The power consumption of the Russian economy, expressed in tons of oil equivalent per capita, and is generally comparable to the power use in France, Germany, and the U.S. However, in view of the economic benefit factor, Russia’s GDP size, and adjustments for purchasing power parity, Russia must use 2.6 times more energy than France, 2.9 times more than Germany, and 1.9 times more than the U.S.

The energy intensity of the Russian economy is superior to that of China by 25 percent, despite China’s rapidly growing real economy. According to the draft of the state program Energy and Energy Efficiency in the Years 2013-2020, about USD1 trillion will be invested for the modernization of Russia’s energy sector (RUR28.653 trillion). As a result, energy intensity should be reduced 26.5 percent by 2020, provided that the structural, product, and price changes take place.

The high energy intensity of the Russian economy is due to a number of factors. Among these are harsh climatic conditions, the high percentage of wear-affected power equipment, and the complexity of interaction between the economic centers of the country that is attributable to their distance from each other. A significantly factor is the high share of industrial activity in Russia’s energy consumption with the share of 44.5 percent (excluding electric power). In recent years, this figure has shown steady growth. Further, a share of 20 to 30 percent of industrial electricity consumption is attributable to the heavy electricity use segments of the industry, including metallurgy and mechanical engineering. An important factor is the lower share of services (excluding transport and communication) in Russia’s GDP composition. Compared to 60-70 percent in the GDPs of the developed market economies, services account for only 40-45 percent of the Russian economy.

The modernization program provides for commissioning equipment with generating capacity of over 76 GW, as well as for decommissioning 26.4 GW of old capacity. The modernization program will have a tremendous impact on the market for engineering services because it will be the engineering companies that will ultimately commission the new capacity. In the next eight years, a record volume of capacity is planned to enter service. As such, companies in the engineering sector will have to take on additional projects and responsibilities. According to an industry survey conducted through INFOLine, the schedules of large engineering companies have been booked until 2016, even as they account for only 40 percent of the planned volume of capacity for administration.

Thus, in order to introduce the 76 GW of generation capacity, big companies either have to make significant changes to their project portfolios, or a considerable number of new (and possibly foreign) players have to come to the Russian engineering market. Otherwise, the market will face a critical shortage of workers needed to build the country’s energy assets. The alternative would be a less-than-complete implementation of the much-needed industry modernization program.