IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v154y2015icp970-986.html
   My bibliography  Save this article

Pain without gain? Reviewing the risks and rewards of investing in Russian coal-fired electricity

Author

Listed:
  • Gorbacheva, Natalya V.
  • Sovacool, Benjamin K.

Abstract

Coal use—and thus investment—is expected to grow considerably in the Russian Federation over the next few decades. Projections suggest that at least $200 billion of investment will be needed to modernize existing coal-fired power plants by 2030, but the bulk of this financing is to come from the private sector or foreign enterprises. This study asks: what are the possible investment risks and rewards of pursuing this expansion of coal in the Russian power sector? To provide an answer, the study uses a mixed methods approach consisting of elite semi-structured interviews and a review of English and Russian peer-reviewed literature. The study provides a brief overview of the Russian electricity sector before discussing five distinct rewards to investing in coal such as low production costs, competitive returns on investment, rural modernization, expansion of exports, and the acceleration of innovation. These benefits however are offset by five risks: inferior performance to investments in oil and gas, development challenges, air pollution and climate change, social degradation from mining, and a tradeoff with existing policies incentivizing renewable energy and energy efficiency. The study concludes by analyzing what these disparate risks and rewards mean for policymakers and energy analysts.

Suggested Citation

  • Gorbacheva, Natalya V. & Sovacool, Benjamin K., 2015. "Pain without gain? Reviewing the risks and rewards of investing in Russian coal-fired electricity," Applied Energy, Elsevier, vol. 154(C), pages 970-986.
    • Handle: RePEc:eee:appene:v:154:y:2015:i:c:p:970-986
    DOI: 10.1016/j.apenergy.2015.05.066
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261915006996
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2015.05.066?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jennifer I. Considine & William A. Kerr, 2002. "The Russian Oil Economy," Books, Edward Elgar Publishing, number 2491, December.
    2. Engoian, Alda, 2006. "Industrial and institutional restructuring of the Russian electricity sector: Status and issues," Energy Policy, Elsevier, vol. 34(17), pages 3233-3244, November.
    3. Nathalie Trudeau & Isabel Murray, 2011. "Development of Energy Efficiency Indicators in Russia," IEA Energy Papers 2011/1, OECD Publishing.
    4. Douglas Cooke & Alexander Antonyuk & Isabel Murray, 2012. "Toward a More Efficient and Innovative Electricity Sector in Russia," IEA Energy Papers 2012/6, OECD Publishing.
    5. Alexandra Bratanova & Jacqueline Robinson & Liam Wagner, 2013. "New Technology Adoption for Russian Regional Energy Generation: Moscow Case Study," Energy Economics and Management Group Working Papers 4-2013, School of Economics, University of Queensland, Australia.
    6. James Henderson & Alastair Ferguson, 2014. "International Partnership in Russia," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-35227-9, September.
    7. Pittman, Russell, 2007. "Restructuring the Russian electricity sector: Re-creating California?," Energy Policy, Elsevier, vol. 35(3), pages 1872-1883, March.
    8. Andrei Shleifer & Daniel Treisman, 2001. "Without a Map: Political Tactics and Economic Reform in Russia," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262692694, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Le Thanh Tiep & Ngo Quang Huan & Tran Thi Thuy Hong, 2021. "Energy Efficiency: Determinants and Roles on Sustainable Development in Emerging Country," International Journal of Energy Economics and Policy, Econjournals, vol. 11(2), pages 7-22.
    2. Svetlana Ivanova & Anna Vesnina & Nataly Fotina & Alexander Prosekov, 2022. "An Overview of Carbon Footprint of Coal Mining to Curtail Greenhouse Gas Emissions," Sustainability, MDPI, vol. 14(22), pages 1-22, November.
    3. Stephenson, J.R. & Sovacool, B.K. & Inderberg, T.H.J., 2021. "Energy cultures and national decarbonisation pathways," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
    4. Skiba, Marta & Mrówczyńska, Maria & Bazan-Krzywoszańska, Anna, 2017. "Modeling the economic dependence between town development policy and increasing energy effectiveness with neural networks. Case study: The town of Zielona Góra," Applied Energy, Elsevier, vol. 188(C), pages 356-366.
    5. Maria Mrówczyńska & Marta Skiba & Anna Bazan-Krzywoszańska & Dorota Bazuń & Mariusz Kwiatkowski, 2018. "Social and Infrastructural Conditioning of Lowering Energy Costs and Improving the Energy Efficiency of Buildings in the Context of the Local Energy Policy," Energies, MDPI, vol. 11(9), pages 1-16, September.
    6. Gong, Xu & Wen, Fenghua & Xia, X.H. & Huang, Jianbai & Pan, Bin, 2017. "Investigating the risk-return trade-off for crude oil futures using high-frequency data," Applied Energy, Elsevier, vol. 196(C), pages 152-161.
    7. Klimenko, V.V. & Fedotova, E.V. & Tereshin, A.G., 2018. "Vulnerability of the Russian power industry to the climate change," Energy, Elsevier, vol. 142(C), pages 1010-1022.
    8. Zaman, Rafia & Brudermann, Thomas & Kumar, S. & Islam, Nazrul, 2018. "A multi-criteria analysis of coal-based power generation in Bangladesh," Energy Policy, Elsevier, vol. 116(C), pages 182-192.
    9. Yuan, Jiahai & Li, Xinying & Xu, Chuanbo & Zhao, Changhong & Liu, Yuanxin, 2019. "Investment risk assessment of coal-fired power plants in countries along the Belt and Road initiative based on ANP-Entropy-TODIM method," Energy, Elsevier, vol. 176(C), pages 623-640.
    10. Evgeny Lisin & Wadim Strielkowski & Evgeniya Krivokora, 2016. "Economic Analysis of Industrial Development: a Case of Russian Coal Industry," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 12(4), pages 129-139.
    11. Aleksei V. Bogoviz & Svetlana V. Lobova & Alexander N. Alekseev, 2020. "Current State and Future Prospects of Hydro Energy in Russia," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 482-488.
    12. Elizaveta Gavrikova & Yegor Burda & Vladimir Gavrikov & Ruslan Sharafutdinov & Irina Volkova & Marina Rubleva & Daria Polosukhina, 2019. "Clean Energy Sources: Insights from Russia," Resources, MDPI, vol. 8(2), pages 1-25, May.
    13. Bratanova, Alexandra & Robinson, Jacqueline & Wagner, Liam, 2016. "New technology adoption for Russian energy generation: What does it cost? A case study for Moscow," Applied Energy, Elsevier, vol. 162(C), pages 924-939.
    14. Zhang, Xiaochun & Myhrvold, Nathan P. & Hausfather, Zeke & Caldeira, Ken, 2016. "Climate benefits of natural gas as a bridge fuel and potential delay of near-zero energy systems," Applied Energy, Elsevier, vol. 167(C), pages 317-322.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kuleshov, Dmitry & Viljainen, Satu & Annala, Salla & Gore, Olga, 2012. "Russian electricity sector reform: Challenges to retail competition," Utilities Policy, Elsevier, vol. 23(C), pages 40-49.
    2. Hella Engerer, 2011. "Liberalization of Infrastructures in Russia," Chapters, in: Matthias Finger & Rolf W. Künneke (ed.), International Handbook of Network Industries, chapter 25, Edward Elgar Publishing.
    3. Avdasheva, Svetlana & Orlova, Yulia, 2020. "Effects of long-term tariff regulation on investments under low credibility of rules: Rate-of-return and price cap in Russian electricity grids," Energy Policy, Elsevier, vol. 138(C).
    4. Korppoo, Anna & Luukkanen, Jyrki & Vehmas, Jarmo & Kinnunen, Miia, 2008. "What goes down must come up? Trends of industrial electricity use in the North-West of Russia," Energy Policy, Elsevier, vol. 36(9), pages 3588-3597, September.
    5. Kapeliushnikov, Rostislav & Kuznetsov, Andrei & Demina, Natalia & Kuznetsova, Olga, 2013. "Threats to security of property rights in a transition economy: An empirical perspective," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 245-264.
    6. Mihaela NECULITA, 2018. "Trends of the Russian Economy in the World Economy," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 1, pages 104-109.
    7. Berkowitz, Daniel & DeJong, David N., 2011. "Growth in post-Soviet Russia: A tale of two transitions," Journal of Economic Behavior & Organization, Elsevier, vol. 79(1), pages 133-143.
    8. Marina Tsygankova, 2008. "Netback pricing as a remedy for the Russian gas deficit," Discussion Papers 554, Statistics Norway, Research Department.
    9. Chernenko, Nadia, 2015. "Market power issues in the reformed Russian electricity supply industry," Energy Economics, Elsevier, vol. 50(C), pages 315-323.
    10. repec:hhs:bofitp:2012_010 is not listed on IDEAS
    11. Tullio Buccellato, 2007. "Convergence across Russian regions: a spatial econometrics approach," UCL SSEES Economics and Business working paper series 72, UCL School of Slavonic and East European Studies (SSEES).
    12. Tullio Buccellato & Tomasz Marek Mickiewicz, 2007. "Oil and gas: a blessing for few hydrocarbons and within-region inequality in Russia," UCL SSEES Economics and Business working paper series 80, UCL School of Slavonic and East European Studies (SSEES), revised Feb 2008.
    13. Erdogdu, Erkan, 2011. "The impact of power market reforms on electricity price-cost margins and cross-subsidy levels: A cross country panel data analysis," Energy Policy, Elsevier, vol. 39(3), pages 1080-1092, March.
    14. Nadia Chernenko, 2013. "Market power issues in the reformed Russian electricity supply industry," Cambridge Working Papers in Economics 1358, Faculty of Economics, University of Cambridge.
    15. Berkowitz, Daniel & Hoekstra, Mark & Schoors, Koen, 2014. "Bank privatization, finance, and growth," Journal of Development Economics, Elsevier, vol. 110(C), pages 93-106.
    16. Gore, Olga & Viljainen, Satu & Makkonen, Mari & Kuleshov, Dmitry, 2012. "Russian electricity market reform: Deregulation or re-regulation?," Energy Policy, Elsevier, vol. 41(C), pages 676-685.
    17. Ananyev, Maxim, 2022. "Political economy of cross-border income shifting: A protection racket approach," Journal of Comparative Economics, Elsevier, vol. 50(4), pages 1087-1102.
    18. Nikolay Nenovsky & Yorgos Rizopoulos, 2003. "Extreme Monetary Regime Change: Evidence from Currency Board Introduction in Bulgaria," Journal of Economic Issues, Taylor & Francis Journals, vol. 37(4), pages 909-941, December.
    19. Nikolay Nenovsky & Yorgos Rizopoulos, 2004. "Measuring the Institutional Change of the Monetary Regime in a Political Economy Perspective (Groups of interest and monetary variables during the Currency Board introduction in Bulgaria)," William Davidson Institute Working Papers Series wp732, William Davidson Institute at the University of Michigan.
    20. Jae-Seung Lee, 2006. "Beyond New Markets: BRICs and Korean Diplomacy1," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 9(2), pages 0-18, June.
    21. Nikolay Nenovsky & Yorgos Rizopoulos, 2004. "Peut-on mesurer le changement institutionnel du régime monétaire ?," Revue d'Économie Financière, Programme National Persée, vol. 75(2), pages 17-36.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:154:y:2015:i:c:p:970-986. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.