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with Alexander Klimenko, General Manager, VTI (All-Russia Thermal Engineering Institute)

12.03.2013 / Energyboardroom

Mr. Klimenko, you have previously stated that the VTI enjoys a great standing in the Russian power sector. How would you describe this reputation?
In brief, the VTI is the largest institute in the Russian power engineering sector. We have 650 employes, while an average institute will have around 200 staff. Every project in the Russian power sector is somehow linked to the VTI. Established in 1921, the VTI was formed right after the approval of the GOELRO plan – the transliteration of the Russian abbreviation for ‘State Plan for Electrification of Russia,’ headed by Gleb Krzhizhanovsky. The Institute was founded to provide the technical and technological basis to implement this plan. Most particularly with regards to the thermal industry, everything is carried out by the VTI.
To develop modern technologies and equipment that for such facilities, we have a small experimentation power plant at the VTI of 10 MW. This allows us to produce in small what is then done on a larger scale in the plants.
As an Institute, we also enjoy a strong reputation abroad. On the one hand, we have the former Soviet States such as Ukraine, Belarus, Moldavia, Estonia, Kazakhstan, etc. which have always been and continue to be our partners. As we are united by a common history and language we do not really consider these partners as ‘foreign.’ On the other hand, we have our so-called ‘far abroad’ partners from countries such as Germany, Poland, Slovakia and China. Our foreign order portfolio, however, is still rather small whereas we are mostly needed here in Russia at the moment.

From a personal point of view, you have focused on energy efficiency for many years, acquiring a fair bit of expertise in this field. To what extent has the private industry understood the relevance of investing in the energy efficiency? Is the sector ready?
We commonly categorize three steps to power production: generation, transmission and consumption. The highest potential for energy conservation sits with the third step: consumption. It is where we can achieve the highest results in energy conservation. Both from a technical and return on investment perspective, consumption offers the greatest potential. Naturally, there are also opportunities to achieve greater efficiencies in the areas of transmission and generation.
Data on the efficiencies of coal- and gas-fired thermal plants of different countries of the world show an average of 33 percent for Russia, which is about a half of the best performing country. Thus, the potential to improve efficiencies in the generation phase is significant. The Adler CHPS in Sochi is a remarkable example of a very modern Russian plant with a coefficient of efficiency of 52 percent. All of the commissioning works on this plant were done by the VTI.
On the one hand, we face great potential to increase energy efficiency and have well-defined goals to do so in the government’s Energy Strategy 2030 document. On the other hand, we also understood that we need to achieve these efficiencies through modernization, most particularly as the average age and use of the equipment in Russia is too high today.

Which factors are contributing to the growth of the VTI? Does growth come from new projects in thermal generation or –perhaps– more from diversifying into new areas such as nuclear energy and the oil and gas sector?
Our main area of work is thermal energy, which in terms of our portfolio still accounts for roughly 60 percent. In 2021, the VTI will be 100 years old and we definitely want to have a clear understanding of where we are heading in the future. As part of this strategy, we have recognized that our knowhow is also needed in other areas.
Other areas of importance to us are oil and gas –where we are now working on agreements in Moscow and Omsk– as well as housing. President Putin has highlighted the importance of developing the heating grids, which are all centralized in Russia. According to the law, every city or village must have a scheme for the development of their heating systems as part of an overall sustainability plan for the city. This is a new area of work for us where we already have booked some success. Just a few days back, a scheme of centralijzed heat supply for Novosibirsk which has over one million inhabitants. For so big cities a scheme must be adopted by a special committee of the Ministry of Energy. VTI became the first which managed to develop such a project.
Another area we are looking at is renewables. Following recent events worldwide, I have changed my perception towards this field. The achievements of the US, Europe and China are truly surprising. I do believe that Europe can satisfy its demand using such alternative energy sources. While the situation in Russia is still different, it is also a fact that two thirds of the country does not have centralized heat and power. In Siberia and the Far East, renewable sources can bring great value.

You and your staff have quite an academic background, unlike many of the CEOs you deal with. They need to think of return on investment and justify their decisions to their shareholders. Do they look differently at energy efficiency?
While this does create certain issues, I personally consider myself lucky. After starting with the Institute, I subsequently worked at the Academy of Sciences and at the Federal Agency for Science and Innovation. Today, I am working in Applied Sciences. One could say I have tried both sides of the trenches.
In Russia, one of the main problems to innovation is the financing of science and scientific progress. Today, only 30 percent of funding comes from the private sector while 70 percent comes from the national budget. In most other countries, the opposite is true.
At present, there is however a positive trend of an increased interest of generation companies towards innovation. The second largest owner of generation assets in Russia, INTER RAO UES, has created a special scientific fund. This fund is now both being used to address more pressing issues, such as increasing revenues and reliability, as well as issues that look ahead into the future, such as carbon capture and storage (CSS) projects.

The Russian President has also stressed the importance of bringing in foreign technologies to modernize the Russian power sector. What is your view on this?
One of mistakes previously made in Russia has been the lacking attention given to manufacturing gas turbines of large capacity, i.e. higher than 100 MW, in Russia. For such capacity, we have always been forced to resort back to turbines produced abroad. Now, there are mutually beneficial partnerships to bring such production to Russia. INTER RAO UES has such partnership with General Electric for instance. In the heat and power sector today, Russian companies are fully competitive. Interautomatika is a great example of how we work here. This company is now a leading supplier in automation management systems for plants and boilers. Two major founding shareholders in this company are VTI and Siemens.

Beyond individual equipment and facilities, there is also the bigger picture of creating so-called ‘smart cities.’ Is Russia ready for these and if so, can VTI play a role?
VTI is not directly involved in taking power to the new level as it is often described in the ‘smart city’ concept. We are more focused on heat related equipment. We can however play a role when it comes to fluctuations in electricity production capacity. Hydropower capacities are insufficiently present and nuclear plants are not allowed to change their output. That´s why the heat plants that need to do all the work and this is where we come into play. This is where we can give recommendations and advice to reduce losses.
Most people also talk about smart grids in terms of electricity, but it is worth noting that similar concepts are very applicable to thermal grids too. Other countries like Finland, Sweden and Denmark have similar systems. Because of the many twists and turns in the pipeline network, the losses in hot water transportation are similar to the losses we face when transmitting electricity. This has led to the idea that smart grid technologies can also be applied to heating grids. We already have some of our staff looking into such developments and by 2021 –when the Institute celebrates it´s centenary we will have expanded our capabilities into this area. Since Soviet times, Moscow has had the first centralized combined heat and power plant with the help of the VTI. If we were the first to do that, we certainly believe we can be the first in developing smart grid heat supply.

Do you have a last message to add?
All people working in supplying humanity with energy are given a great responsibility. These people should recognize the importance of what they do and put all other factors –such as revenues– into perspective. Through international partnerships, we can even advance better. At VTI, we definitely welcome everyone



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