the third among the world’s largest hydropower companies (in terms of installed capacity).

The wholesale electricity and capacity market within the territory of the Russian Federation is divided into the Wholesale market for electricity and power (WMEP) and Retail market for electricity and power (RMEP). According to the requirements of the legislation, all stations with installed capacity over 25 MW perform electricity sales on the WMEP. Stations whose capacity is 5-25 MW can choose to operate either on WMEP or RMEP.

The RusHydro companies operate on wholesale electricity and capacity market and on retail markets of electricity and heat.

The Company operates under such conditions when the industry is divided into price and non-price zones of the UES, as well as isolated power systems operating on the basis of regulated tariffs. The first price zone includes the territories of the European part of Russia and the Urals, while the second price zone includes Siberia. The WMEP’s non-price zones include: the Arkhangelsk and Kaliningrad Regions, the Komi Republic and the territories of the Far East, where the energy (capacity) wholesale is operated under special terms. The rules of the retail electricity markets apply on the territories of the country that are not united in price and non-price zones.

During 2016, all electric energy in the price zones of the wholesale market was sold by RusHydro Group companies at unregulated (market) prices, excluding energy to be supplied to population and equated consumers, as well as consumers in the North Caucasus and the Republic of Tuva. Within the retail markets, electric energy purchased at the Wholesale Electric Energy Market, as well as electricity of generating companies that are not participants of the wholesale market is sold to ultimate customer.

The companies of RAO ES of the East operate in the non-price zone of the Far East of Russia and in the isolated power systems. The prices are established on the basis of national rules and regulations on electricity and heat tariffs in the Russian Federation. The zone of free-of-control prices is absent in the Far Eastern Federal District.

Participants of WMEP and REMP

Participants of the Wholesale market for electricity and power (WMEP)Participants of the Retail market for electricity and power (REMР)
  • Generating companies and electricity sales organizations
  • Big consumers of electricity
  • Guaranteeing suppliers that have received the status of wholesale market entities
  • NP «Market Council”
  • Commercial operator and other organizations that ensure functioning of the commercial infrastructure of the market
  • Organizations that ensure functioning of the technological infrastructure of the market (Organization for the management of a unified national (all-Russian) electric grid, a system operator)
  • Consumers
  • Public utility service providers
  • Last resort suppliers
  • Energy sales and energy supply organizations
  • Electricity (capacity) producers in retail markets
  • Grid companies
  • Operational and dispatching management entities of the electric power sector, and exercising operational and dispatch management in retail markets (the system operator and operational and dispatching management entities in technologically isolated territorial electric power systems)
Протяженность надземных и подземных линий электропередачи и распределительных линий в разбивке по режиму регулирования

Length of overground and underground electricity transmission lines and distribution lines by control mode

Length of electricity transmission lines, km (in chains)
WMEP - controlled pricesRMEP- controlled prices
Оverhead power transmission line
110 kV8,035.7220 kV4,471.4
110 kV6,889.4
35 kV8,801.435 kV6,814.5
Underground power line
110 (10) kV40110 (10) kV1.6
35 kV83.535 kV2.8
Length of distribution lines, km (in chains)
WMEP - controlled pricesRMEP- controlled prices
Оverhead power transmission line
6 (10) kV20,532.86 (10) kV11,378.8
0,4 kV20,325.40.4 kV11,729.8
Underground power line
6 (10) kV1,224.26 (10) kV1,916.9
0,4 kV1,055.50.4 kV1,360.6

Number and installed capacity of transforming sub-stations

 Number of transforming sub-stations, pcInstalled capacity of transforming sub-stations, MVA
WMEP - controlled prices
110 kV2427,338.3
35 kV4654,318.8
6 (10) kV10,7273,411.3
RMEP- controlled prices
220 kV283,620.3
110 kV1404,563.3
35 kV3211,595.8
6 (10) kV9,2343,296.9

Thermal power market

The RAO ES of the East subsidiaries are participants of thermal power retail markets on their territories. In accordance with the Russian legislation, thermal power sale is fully regulated.

Prices (tariffs) for heat supplied by the power companies to consumers of all categories are approved by the executive authorities of the sub-federal units of the Russian Federation involved in the state regulation of tariffs on the basis of the tariff limit set by the Federal Tariff Service of Russia

Development of renewable energy sources

RusHydro Group considers the use of traditional and non-traditional renewable sources (RES) of energy as a priority of its business and steadily increases the installed generation capacity through construction of new hydroelectric power stations and commissioning of new energy generating capacities.

RusHydro was one of the first companies developing projects based on the use of RES (renewable energy sources) in Russia. Together with its subsidiary company RAO ES of the East, the Group develops such RES areas as solar, wind, geothermal energy and small hydro power plants. RusHydro’s Innovation Development Program names energy efficiency improvement via expanding the use of other RES (wind power and geo-thermal, etc.) as one of the Company’s strategic goals.

Read more about the RusHydro Group activities in terms of renewable energy sources in 4.4. Development of renewable energy.