OREANDA-NEWS. March 22, 2010. IES is planning to increase investments in development of peat extraction in Kirov region three times, from RUB 63.1 million in 2009 to RUB186.4 million in 2010. As a result, peat production volume will grow 100,000 tons.

This was announced by Vyacheslav Torsunov, Vice President of OJSC IES, during a round table conference in the State Duma. The participants discussed issues related to heat and power generation using "local" fuels such as wood, peat and waste products.

"While in 1991 Russian regions produced 17.5 million tons of peat, in 2009 this figure reduced to 1.3 million tons", said Mr. Torsunov. At the same time, this resource holds huge potential, whose fulfillment will contribute to diversification of Russia's fuel balance, growth of federal and regional budget incomes, and increase in the level of employment in the regions where peat bogs are concentrated.

The Kirov region where nearly 50 percent of all Russian peat is produced annually is a good example of efficient use of peat in the major energy industry. Current combustion technologies make it possible to increase gross efficiency of boilers and reduce specific hazardous emissions. Regional government in cooperation with CJSC IES drew up a special program of development of peat extraction in the region. As a result, the share of peat in the fuel balance of IES Holding's Kirov CHPPs may reach 29 percent by 2013, while the overall volume of peat production in the region is expected to reach 3 million tons.

However, following the results of 2009, the costs of heat and power generation based on local peat  appear to be, on the average, 30 percent higher than coal- and gas-based energy production. "The problem is that among the expenses related to the use of peat for energy generation the peat production costs amount only to 23 percent, while the rest is shipping and transshipment costs", said Mr. Torsunov. He also noted that application of special tariffs to peat transportation to power plants will make it possible to reduce the costs of heat and power generation, increase competitiveness of such fuel and give economic incentives to development of peat industry in the Russian Federation.