Renewable energy sources

We believe that the development of the renewable energy sector is a long-term trend and that over time it could change significantly the face of the energy sector.

According to an IRENA report, renewable energy sources (RES) are being implemented globally at a rapid rate – installed generating capacity is growing by 20–30% per annum. The levelized cost of energy (LCOE) for wind and solar power plants is now near to that of traditional generation options.

After gaining experience in foreign projects in the solar and wind energy sectors in Bulgaria and Romania, LUKOIL is gradually expanding its presence in the clean energy projects market.

The main goals of LUKOIL Group in the sphere of renewable energy are:

  • Implementing effective projects as part of the state system for developing the renewable energy sector (an agreement to provide capacities by qualifying generating objects that operate using renewable energy sources).
  • Utilizing resources and competencies obtained in the course of fulfilling capacity-supply agreements in Russia and renewable-energy projects in Romania and Bulgaria.
  • The efficient utilization of free land plots belonging to LUKOIL Group entities.

The implementation of projects based on renewable energy sources is performed in two areas:

  • Satisfying the in-house needs of LUKOIL Group entities
  • The generation and supply of electrical energy to the grid

The plan to support capacity supply agreements based on renewable energy sources opens up opportunities to implement projects in renewable energy sectors in Russia: the level of investment risk is getting lower, thanks to the possibility of securing a return on investments through guaranteed payments. Requirements related to the degree of equipment localization and capital cost restrictions do present certain obstacles (for example, for solar power units not less than 70%). The manufacture of Russian components for the RES sector is only just beginning, hence choice is limited.

The Industrial Development Program for the "Electrical Energy" business sector includes proposals to build new solar power plants (SPPs) at unused sites at refineries in Saratov and Volgograd. Projects to build wind power plants can potentially be considered. The emergence of localized facilities to produce major power equipment in Russia would allow the Company to play a more active role in implementing renewable energy projects.

The Company has three SPPs erected at oil refineries in Bulgaria, Romania, and Russia, with a total capacity of 20.25 MW, as well as a wind power plant in Romania, with a capacity of 84 MW. Thus the total installed capacity in 2018 was 104.25 MW.

Total volume and share of electric power generated from renewable sources, million kWh
2016 2017 2018
Generation of electrical energy from renewable sources, including: 977.1 1,053.3 1,365.3
Wind power 200.8 228.5 192.3
Solar power 11.5 12.0 16.6
Hydropower 764.8 812.8 1,156.4
Volume of power generated by LUKOIL Group commercial generation facilities (net of supporting energy supply) 21,703.9 20,189.4 19,919.0
Share of electric power generation from renewable sources in the electrical energy generation volume by LUKOIL Group commercial generation facilities, % 4.5 5.2 6.9

Notes. The value presented in the “Total volume of power generated by commercial generation facilities” line item for 2016, 2017, and 2018 is shown inclusive of the data on the power supply complex at the ISAB S.r.l oil refinery.
Investments to develop renewable energy sources, RUB million

Notes. 1) The data for 2017–2018 relate to LLC LUKOIL-Ekoenergo and LLC LUKOIL-Volgogradenergo. 2) The increase in investment in 2018 was due to the cost of acquiring the solar power unit for the Volgograd refinery being attributed to the reporting year, as well as due to an increase in the cost of the Belorechenskaya HPP reconstruction.
Share of income from the sale of electrical power from renewable energy sources, %

Note. The indicator is calculated as the ratio of income received from the sale of electricity from renewable energy sources to the total amount of income received from the sale of electricity generated by commercial generation facilities of LUKOIL Group.

Largest solar park in the Netherlands

LUKOIL takes part in partner projects to develop renewable energy sources, in order to expand opportunities for increasing the generation of clean energy.

Hydropower sector

LUKOIL Group owns four hydropower plants, with a cumulative capacity of 290.5 MW. In 2018, a number of projects to renovate and upgrade HPP equipment, optimize the operating mode of hydraulic units, and enhance the overall reliability and efficiency of operations were implemented, including renovating the Belorechenskaya HPP, renovating hydro-mechanical equipment at the gas-turbine station at the Maykopskaya HPP, and upgrading equipment at the Tsymlyanskaya HPP.

Personnel training

In order to develop the renewable energy sector in Russia and supply it with highly qualified personnel, LUKOIL assisted in creating a specialized Department of Renewable Energy Sources at the I.M. Gubkin Russian State University of Oil and Gas.

In 2018, a training and exploratory trip to the Volgogradskaya Solar Power Plant was organized for students of the department. The students were shown the stages of the project’s implementation, from design to plant launch; installed equipment; and the special features of operating the facility. Following the trip, the students were able to put into practice at the university the theoretical and practical knowledge they had acquired.