Belarusian Energy: expensive and inefficient

Implementation of investment projects, targeting at Belarusian energy system modernization, during the past five years managed to reduce the Belarus’ power grids depreciation from 61% to 48%. Belarus’ energy system state is far from satisfactory and as discussed at a meeting at the Presidential Administration on April 16th, modernization investments are ineffective.

The national economy is no longer able to fund the power grid’s modernization – half of the funds are provide by foreign creditors. Funds are often spent inefficiently. De facto, during the meeting at the Presidential Administration, facts of embezzlement of funds for Berezovskaya GRES (Brest Region) modernization were discussed.

Belarus’ energy system main modernization partners are Russia and China. The agreement with China for a USD 2.5 billion loan by 2015 for the construction and reconstruction of power objects in Belarus is negotiated. Apart from the NPP construction, other important energy investment projects include: construction of combined cycle power plants in the Lukolm and Bereza, 400 MW capacity each.

Despite the modernization program and significant amounts allocated for the energy modernization needs, the power system development in Belarus is not satisfactory. Belarus suffers from the overwhelming traditional production capacity, depreciated infrastructure, the dominant focus on gas, and from having only one energy supplier, Russia.

Alternative energy is underdeveloped, so are plans for its development. Thus, in the Gomel region there is only one biogas plant, and plans to build only two solar parks. In Vitebsk region hydropower is the most developed and there are plans to build four more hydropower plants on the river Western Dvina. Mogilev region runs one biogas complex, several wind farms and one hydropower plant and there are plans to install new windmills.

Gas prices in the regions are the lowest, while electricity tariffs are the highest for industrial enterprises, which affects their profitability. For example, since 2010, Minskenergo operates at a planned loss and needs serious subsidies. Formally, this is due to the increase in energy prices. According to Belenergo, over the past 6 years gas prices in dollar terms (95% of all fuel used in the power system) increased by 3.9 times. Simultaneously, energy tariffs for industries only doubled, and decreased for the population by one-fourth (thermal energy prices for the population actually reduced by 2.7 times).

Belarusian energy system (Belenergo) comprises of six regional republican unitary enterprises – Brestenergo, Vitebskenergo, Gomelenergo, Grodnoenergo, Minskenergo, and Mogilevenergo. The installed capacity of the power system on 1 January 2013 was 8367 MW, Belenergo’s generation power is up to 28.05 billion kW / h, and the heat supply – 26.37 million Gcal.