Sat.
May 8
2021
Solar panels installed by Ingka Group, owner of IKEA
Image: Solar Systems LLC

Ingka Group, the owner of most IKEA stores globally, will buy into Russian solar in what marks the first ever non-utility investment into renewable energy in the world’s largest oil and gas exporter.

Ingka Investments has agreed to a 49% share in eight solar parks in southwest Russia run by Solar Systems LLC, according to statements from both companies.

The total book asset value for the parks is more than 235 million euros, with generation capacity of 160 megawatts (MW), which is enough to power all 17 IKEA stores in Russia and part of the MEGA shopping centers. The agreement is subject to approval from regulatory authorities.

The furniture retailer has sought to reduce its climate footprint globally and seeks to make good on that pledge in Russia as well, as ESG gains ground with investors and governments. Ingka Group said it has invested 2.9 billion euros in renewable energy since 2009, showing how some corporations seek to make environmental protection an internal policy.

While leading the world in oil and gas exports, Russia has also moved to develop renewable energy in a state-funded programme. The country also uses subsidized capacity auctions, which require detailed local content requirements for renewables equipment, as the Russian leadership seeks mainly to gain jobs as part of its path to join the global renewables boom.

The world’s largest nation has a massive surplus of energy from oil, gas, coal, nuclear and hydro, yet there are spots across its 11 time zones that are missed by the power grid. Russia’s initial installations, under subsidy auctions, supplied remote villages near the nation’s border with Mongolia. In concept, it actually resembled more supplying power to spacecraft than an anti-carbon initiative.

Even so, over time, the programme has resulted in developments in more central and populous Russian regions. The deal with IKEA will be for solar capacity developed in the Astrakhan, Volgograd and Bashkortostan regions. 

“Solar Systems is proud to parter with Ingka Group and supports IKEA and MEGA operations in Russia with renewable energy from our newly developed projects,” Mikhail Molchanov, CEOof Solar Systems, said.

And one can bet that Molchanov is quite proud. The IKEA purchase marks a new step for Russia’s nascent solar industry, as international chains and corporates seek to make good on pledges to source non-carbon energy.

For Solar Systems, simply executing on creating a clean solar power supply has achieved a demonstrable result. It has attracted its own market of buyer and partner.

It’s a welcome development, and one that may not have been evident from the start even to the developers in Russia’s subsidy and capacity auctions.   

By Stephen Bierman

Stephen Bierman is an energy markets journalist and the editor of New Economy Observer.

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