Playing Hot and Cold: How Can Russian Heat Policy Find Its Way Toward Energy Efficiency?

Abstract

Executive SummaryThe Russian district heating market has a large energy-saving potential, and, therefore, need for investments. The scale of needed investments is significant and reflects decades of underinvestment: about 70 percent of the district heating infrastructure needs replacement or maintenance, as is estimated by the Russian government. Securing the necessary financing will require involving the private industry and creating favorable conditions for private investors. In addition, for private parties to invest in district heating facilities across Russia, and not only in pockets of already successful enterprises, regulators have to develop a comprehensive policy that incorporates cost-reflective tariffs, metering, incentives for efficiency, and social support for the neediest consumers (rather than subsidies for all).Russia's new legislation on district heating provides a strong basis for improvements in the sector. But many challenges remain to be addressed, especially when it comes to the practicalities of implementing the law.The biggest challenge for Russia's district heating policy has been the fact that tariff revenue does not cover the full costs of district heating. This has made it hard to modernize or even maintain district heating systems, which has led to growing inefficiency and service disruptions. This financial situation has also made it difficult to attract private investment and management. While tariffs that do not fully reflect costs are a major reason for revenue shortfalls, non-payments, or poor enforcement of payment discipline, is also a contributing factor. Both low tariffs and non-payments also reduce incentives for consumers to save.The second major challenge is the lack of accurate information on actual consumption, losses, and volume supplied. Introducing metering can help address this; the new law requires metering, and municipalities and district heating companies are working to implement it. Regulators, however, should ensure that metered data are incorporated into billing and planning. When norms and estimates are used, as has been customary in Russia, they often do not reflect the actual situation and fail to send the right signals to consumers and suppliers about their behavior and ability to improve efficiency of consuming or supplying heat. In situations when loss norms are lower than actual losses and metering is absent, losses tend to be passed to consumers and never addressed.The legislation takes courageous steps in addressing these two basic challenges; this is particularly important as other policy improvements hinge upon success in these areas. In parallel with more completely addressing these challenges, regulators can also continue improving the policy framework for district heating in several ways: Ensuring that suppliers have the opportunity to cover their costs through tariffs and can build in necessary replacement costs and investments. Social needs can be better addressed through social support and energy efficiency programs, not broad subsidies. Inc...

Technologies for mathematical and computer modeling to automate the process of operational states development for heat supply systems

“…Recently, the problems of energy efficiency have become increasingly relevant, and HSS have significant reserves of energy saving [27], which are caused by the nonoptimality of their operating states. Automation of solving of the problem of HSS states optimization is complicated by a number of factors: the large dimension of HSS [28], the nonlinearity of the involved flow distribution models, the need to take into account several objective functions, the presence of discrete variables of different types, etc.…”

Aggregation of distribution heating networks in the problems of hierarchical optimization of large heat supply systems

“…Energy efficiency problems are topical both in Russia and abroad, while heat supply systems (HSS) have significant reserves of energy saving [1], which can be released by organizing optimal modes of their operation. In practice, the task of planning HSS modes is solved by multivariate calculations of the mode [2].…”

Development and evolution of methods for optimizing the modes of heating networks

“…Both in Russia and abroad, energy efficiency problems are relevant, while heat supply systems (HSS) have significant energy saving reserves [1], which can be realized by organizing optimal operating modes. In practice, the task of planning HSS modes is solved by multivariate mode calculations [2], while the choice of methods for organizing the modes is assigned to the specialist performing the calculations, which does not guarantee the optimality of the obtained modes.…”