Specificity of risks faced by foreign investors in the Russian electricity market

Abstract

Electric power industry is socially and economically significant to a country. Any negative changes in this sphere have impact on all economic agents, including final consumers. In order to maintain sustainability of the Russian electric power system it is essential to invest heavily into modernization and replacement of morally and physically obsolete generating equipment. Thus, foreign investment, experience and technology are important elements of accelerated Russia’s electric power industry development. A major factor the influences foreign direct inward investment in this sector is an aggregate of risks that foreign investor in the Russian Federation faces with. These risks are determined by peculiarities of the industry, possible shifts in the wholesale electricity market mechanism and current economic situation affected by socio-economic factors and foreign policy.