In the spring of 2014, the Russian occupiers transferred 13 mobile gas turbine power plants (hereinafter referred to as MGTPP) to Crimea with a total capacity of 292.5 megawatts. Delivery and installation were “paid from the federal budget”, and the supplier was the Moscow-registered Joint-Stock Company “Mobilnye gazoturbinnye elektricheskiye stantzii” (“Mobile Gas Turbine Power Plants”) (hereinafter referred to as “Mobilnye GTES”), which earned 2.37 billion rubles [1].

By the beginning of 2017, three sites were equipped for the operation of the MGTPP – “Sevastopolskaya”, “Simferopolskaya” and “Zapadno-Krymskaya” (“West Crimean”). The number of MGTPPs at them increased to 18, and the total capacity increased to 405 megawatts [2]. The invaders-controlled media have repeatedly stated that the deployment of MGTES in Crimea is supposedly a “temporary solution”, but later, having appreciated the benefits of this project, the invaders abandoned the “mobile” status of the installations and allowed them to “take root” [3]. Associate Professor Andrii Chvalyuk found out who benefits from keeping the MGTPP in Crimea and what consequences this may lead to.

On October 3, 2018, the Russian Ministry of Energy reported that “the Crimean energy system has ceased to be energy deficient” after “successful completion of a comprehensive testing of the generating equipment of the ‘Tavricheskaya’ and ‘Balaklavskaya’ thermal power plants and the Saki thermal power plant” [4]. It was planned that the launch of new combined cycle power plants in the Crimea was to cancel the “enforced generation regime” [5], which is regularly “extended by the federal government”. In January 2022, this “regime” was nevertheless canceled, although not for everyone, however, the Russian occupiers are in no hurry to take the MGTPP out of Crimea. Rather, on the contrary, they are developing a “regulatory framework”, thanks to which these installations can receive a “new status for the energy market”, a kind of “federal mobile power reserve”. So far, the increased “tariff” for MGTPP has been “extended” for 2022-2024, but if the “idea” succeeds, the beneficiary of the former “mobile”, and now “stationary” gas turbine power plants will be able to set the “increased forced tariff” in their favor indefinitely.

Usually, “enforced generation” status is given to thermal power plants that do not pay off in the market, but are needed for heat supply or the reliability of the power system. Such thermal power plants receive an increased tariff for capacity, and the burden for maintaining a forced generator falls on consumers [6], in our case, on the inhabitants of the Russia-occupied peninsula. Moreover, the status is usually given not to new, but to obsolete and inefficient stations. And since the occupiers decided to move away from the rules established by the laws of the market, it means that this is beneficial to someone. It remains to be seen – to whom.

“Mobilnye GTES” positions itself as allegedly “private joint-stock company”, but this is not so. Established on July 24, 2006 as a 100 % subsidiary of the open joint-stock company “United Energetic System of Russia”, it successfully survived the reorganization of the parent company in 2008 and it is now fully part of the Russia’s public joint-stock company “FGC United Enegretic System”, better known as Rosseti [7 ]. As it is indicated on the “Mobilnye GTES” website, at present the main fleet of mobile generating equipment is located “on the territory of the Republic of Crimea”, as well as “at Sevastopol and the Krasnodar Territory” [8].

Vladimir Sklyar from VTB Capital believes that, given the emergency nature of the capacity of the Crimea-located MGTPPs, they “obviously carry out a governing, public function”. In his opinion, “it would be logical to pay for their maintenance from the federal budget, and force consumers to pay the full price only for their actual usage” [6]. MGTPP are indeed created to eliminate the consequences of accidents, but they themselves are sources of danger. On September 20, 2014, as a result of a short circuit and subsequent fire, a complete mobile substation 110/10 kilowatts at the “Simferopolskaya” MGTPP was damaged and out of service, and in March 2016, a fire completely destroyed one gas turbine power plant at the “Zapadno-Krymskaya” MGTPP. We believe that installations fail precisely because they are not designed for continuous use, but the occupying “authorities” continue to actively exploit them.

According to Yaroslav Rykov, director of business analysis and market development at “OJSC Fortum”, a station operating in a forced mode, a priori, falls into the balance and displaces efficient generators from the competitive power take-off market. As a result, the most efficient and most competitive generators that have declared acceptable prices are forced to move in the market in favor of less efficient ones, losing profits and motivation to improve. In theory, new capacities should replace the old ones, but this does not happen and leads to the fact that investors are unwilling to invest in the construction of new power plants.

In addition, such a non-market mechanism as capacity supply agreements (CSA) operates on the market. The CSA establishes a guaranteed and higher (relative to the prevailing market price) cost of capacity for generating facilities listed in the list approved by the Russia’s Government. We add that this list includes new “generation facilities” built by the Russian invaders in the Crimea as a part of the “federal targeted program”. To date, CSA remains the only working mechanism for the “return and payback of investments”, Yaroslav Rykov believes [9]. Indeed, everything is going to the fact that Russian state corporations are squeezing out “private producers of electrical and thermal energy” from the energy market of Crimea. A powerful lobby in the Russia’s federal government leads to the adoption of regulations giving the right to such firms as “Mobilnye GTES” to set tariffs, that are impossible in market conditions. Now the “tariff” at which mobile stations sell electricity in the Crimea is twice as high as the “average market price” [10].

From January 1, 2022, the “veterans” of the Crimean energy sector, the “Simferopolskaya” (completely) and “Kamysh-Burunskaya” (by 50%) combined heat and power plants (CHPP), have suspended electricity production. These CHPPs are owned by LLC “Krymteploelektrotsentral” (“KrymTETs”), founded in 2003 by a subsidiary of the Ukrainian state joint-stock company “Chernomorneftegaz” and the open joint-stock company “Teploenergoresursy”. In 2013, Ukrainian “KrymTETs” became a public joint stock company, in which 62.77 % of the shares were transferred to the Cypriot company GASERMILL VENTURES LTD, and 37.23 % – to the Government of Ukraine. After the Russia’s occupation of Crimea begun, “KrymTETs” was illegally “nationalized” and “began to operate under Russian jurisdiction”, so since January 2021, “KrymTETs”, controlled by the aggressor State has become a “completely private company”.

“The shares were bought out” by the “Southern Energy Company”, the beneficiary of which is the Russian Peter Nidzelsky, one of the former Deputy Ministers of Energy of Russia, who is under Ukrainian and U.S. sanctions for his illegal activities in the Crimea [11]. The greed and pettiness of this man is well shown by the situation when one company of Peter Nidzelsky rented a “Mercedes-Benz S 500 Maybach” for several years from his other company, and this transaction was paid from the budget. Moreover, not a single participant of the tender commission paid attention to this [12]. However, the conversation now is not about him, but about what fate the Russian invaders, have in store for the Crimean energy complex. We assume that such invaders’ plan to “squeeze juice” from the Crimean energy sector will take place in three stages.

The first step is to eliminate “competitors”. There is no doubt that “Rosseti” wants to become “monopolists in the energy market”, so they will try to squeeze private individuals out of business. This is already facilitated by the mode of partial cancellation of “forced generation”. After “KrymTETs” completely stops the generation of electric and thermal energy at the “Simferopolskaya” and “Kamysh-Burunskaya” CHPPs due to unprofitability, the Russian occupiers will transfer even more MGTPPs to the Crimea. Taking into account the fact that the regime of forced generation has been extended for these units for the next two years, “Mobilnye GTES” and its parent company “Rosseti” will continue to receive increased profits at the expense of the population of the Crimea.

The reality of such a scenario is indicated by the fact that on September 23, 2021, the Russia’s Government Commission for Ensuring the Security of Electricity Supply, at its off-site meeting, titled “On the preparation of the subjects of the electric power industry and housing and communal services of the Southern Federal District for the passage of the heating season 2021-2022” made a remark to “Mobilnye GTES”, namely as allegedly “GTPP in the Republic of Crimea and the City of Sevastopol”, regarding low fuel reserves and gave a deadline for “eliminating this shortcoming” [13].

The second stage can go in parallel with the first and will begin with the announcement of new “tenders” for the modernization of equipment of obsolete Crimean thermal power plants. The last “tender” for the modernization of the “Simferopolskaya” CHPP for 6.5 billion rubles failed. The “commission” recognized the “request for proposals as invalid”, but since the only “bid met the procurement requirements”, it declared the Crimean company “Khimpromstroy” as the “winner”. This company, “registered” in 2016 in Saki is engaged in the construction of residential and non-residential buildings. The beneficiary is its boss Alexander Frolov, who is also a co-owner of the ‘Bansko’ company near Moscow and the beneficiary of the Nizhny Novgorod company ‘Instroy’ [14]. “Khimpromstroy” has been unprofitable for several years, but in 2020 it was still entrusted with “executing large amounts of work and disbursing large amounts of money.” There is still no information that this “enterprise” really “started modernizing the Simferopolskaya CHPP”, but there is a decision of the tax authorities dated December 17, 2021 to suspend “Khimpromstroy’s” operations on accounts [15].

Since local businessmen cannot cope, some larger firm, for example, the same “Krymenerho”, may participate in the tender. The already mentioned Russia’s Government Commission on ensuring the safety of power supply, recently recommended to the “government of Sevastopol”, together with the “government of the Republic of Crimea”, “Krymenerho” and “Sevastopolenerho” “to work out the issue of attracting JSC “Krymenerho” “for the implementation of the project for the reconstruction of the equipment of the Sevastopolskaya CHPP” [13]. Something tells us that these “recommendations” are de-facto ordered and they will be duly implemented by the occupiers and collaborators.

Successful disbursement of “budgetary funds” for the reconstruction of the Crimean CHPPs will mark the beginning of the third stage, in which the federal government will force the “government of the Republic of Crimea” to decide on the “inexpediency of further operation” of the “Simferopolskaya” and “Kamysh-Burunskaya” CHPPs, and on the “need to build another modern thermal power plant”. Talks about its construction have been actively underway since 2020, after the regulators of the Russia’s energy market found that by 2026 “the region of Crimea and Taman will need about 500 megawatts of new capacity” due to the commissioning of the facilities of the Black Sea Fleet and the so called “Crimean Railway” [16]. Incidentally, it is noteworthy that the Russian occupiers are planning to increase the energy intensity of the Crimea precisely within the framework of its militarization and the corresponding resource provision.

The Russian state corporation “VO Technopromexport”, a subsidiary of the “Rostec” corporation, has already built two thermal power plants in the occupied Crimea, the “Balaklavskaya” TPP, aka “Sevastopolskaya CCGT-TPP” with a capacity of 496.8 megawatts, and “Tavricheskaya” TPP, aka “Simferopolskeya CCGT-TPP”, with a capacity of 490.2 megawatts. Now “Technopromexport”, as a “manufacturer and wholesale market entity”, independently sets “tariffs” for electricity supplied to Crimean consumers. These “tariffs” increase every six months, and compared to 2019, they increased by 5.74 % [17]. There is no doubt that they will continue to grow, because “federal investment” should pay off. The affected party again turned out to be the population and business entities of the occupied Crimea. After all, the cost of electric energy for enterprises directly affects the decrease in profitability and the rise in the cost of the services and goods they produce.

As it is known, the price of electricity for consumers directly includes the cost of electricity, the transmission tariff, the distribution tariff, and the consumer can pay it independently or through a supplier. The only component of the formula by which suppliers compete with each other is the supplier’s margin [18]. At the moment, the only “guaranteed supplier” of electricity in Crimea is the “state unitary enterprise” “Krymenerho”. By eliminating it, the occupiers will have the opportunity to build an extensive scheme for the supply of electricity, when several intermediate links are introduced between the producer and the end consumer, consisting of “subsidiaries” and “separate branches” of the Russian operator of electrical networks “Rosseti”. Each such intermediate supplier receives the status of an “interregional distribution grid company” and the “legal right” to add its own margin to the current “tariff”, which is why the “tariff” rises.

How exactly the withdrawal of “Krymenerho” from the “electricity supply market” will take place, we outlined in our last article [19], and in the next one we will tell you how the fuel reserves of Crimea-located mobile gas turbine power plants are connected with the further aggressive plans of the Russian invaders.








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