1.4 Electricity and Heat Supplies

The Gazprom Group is one of the largest owners of the generating assets in the Russian Federation. The installed electric capacity of the Group’s companies (taking international assets into account) was 39.96 GW, and installed thermal capacity was 70,790 Gcal/h in 2018.

In 2018, the Power Energy Strategy of PJSC Gazprom for 2018–2027 was approved. The key strategic goal is to ensure sustainable profit growth while maintaining reliable power supply to customers. The Power Energy Strategy entails implementation of the projects aimed at building new and upgrading the operating generating facilities, as well as at decommissioning facilities, which operation is no longer feasible.

Power sector assets of the Group are managed by Gazprom Energoholding LLC that is one of Top 10 European electric power producers and the largest heat energy producer in Russia (supplying heat to about 20 million people).

In 2018, the Gazprom Group generated in the Russian Federation 151.5 billion kWh of electric power, which is 2.5% less than in 2017. That is driven mainly by minimizing the utilization of inefficient equipment of Gazprom Energoholding. Heat energy generation amounted to 131.25 million Gcal in 2018, which is 3.1% more than in 2017. Heat generation growth was driven by lower temperatures of open air in the regions of operations. Gazprom accounted for 14% of electric power generation in Russia in 2018, and for 10% in the total heat energy generation.

The total Gazprom Group’s electric power generation amounted to 153.19 billion kWh in 2018. The Group generated 1.69 billion kWh of electric power abroad (via its subsidiary, CJSC Gazprom Armenia, which owns the fifth power unit of the Hrazdan TPP, and via the NIS company in Serbia).

In the customer relations area, Gazprom Energoholding implements a set of activities aimed at improving quality and speed of service through identification of the customer requests and expectations. In 2018, a pilot project aimed at the customer satisfaction index assessment was implemented in the largest region of operations, Moscow, at one of Gazprom Energoholding entities. The survey covered at least 1% of the customers who highly appreciated quality and speed of service, completeness and accessibility of information, prompt updating of the web site sections, their convenience and user-friendliness. Since 2019, customer satisfaction monitoring shall be performed throughout Gazprom Energoholding.

Gazprom Energoholding Investment Program projects portfolio includes:

• investment projects under capacity supply agreements (CSAs);
• investment projects aimed at upgrading and renovation, as well as other projects out of CSA scope.

Investment projects aimed at construction of the generation facilities performed by way of discharging the obligations under the CSA are carried out by the Gazprom Group’s generating companies in furtherance of the Order of the Government of the Russian Federation “On Approval of the List of Generating Facilities to be Used to Supply Capacity under Capacity Supply Agreements”.

The total obligations of Gazprom Energoholding as related to commissioning/upgrading the generating facilities under CSAs will amount to 8.9 GW in 2007–2019 (that is 30% of the total obligations under the CSAs in Russia). The total cost of implementation of all projects under the CSAs is RUB 449 billion (including capitalized interests). As of the end of 2018, 98% of the total cost of the Investment Program was financed. The majority of the generating facilities were constructed using steamgas technologies.

By the end of 2018, 8.8 GW of the new generating facilities were commissioned (99% of the total obligations). In December 2018, the 1^st power unit of the Grozny TPP (176 MW capacity) was launched, covering the Chechen Republic’s demand for electric power to a large extent.

As the 2^nd power unit of the Grozny TPP is launched in 2019, implementation of the large-scale Investment Program to build new generating facilities under the CSA obligations would be completed. The total capacity of the new power plant will be 356 MW.

Upon completion of the projects under the CSA program, Gazprom Energoholding will proceed with implementation of activities and projects aimed at improving performance and ensuring secure operation of the generating facilities and the heat supply infrastructure.

The priority projects that are out of CSA scope are construction of the Svobodny TPP in the Amur Region (Russia) and the CHPP in the city of Pancevo (Serbia), as well as upgrading the equipment at the TPPs of Gazprom Energoholding based on the outcomes of competitive selection of the projects aimed at upgrading generating facilities of the TPPs.

Commissioning of the Svobodny TPP will ensure reliable electric power supply to the Amur GPP, and the Pancevo CHPP (Serbia) will supply electric power and heat to the Pancevo refinery (asset of NIS Company, that is a part of Gazprom Neft Group). The power plants shall be commissioned in 2020.

The Gazprom Group’s strategic priorities as related to electric power and heat energy business are as follows:

• Development of the optimal structure of production facilities;
• Performance improvement and cost optimization;
• Implementation of the projects aimed at building new and upgrading the operating generating facilities, as well as decommissioning of inefficient facilities (about 2 GW shall be decommissioned by 2022);
• Technological development (ensuring secure power supply to the Gazprom Group’s entities; import substitution and priority use of Russian equipment; increase of the share of innovative technologies in production activities);
• Diversification of electric power business by entering promising markets in Russia and abroad.