Utilities - Results of Modernization and CSA Renewables Tenders
Yesterday, the System Operator disclosed the preliminary results of the modernization tender for 2026, while ATS disclosed the results of the CSA for the renewables tender for 2023-24. The results of the modernization tender have yet to be approved, nor have the capex figures been disclosed. But based on the data, InterRAO and Unipro now seem to be the main beneficiaries of the modernization tender selection for 2026, although we do not expect this to drive any major market reaction. TGK-1 and RusHydro managed to get several small HPP projects, but given the limited potential EBITDA impact, we see this as only a minor positive factor (though the magnitude is a bit higher for TGK-1). > InterRAO, SGK and Unipro received most of the modernization contracts. The preliminary list of modernization projects selected for 2026 contained 15 projects with total installed capacity of 3.8 GW. InterRAO got five projects for 46% of the total capacity selected; Unipro got 22% with one project. The rest was split among other players, with SGK being the main recipient (six projects for 22% of capacity).> Modernization projects becoming more expensive. The data on key parameters (such as capex) has not been released yet, but based on the efficiency criteria (LCOE), the projects were more expensive than in the previous tenders. Seven projects out of 15 selected during the tender for 2026 are now the most expensive in terms of LCOE among all the modernization projects selected via tenders for 2022-26; the lowest LCOE for 2026 was R1,797/MWh, slightly above the median for projects selected for 2022-25.> Small HPPs to be built by RusHydro and TGK-1. The results of the tender for CSA for renewables was also announced yesterday. Rosatom structures received all the wind farm projects for 2023-24 (192.5 MW), RusHydro got contracts for two small HPPs (10 and 19.1 MW, total capex of R5.6 bln). TGK-1 got a CSA contract for one small HPP (16.5 MW, total capex of R3.2 bln).> Stock implications. We see the implications for InterRAO and Unipro as rather limited, owing to the lack of details and quite distant impact on cash flows of the modernization projects to be launched in 2026. The impact from the small HPP CSAs for RusHydro and TGK-1 are also limited to less than 1% of EBITDA and roughly 2% of EBITDA, respectively, and are therefore unlikely to change the investment cases.PJSC RusHydro is a hydro-generating company based in Russia. Co. is engaged in the generation and sale of electricity and capacity on the Russian wholesale and retail markets, as well as generation and sale of heat energy. The main activity of Co. is production of power from renewable energy sources, developing power generation using water flows, tidal, wind and geothermal energy. It has an installed electricity generation capacity of 38.5 GW; and heat capacity of 16.2 GCal/h.
Inter RAO UES PJSC is a functioning operator of electricity exports and imports in the territory of Russia. Co. represents the interests of two Russian power sector participants: RAO UES of Russia and Rosenergoatom concern, which possess 60 and 40% of the shares respectively. Co. is engaged in arranging transboundary electricity supplies, to provide both domestic and foreign consumers with electric power. Co. is also engaged in pursuing effective investment activities. Co. is developing several areas of activity, including: electric power export and import supplies; electricity sales in home and foreign markets; investment activities; and foreign asset management.
Territorial Generating Company - 1 is a producer of electricity and heat energy in the North-West region of Russia. Co. incorporates generating enterprises from the Baltic Sea to the Barents Sea. Generated electricity is delivered to the domestic wholesale market of electricity and capacity as well as exported to Finland and Norway. Co. is a strategic supplier of heat energy in Saint Petersburg, Petrozavodsk, Murmansk, Kirovsk in the Leningrad Oblast, and Apatity in the Murmansk Oblast.
E.ON Russia is engaged in the wholesale electricity market, it produces and sells electric and heat power. As of Dec. 31, 2012, the structure of Co. includes five heat power plants with the total installed capacity of 10,345 MW/2,125.9 Gcal/h: Surgutskaya GRES-2 (Khanty-Mansi Autonomous Area, Tyumen Region), Berezovskaya GRES (Krasnoyarsk Territory), Shaturskaya GRES (Moscow Region), Smolenskaya GRES (Smolensk Region) and Yaivinskaya GRES (Perm Territory).
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
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