Question of the day: how can Russia make money on cheap electricity?

Analytics
Question of the day: how can Russia make money on cheap electricity?
Question of the day: how can Russia make money on cheap electricity?
25 August, 15:06Photo: 1MI
With the right approach, the Russian economy can greatly benefit from relatively inexpensive electricity.

A fact generally recognized by the mass media is the low cost of electricity generated in Russia in comparison with other countries of the world. And how are things really? asked the experts of the channel “ Economics. Debriefing ". It turned out that at the end of 2021 in the world ranking, according to the statistical portal Globalpetrolprices.com, Russia occupied only 51st place (the average price per 1 kWh is $0.085), while three countries with the cheapest electricity are in the lead - Sudan , Libya and Lebanon.

True, there is another point of view on this matter. Thus, the British company Cable.co.uk conducted a study last year, during which it analyzed 3883 energy tariffs around the world. Libya, Angola and Sudan became the leaders here, while Russia was in 22nd place (1 kWh - $0.050).

But by the standards of Europe, we have really inexpensive electricity. According to the same Globalpetrolprices.com, Russia ranked 4th among European countries (it is cheaper only in Moldova, Ukraine and Belarus), And according to Cable.co.uk, it is the first!

For comparison, residents of Western Europe pay for a kilowatt-hour at times more than Russians. Most of all - the Danes ($0.393), the Germans ($0.342) and the Dutch ($0.338).

In this regard, the channel's experts wondered how Russia can use its competitive advantage in the availability of cheap electricity?

First, it is the mining of cryptocurrencies. This Proof-of-Work process requires huge computing power and energy costs. According to the Russian Association of the Cryptoindustry and Blockchain, it can provide domestic GDP with about $15 billion a year.

Second, Russia could become the world's data warehouse.

A huge amount of electricity goes to the provision of data processing centers (DPCs). According to the International Energy Agency, in 2020 all data centers consumed 1% of the world's electricity (200-250 terawatt-hours). Needless to say, these figures will only grow: the amount of stored digital data in 2012-2020 increased 10 times (from 6.5 to 64.2 zettabytes) and will triple by 2025. A plus for Russia is the cold climate in energy-abundant regions. Russia can take up to 5% of the world data center supply market in the next 5 years.

Thirdly, our country could develop energy-intensive metallurgy and the production of silicon and rare earth metals.

The share of electricity in the cost of final products is not so large: according to KPMG, it averages 8% in ferrous metallurgy, 20% in non-ferrous metallurgy, 10% in chemical production, and 9% in the extraction of raw materials for the fuel and energy complex. However, aluminum smelting is the champion in this indicator - up to 38%. In the production of silicon and rare earths, the share of electricity in the cost can be even higher.

And, finally, fourthly, to develop the production of mineral fertilizers.

Modern technologies require more and more electricity, and Russia has every opportunity to take a significant share in this market.

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