Energy

Martex Invest Ltd. and Energy and Gas Company ENECO, which is included in ITERA Group, invite partners to participate of Russian energy business development.

Energy and Gas Company ENECO owns about 70 boiler houses with the total power of 900 MW in Sverdlovsk region.

Currently our companies start realization of the Federal Target Program (FTP) "Complex program of the housing and communal services reforming and modernization for the period of 2010-2020" in cooperation with the state research organization "Council for studying of productive forces" under the Ministry of Economic Development of Russia and the Russian Academy of Sciences.

For cooperation in the scope of the program of housing and communal services reforming, we propose to set up the joint venture for the development of the following business activities:

Modernization of the communal energy facilities.
Local energy – erection of the local heat and power plants for industrial enterprises for their own expense.
Erection of the power plants operating on the renewable energy sources.

The backgrounds for communal energy facilities modernization

High specific consumption of fuel and electric power for heat energy generation, as well as extremely high production costs of heat generation and transportation .
Increased number of technogenic catastrophes.
Ecology problems.
High infrastructural costs due to the lengthy heat and power supply networks.
Excess of standard operation life of the equipment at the most of housing and communal services enterprises.
State guarantees for the investment projects to the amount of $14 billion will be granted by the Subjects of Russian Federation within the scope of Federal Target Program (FTP) "Complex program of the housing and communal services reforming and modernization for the period of 2010-2020" realization.

The following projects will be implemented within the scope of communal facilities modernization:

Heat supply network reconstruction.
Boiler plants reconstruction and transfer to cogeneration.
Transfer of the power generating plants to the local fuels. Russia has the biggest peat reserves and considerable forest resources in the world. New ecological technologies of traditional fuels (coal) incineration are being implemented at the power plants.

Local energy development backgrounds

Enterprises are interested in reduction of power supply services costs and ready to conclude long term contracts for power purchase.
Electrical power shortage is forecasted in Russia in the nearest future: in 2016 – 10 000 MW, in 2020 – 60 000 MW.
Rotational power cutoffs are possible due to the electric power shortage. Local heat and power plant will enable the enterprises to reduce power supply failures risks.

Currently high electric energy prices as well as terms of linking-up to the electric grid are the obstacles to the development of a lot of production projects.

This problem could be solved by means of erection of the local heat and power plants for the enterprises. The local heat and power plant allows to sell electric energy to the enterprise at a price which will be lower than the market one, owing to electric power generation cost price reduction due to exclusion of network and sales organizations from the “ producer-consumer” chain.

The most enterprises have no sufficient funds for the local heat and power plants erection. But if an investor is ready to invest heat and power plant construction, the enterprises will be ready to conclude long-term contracts (up to 25 years) on electric energy purchase at a price 5-10% lower than the market price and to rent out land for heat and power plant construction.

Our company has held negotiations with a number of enterprises which are interested in such projects and we have developed economic model of the local heat and power plants. The projects have high IRR (more than 25%) and high for the energy sector DPP (7,5-10 years from the beginning of financing).

Portfolio of potential energy projects of the company:

Customers	Power, MW	Cost, $ millions
OJSC "Severstal"	300	481
OJSC "NC "Rosneft"	80	117
OJSC "Asia-Cement"	140	234
OJSC "Kasanorgsintez"	250	394
Total:	770	1226

The potential local energy market of Russia is estimated as 10% of the rated power of all power facilities in Russia 209 GW - 20 GW.

Construction of power stations on the renewable energy sources

Russia possesses favorable conditions for the development of energy sector on the renewable energy sources. Russia is especially reach in wind energy resource, mainly on the continental shelf. A lot of coastal regions generate energy using diesel fuel due to the absence of federal electric grids. It results in high electric energy tariffs ($0,8 per kW). This value is 8-10 times higher than in the regions having federal electric grids ($0,1 per 0,14 kW).

In addition to that the average wind speed on the shelf is more than 6 m/sec. Implementation of wind generation is highly profitable in such regions and is repaid within 2,5 years in average (maps of wind, solar and geothermal resources of Russia).

At present we are on the threshold of the large reform, the scope of which is comparable to the power industry reform in Russia (the budget of the municipal modernization is approximately $140 billion). We propose you to take part in the development of the reform principles and in realization of the FTP projects "Complex program of the HCS reforming and modernization for the period of 2010-2020".