Dynamics of the index of volume of productive electricity supply as an indicator of how fast the economies of Russian regions are adapting to the new reality
As an indicator that complements the main socio-economic indicators of the regions, ACRA used the volume of productive electricity supply by one or several guaranteeing suppliers of the Other Consumers category. This category includes the volume of electricity supplied to legal entities and state-funded consumers in a specific region, but excludes losses, as well as electricity supplied to the population and categories of consumers equated to it. This indicator allows us to estimate the volume of industrial demand1 for electricity, and therefore, can indicate the level of capacity utilization in regions with a high concentration of energy-intensive industrial production.
In crisis periods, which usually involve declining volumes of production, the analyzed indicator falls. For example, in 2022 the volume of productive energy supply for Russia as a whole declined below the indicator of 2021 as of the end of the first half of the year due to changes in the external economic situation. By the end of 2023, the volume of electricity supply reached the point recorded in 2021, while in Q1 2024 it considerably exceeded the dynamics of previous periods (Fig. 1).
For more details, see ACRA’s analytical commentary Useful Indicator dated June 22, 2023.
1 Hereinafter, industrial demand means demand from legal entities.
Figure 1. The volume of productive electricity supply in Russia increased in the first quarter of this year (Other Consumers (category, bln kWh)
Industrial demand for electricity reflects the degree of capacity utilization in industrial regions
In 2022, the productive electricity supply declined in 42 out of 57 analyzed regions2. In 23 of them, this trend continued in 2023 too, but already at the beginning of 2024, almost all of them saw signs of recovery in supply volumes (the exceptions were the Penza, Bryansk and Kaliningrad Regions, where no such signs were observed in the first quarter).
In 2022, the volume of productive electricity supply did not decline in 15 regions, however in six of these regions it did decline in 2023. In the Komi Republic and Bashkortostan, this indicator declined for a short period and then began growing at the start of 2024. The Agency separately notes the Tomsk and Smolensk Regions, as well as the Chuvash Republic — the productive electricity supply in these regions began to decline only in 2024, which indicates a delayed reaction of regional economies to changes in the foreign economic situation.
If we classify the regions of the sample by the industries that prevail in them3, then in 2022, regions whose industry is mainly focused on hydrocarbon production (which could be facilitated by high world oil prices) felt more confident in terms of the volumes of productive supply. At the end of 2022, this group of regions saw an increase in useful electricity supply on average, but in 2023 and over the past period of 2024, this figure decreased.
2 In the context of this analytical commentary, the share of industry in the gross regional product (GRP) sufficient to consider the productive supply indicator relevant for assessing industrial demand for electricity at a regional level is taken to be at least 21%. The analyzed sample does not include the DPR, LPR, and the Zaporozhye and Kherson Regions due to the lack of complete statistical data for these regions. In addition, the Chukotka Autonomous Okrug with its share of industry in the GRP exceeding 21% was excluded from the analysis given the low absolute indicator of productive supply (insignificant changes in its absolute values lead to high volatility of the index). The indicators for the Tyumen and Arkhangelsk Regions include data from autonomous districts due to the specifics of information disclosure by sales companies.
3 The industry that made the largest contribution to GRP; the detailed structure of the region’s manufacturing industry is assessed based on the volume of shipped goods produced in the region.
Figure 2. The dynamics of volume of productive electricity supply strongly depends on the dominant industry4
4 The dynamics of the volume of productive electricity supply (% year-on-year) are averaged on an annual basis for groups of regions with a similar dominant industry.
Sources: sales companies, Rosstat, ACRA
The most significant decrease in the volume of productive electricity supply in 2022 was observed in regions specializing in the production of chemical and petrochemical products, as well as in machine and instrument engineering. This trend continued in 2023, but at the beginning of 2024, this indicator began to recover along with the first results of the import substitution policy.
The decrease in the volume of productive electricity supply in 2022 in the group of regions focused on the extraction of coal and metal ores was largely caused by falling world metal prices. Regions focused on the subsequent export of extracted raw materials to the east also experienced difficulties due to the suspension of the rules for non-discriminatory access of carriers to railway infrastructure. After the revival of the dynamics of productive electricity supply in 2023, which was associated with the reshaping of logistics chains, this group of regions continued to demonstrate active growth of the indicator in 2024, despite the fact that the updated rules for non-discriminatory access are not expected to take effect until the end of this year.
In addition to the abovementioned group of regions, a significant increase in the volume of productive electricity supply in 2023–2024 YTD was observed in regions focused on the metals and food industries. This may indicate that as early as in 2023, most of them had coped with a number of transformation challenges, and the food industry and metals industry have been actively developing domestic sales markets for the second year in a row.
In the context of federal districts, the most intensive recovery in the dynamics of the productive electricity supply is observed in the Far Eastern Federal District, which indicates its rapid economic growth and the effectiveness of development programs in this region.
Figure 3. Industrial demand for electricity has been growing most significantly5 in Russia’s Far East
5 This analytical commentary uses abbreviations for the federal districts: Far Eastern (FEFD), Central (CFD), Northwestern (NFD), Urals (UFD), Southern (SFD), Volga (VFD), and Siberian (SIBFD).
Sources: sales companies, ACRA
The Siberian Federal District was the only federal district with no positive dynamics in the productive electricity supply in the first quarter of this year, which highlights a number of socioeconomic issues in this district. The development of this territory will be determined by the attainment of a number of long-term objectives, which include, among others, solving infrastructure issues, especially those related to transport accessibility, as well as shifting the focus in the raw materials segment from the extraction of hydrocarbons toward their deeper processing and the creation of industries that manufacture products with higher added value.
