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First geothermal energy project steams ahead in Russia; EBRD finances 'renewable' power production in isolated Kamchatka
The pristine Kamchatka Peninsula in Russia's far east, home to a wealth of
natural resources and wildlife, will receive a major boost to its energy
efficiency and environmental protection via a US$ 99.9 million (ECU 85.6
million) sovereign loan from the European Bank for Reconstruction and
Development (EBRD). The loan to the Russian Government will be on-lent to
Geoterm, a Russian company specialising in the design and operation of
geothermal power production facilities, and will finance a 40 megawatt
geothermal power station, the first 'renewable' energy project launched in the
Russian Federation.
Accessing one of the world's largest geothermal fields on the remote Kamchatka
Peninsula, the project will significantly increase local energy production, a
major regional concern as the peninsula remains unconnected to the Russian
power grid. Use of modern geothermal technology will also allow the region to
reduce its dependence on costly and highly polluting 'heavy fuel oils' for
power generation.
"Energy costs on the Kamchatka Peninsula, due to imported fuel and
individually operated diesel generators, are higher than in Western Europe,"
said the EBRD's Power and Energy Utilities Team Director, Ananda Covindassamy,
at a press conference in Moscow. "Yet Russia's first renewable energy project
has set multiple precedents for the entire Russian energy sector, namely
promoting environmental protection, reducing local energy costs, and
introducing commercial management and operation of a regional power utility."
The EBRD's loan to Geoterm will create the first Independent Power Producer
(IPP) in the Kamchatka region and finance construction of a power plant with a
total capacity of
40 megawatts, in addition to new steam turbine technology, and the drilling
and repair of production wells. Geoterm, a joint-stock company owned by RAO
EES Rossiya, the Kamchatka regional administration, and the private
engineering company, Nauka, will sell electricity to Kamchatskenergo, the
regional power distribution company. It is expected that the IPP structure and
commercial operation of Geoterm will facilitate future privatisation of the
company.
"This is a high-priority project for the Kamchatka region. To concentrate on
our most profitable industries, fishing, food-processing, ship-building and
tourism, we must reduce energy costs and maintain our greatest asset, a unique
environment. The EBRD and development of the Mutnovsky geothermal field will
propel us along that path," added Mr. Vladimir Biruikov, Regional Governor of
Kamchatka.
To date, the EBRD has invested more than US$ 2.5 billion in the power and
energy sector throughout eastern and central Europe and the former Soviet
Union, in addition to more than US$ 3 billion invested in other sectors in the
Russian Federation such as manufacturing, food production and financial
services.
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