An Economics and Engineering Approach to Energy Supply Development in Remote Areas of Russia

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Ilya Dolmatov, Director of the HSE Institute of Economics and Utility Regulation, heads a Mirror Lab project titled ‘Models of Energy Infrastructure Development in Russia’s Remote and Isolated Territories’ and implemented together with a university in Irkutsk. Why is energy efficiency a particularly pressing problem in remote territories? How can economics and engineering work together to solve it? Ilya Dolmatov addressed these and other issues in his interview for The HSE LooK.

Ilya Dolmatov, Director of the HSE Institute of Economics and Utility Regulation

Collaboration Continued and Reinvented

We decided to participate in the Mirror Labs project because we were attracted to its competitive format. It seemed unusual that it required having a joint project with a partner university specifically located in a region away from Moscow and St Petersburg, and our institute works quite a lot with such regions on issues of energy and utilities infrastructure development. Thus, we were sure that we could find a partner with whom we could jointly develop a particular area of interest.

When the competition was announced, our institute began collaborating with our colleagues from Irkutsk National Research Technical University (INRTU). They had internships with us on the economic and technical aspects of energy supply development in remote areas of Russia as part of an earlier research and education cooperation agreement signed in January 2020 between INRTU and HSE University. It was during the discussions about future research collaboration and possible joint publications that we decided to establish a legal basis for our further cooperation.

A project aimed at analysing issues of power supply in remote and isolated areas of Russia became the basis for our application

The Institute of Economics and Utility Regulation has been a part of HSE University for 25 years now, and over this time, we have studied energy economics and the regulation of infrastructure sectors.

There are quite a few remote territories in Russia isolated from power systems, which means that the cost of electricity is significantly (two to three times) higher for consumers in those territories than in central Russia. The efficiency of such energy supply systems is rather low, and because they are government controlled, electricity prices are regulated. The issues of energy supply systems’ efficiency as well as technical and economic regulation are quite relevant.

We are economists who interact with almost the entire country in terms of implementing projects in the energy and utilities sector, and we know that energy infrastructure development in remote and isolated territories of Russia is an important issue

Our institute is capable of analysing energy economics. However, in order to give comprehensive recommendations to government, federal and regional authorities on the issues mentioned above, we needed a partner who deals with technical solutions for the energy sector. Our colleagues at INRTU possess the necessary technical and engineering competencies. Our aim is to offer the best practices and techniques in terms of science and expertise. Although the mirror labs competition period lasts three years, we understand that finding effective solutions is an ongoing challenge. We will continue to work on this with a particular view to existing opportunities and priorities.

An Inter-Institutional Team

Our institute works on the project from an economics perspective, while the engineering aspects are taken care of by our colleagues from INRTU. We complement each other while trying to solve the complex problem of efficient energy supply to remote and isolated territories.

The institute’s project team was formed on a voluntary basis, since, under the terms of the competition, we receive funding for organisational matters (eg, mobility, acquisition of databases etc,), while no funds are directly allocated for research. The project team is also dynamic.

We have the core team members, whose responsibility is creating databases and drawing up best practices both in Russia and abroad (but new members are welcome to join us as well)

Regular internal analysis of publication ideas and possible joint research ideas can help our colleagues with similar research interests to find each other and cooperate.

Since we did not have a formal statement of work and needed to formulate it ourselves, the project team agreed that everyone has their own competencies, and everyone should contribute (publications, databases, or pre-project exploratory enquires that may be of interest to external clients) to the common goals of the project.

Our collaboration with INRTU is not limited to the agenda of the Mirror Lab project, so it often triggers cooperation in other applied projects. We have each other in mind when we meet with different customers, and that is how we and INRTU received a commercial offer from the firm BitRiver to work on economic incentives for the power supply of mining farms. Our colleagues from Irkutsk also invited us to participate in a competition for student initiatives carried out by large energy firms in the Irkutsk region as part of the Electric Power Engineering Laboratory.

Together with students from the Faculty of World Economy and International Affairs, where I am an Associate Professor, we were ranked in the top five out of 30 teams

Moreover, we received a certificate for 10,000 roubles to purchase digital equipment for active participation in an accelerator titled ‘Laboratory of Energy 2020’. The project for the competition was developed within the framework of the mirror lab.

What Future Has in Store for Us

In addition to our formal responsibilities (joint publications, the collection and systematisation of best practices of development models of energy infrastructure in remote and isolated territories), our project team gets involved in external initiatives. In the process of cooperation, we find out the interests and competencies of other members and recommend each other to other projects.

For example, I participated in a weeklong advanced training programme for regulators from CIS countries, who shared their practices on regulating tariff rates. This led to the publication of a monograph. Furthermore, I would likely not have known about the training myself unless colleagues from INRTU recommended me to the organiser.

This is an important component of the whole mirror lab project—it gives us, the participants, the opportunity to get to know each other, our competencies and expertise better

We start with a formal project, but if the interaction goes well, this will inevitably lead to other events. This is evidence of effective interaction.

Mirror Labs are joint research projects between HSE University and its partner institutions. Launched in 2020, this format was the first inter-university initiative of its kind aimed at developing networks and collaborative partnerships, while also enhancing cooperation in research and academic activities between HSE University and other leading Russian academic institutions.

The name ‘mirror’ labs refers to the financing of projects on parity terms and pooling research resources from both sides: providing each other with necessary expertise, sharing analytical methodology and results, conducting training seminars for each other and hosting interns. Research activities may be carried out by joint project teams over a period of three years with the option for extension.

Mirror lab projects can be carried out in various fields and a diverse array of formats.