1.2.

RusHydro Strategy

Стратегия РусГидро

1.2.1. The Company’s mission and values

The Company’s mission is an efficient use of water resources to ensure reliability of Russia’s Unified Energy System (UES), as well as creation of favourable conditions for the social and economic development of the Far Eastern regions by providing reliable access to energy infrastructure for the existing and prospective consumers.

The Company’s values

Clean energy – environmental safety and respect for natural resources.
Engineering culture – safe and reliable operation of the assets.
Prosperous society – reliability and infrastructure development, sustainable use of water resources, development of the hydro generation potential and expanded use of renewable energy sources that promote development of the territories, economic growth and increase in welfare and prosperity of society.
Responsible business – social policy that supports personnel and residents of the regions where the Company operates.
Leading company – ensuring the Company’s success and leadership by combining efforts of the personnel, resources and business components in the pursuit of excellence in every activity.
Unified team – fair remuneration and development opportunities for employees to achieve the Company’s competitive advantages in different areas of its activity (team spirit, self-expression and personal fulfilment for each team member).
Developing environment – new technologies and unlimited development opportunities.
Young energy – professional development of the Russian youth when still at school.

1.2.2. The Development Strategy of RusHydro Group for the period until 2020,
with a perspective up to 2025

In June 2016, the Board of Directors of PJSC RusHydro approved the Development Strategy of RusHydro Group for the period until 2020, with a perspective for up to 20255. The Strategy was developed in accordance with the following documents:

  • Concept of the long-term social and economic development of the Russian Federation until 2020;
  • National Security Strategy of the Russian Federation;
  • Long-term forecast of Russia’s economic development until 2030;
  • Draft Energy Strategy of Russia until 2035;
  • Scheme and program of development of the Unified Energy System of Russia for 2015 – 2021;
  • General layout of electricity generation facilities’ locations until 2020;
  • Regional social and economic development strategies and regional energy strategies;
    Sector strategies.

The new Strategy defines the goals and development directions for the entire RusHydro Group. In 2016, the development of the Far Eastern regions became a new priority strategic goal.

strategic-goals

In accordance with the Company Strategy, specific tasks were formulated for the goals achievement. Some tasks serve simultaneously several goals, other serve just one of them. For example, the task «Human resources management» is aimed at achieving all goals, but the task «Operating efficiency and transparency» is aimed only at achieving the Company’s value growth.

Interrelation of strategic goals, objectives in principal activities, measures and key indicators of the Strategy

Interrelation of strategic goals

Key points of growth

Key points of growth

Strategy implementation mechanisms

The Company has introduced a strategic management system that links the processes of strategic management with the motivation system. The system is formed taking into account the recommendations of the Federal Agency for State Property Management for the development of key strategic documents6.

The main Strategy implementation tools are the Long-Term Development Program of RusHydro Group and the Strategy Implementation Plan, which include Company’s development priorities as well as annual tasks and indicators aimed at achieving the Company’s strategic goals.

STRATEGY

Long-Term Development Program (LDP)

Business plan and development programs in key areas
(Investment Program, Innovative Development Program, Production Program)

The KPI and motivation system

The Development Strategy of RusHydro Group and the Energy Strategy of the Russian Federation for the period until 2035

Long-Term Development Program of RusHydro Group is based on the Energy Strategy project of the Russian Federation for the period until 2035, in whose development PJSC RusHydro has taken an active part. The central element of the national strategy is the transition from resource-based to resource-innovative development of the fuel and energy complex. A particular emphasis is made on the need for deep and comprehensive modernization of the fuel and energy complex in Russia.

The tasks outlined in the Energy Strategy of the Russian Federation for the period until 2035, and RusHydro’s contribution to their achievement

Sector wide task

RusHydro measures and projects

Electric power and heat power industry

Decommissioning of economically inefficient, obsolete power equipment with the introduction of a necessary amount of new capacities, mainly based on the use of domestic technologies and equipment, together with keeping priority of electric and thermal energy generation in a combined modeThe HPP Complex Modernization Program, technical re-equipment and reconstruction (TP&R) Read more in 2.4 Modernization, technical upgrade and reconstruction
Modernization and development of the Unified Energy System of Russia (UES) with the consequent inclusion of the unified power system of the East and a number of isolated power systems (taking into account possible technical and economic consequences) while ensuring reliability of electricity supply in combination with the systems intellectualization«Far East power development» is one of the Group strategic goals.
In 2016, by increasing the charter capital of the Company, funds to refinance current loan obligations of the Far Eastern energy sector were attracted
Optimizing the structure and loading the electricity and heat generating capacities by types of generation (taking into account the equipment manoeuvrability) and types of energy resources used as the basis for improving the structure of the fuel and energy balance of the country and regionsAn important part of the Company’s Investment Program is the increase in hydro generating capacities

Non-conventional renewable energy sources

Introduction of new generating capacities, functioning on the basis of non-conventional renewable energy sources under condition of their economic efficiencyOver the past five years, the Group put into operation 16 solar stations with the capacity of 1.47 MW and three wind plants with the capacity of 2.2 MW in Yakutia
Development of the domestic scientific and technical base and mastering of the advanced technologies in the field of the use of non-conventional renewable energy sources, increase in production of the main generating and auxiliary equipment for non-conventional renewable energy sources in RussiaAmong the RusHydro innovation projects, there is development, implementation and research of the multifunctional complex efficiency that provides 100% of the energy supply of the village of Verkhnyaya Amga of Aldan ulus on the basis of renewable energy sources

1.2.3. RusHydro Group’s Long-term Development Program

Долгосрочная программа развития

Long-Term Development Program is a key tool in the vertical system of strategic planning in companies with State participation. The RusHydro Group Long-Term Development Program for the 2016-2020 (hereinafter referred to as LDP) is aimed at improving the Group’s efficiency and upgrading the governance system by the Russian Federation, the major shareholder of the Company.

The LDP7 for 2016-2020 is drawn up in accordance with the instructions of the President of the Russian Federation8 and the Government of the Russian Federation9 and approved by the decision of the Board of Directors of PJSC RusHydro. LDP is formed on the basis the Development Strategy of RusHydro Group for the period until 2020 with a perspective for up to 2025, the consolidated RusHydro Group Business Plan and the program documents of RusHydro Group (PJSC RusHydro and PJSC RAO ES of the East): production programs, investment programs, innovative development programs.

The LDP defines the main principles and directions that ensure an effective development of RusHydro Group. The document contains proposals to improve the PJSC RusHydro’s operating and investment efficiency, and competitiveness of PJSC RAO ES of East Holding. The LDP also includes measures to enhance corporate governance management, human resources management, the systems of antiterrorist, information and economic security and development of international activities. Moreover, the LDP contains risk analysis of measures implementation, key performance indicators and the methodology for calculating and evaluating KPIs of the LDP.

The goals of the LDP coincide with the goals of the Development Strategy of RusHydro Group for the period until 2020 with a perspective for up to 2025. The key priority areas of development and goals are:

  • development and improvement of the management efficiency in production and technological complexes;
  • investment policy and change of the approaches to an investment program development;
  • enhancement of the effectiveness of the Far East asset management system and development of the power system in the Far East;
  • increase in operational efficiency and transparency of activities;
  • development of the human potential.

Control of the LDP implementation is carried out in accordance with the Standard for control of the LDP implementation10 and the Technical task for conducting an audit of the LDP implementation11. The functional specification for the program control is prepared taking into account the approximate functional specification developed by the Ministry of Economic Development of Russia. Based on this standard, since 2016, the independent auditor has been checking the program implementation on an annual basis.

Key performance indicators

The system of key performance indicators (hereinafter referred to as KPIs) of PJSC RusHydro is aimed at enhancement of efficiency of the Company’s performance and achievement of the goals set by the shareholder, and includes the indicators in accordance with the LDP and Business Plan for the year of 2016.

The KPIs of PJSC RusHydro includes seven annual KPIs: four financial and economic indicators, two sectoral ones and an integrated KPI for innovation (Read more
in 3.3.1. Innovative development management). In 2016, all KPIs were fulfilled, except one – «Fulfilling capacity commissioning timetable and plan for finance and disbursement».

KPIs of the LDP of RusHydro Group include 10 indicators, among them there is prevention of accidents at work and maximum number of accidents in RusHydro Group, purchase share from small- and medium-sized business entities.

Read more about the key performance indicators in RusHydro Group, PJSC RusHydro and RAO ES of the East in the 2016 Annual Report of PJSC RusHydro.