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Would Russian solar energy projects be feasible independent of state subsidies?

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Listed:
  • Gordon Rausser
  • Galina Chebotareva
  • Wadim Strielkowski
  • Lubos Smutka

Abstract

This paper explores the critical question of the sustainability of Russian solar energy initiatives in the absence of governmental financial support. The study aims to determine if Russian energy companies can maintain operations in the solar energy sector without relying on direct state subsidies. Methodologically, the analysis utilizes established investment metrics such as Net Present Value (NPV), Internal Rate of Return (IRR), and Discounted Payback Period (DPP), tailored to reflect the unique technical and economic aspects of Russian solar energy facilities and to evaluate the influence of sector-specific risks on project efficiency, using a rating approach. We examined eleven solar energy projects under ten different scenarios to understand the dynamics of direct state support, exploring variations in support cessation, reductions in financial assistance, and the projects' resilience to external risk factors. Our multi-criteria scenario assessment indicates that, under the prevailing market conditions, the Russian solar energy sector is not yet equipped to operate efficiently without ongoing state financial subsidies. Interestingly, our findings also suggest that the solar energy sector in Russia has a greater potential to reduce its dependence on state support compared to the wind energy sector. Based on these insights, we propose energy policy recommendations aimed at gradually minimizing direct government funding in the Russian renewable energy market. This strategy is designed to foster self-sufficiency and growth in the solar energy sector.

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  • Gordon Rausser & Galina Chebotareva & Wadim Strielkowski & Lubos Smutka, 2023. "Would Russian solar energy projects be feasible independent of state subsidies?," Papers 2312.07240, arXiv.org.
    • Handle: RePEc:arx:papers:2312.07240
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    References listed on IDEAS

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    1. Galina Chebotareva & Manuela Tvaronavičienė & Larisa Gorina & Wadim Strielkowski & Julia Shiryaeva & Yelena Petrenko, 2022. "Revealing Renewable Energy Perspectives via the Analysis of the Wholesale Electricity Market," Energies, MDPI, vol. 15(3), pages 1-19, January.
    2. Galina Chebotareva & Inna Čábelková & Wadim Strielkowski & Luboš Smutka & Anna Zielińska-Chmielewska & Stanislaw Bielski, 2023. "The Role of State in Managing the Wind Energy Projects: Risk Assessment and Justification of the Economic Efficiency," Energies, MDPI, vol. 16(12), pages 1-26, June.
    3. Kozlova, Mariia & Collan, Mikael, 2016. "Modeling the effects of the new Russian capacity mechanism on renewable energy investments," Energy Policy, Elsevier, vol. 95(C), pages 350-360.
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