Russia prepares to spend billions on smart grid upgrades

Russia’s Federal Grid Company (FGC) has signed a deal with the New York-based battery maker Ener1 to find ways to use high-performance batteries to make the ageing Russian electrical grid smarter and more reliable.

Russia, the world’s fourth-largest electricity market, has seen record-setting demand for power. After two decades of deferred investment, the nation is now preparing to spend some $15 billion between now and 2012 to upgrade its utilities using smart grid technology and energy storage.

FGC owns nearly 120,000 kilometres (75,000 miles) of Russia’s power grid, which stretches across nine time zones.

“Compared to any of the alternatives, grid storage is a quick, highly cost-effective way to solve reliability and power quality challenges on any network, and especially one that is already operating at its limit,” said Charles Gassenheimer, CEO of Ener1. “Russia and other emerging markets have the opportunity to leapfrog the kind of systems that exist elsewhere because the need for innovative solutions is so acute, and their existing grids are already stretched thin. The ability to store energy to use where and when it’s needed is a big part of that.”

FGC hopes that smart grid technologies will help reduce electricity losses by 25 per cent, as well as reduce energy consumption by as much as 35 billion kilowatt hours per year — enough to save more than $1.6 billion annually.

FGC plans to pay for the grid upgrade through a 51 per cent increase in the prices it charges electricity generators.

“The Russian economy continues to experience unprecedented transformation, with an increasing share of it depending on reliable, affordable electric power,” said Oleg Budargin, CEO of FSG. “Energy storage is a fundamental element in our strategy to make a truly flexible smart grid a reality.”

Russian and US companies are also cooperating on energy efficiency and smart grid development through the bilateral Presidential Working Group formed last year by President Barack Obama and President Dmitry Medvedev. Co-chaired by US Energy Secretary Steven Chu and Russian Energy Minister Sergei Shmatko, the group is set to hold its next meeting in Washington, DC, next month.

Battery storage systems are viewed as a scalable and rapidly deployable way to provide power to Russia’s large, remotely located load centers, as well as to densely packed urban areas where demand for electricity has risen rapidly as the country’s affluence grows. In some areas, the power network hasn’t been improved since the Soviet era.

“These improvements are a high priority step in Russia’s efforts to build up a diversified high-tech economy that truly reflects the education and engineering talent that exist there,” Gassenheimer said, noting that the country is also gearing up to host the 2014 Winter Olympic Games. “That global spotlight has always been a major driver of new infrastructure investment.”