E.ON enters Russian power market

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E.ON and Russian energy company STS have founded a joint venture called E.ON-STS Energia in Tyumen in western Siberia, with each of the partners owning 50 per cent.

STS has a number of shares in power generation and distribution. STS supplies electricity and gas to about 1.1 million customers in western Siberia. E.ON operates several power plants in Europe and has extensive experience in liberalised energy markets.

STS intends to transfer some of its own generating capacity into the new joint venture. In order to expand its market presence in the region, E.ON-STS Energia will take part in the privatisation of power producer TGK-10. Plans call for STS to transfer some of its generating capacity to TGK-10 before the joint venture acquires a majority in the company. TGK-10 intends to build about 1,000MW of new generating capacity over the medium term.

Russia’s electricity market is one of Europe’s largest and fastest growing, with an annual growth rate of 5 to 6 per cent. The very low thermal efficiency of Russia’s existing power plants will make it possible to achieve significant efficiency enhancements that will also help protect the earth’s climate. E.ON’s long-term objective is to establish a strong position in Russia’s fast-growing industrial regions in the Urals, western Siberia, Volga, and central Russia.