RDIF, GE sign Russian power plant deal

The Vnesheconombank subsidiary is teaming with the world’s fourth-largest company to construct mini power plants for manufacturing firms.

The Russian Direct Investment Fund (RDIF) and New York-listed General Electric (GE) have signed a memorandum of understanding to create a joint venture for the construction of mini power plants for manufacturing companies across Russia.

The growth of the industrial sector in Russia has created demand for individual electric power generating systems. The RDIF/GE joint venture will aim to meet this need by producing low-power co-generation systems with capacity of up to 25 megawatts (MW).

Such systems are independent from the federal power grid and supply energy directly without the need to construct transmission lines, which reduces the risk of power cuts.

Combined heat and electric power systems are playing a greater role in the face of rising energy prices, increasing energy consumption and tougher environmental requirements for industrial facilities.

“We expect that this collaboration will allow us to expand our geographic footprint, helping to modernize Russia’s industrial infrastructure,” said Ron Pollett, president and chief executive officer of GE in Russia and CIS, in a statement.

GE is a technological solutions provider in the fields of energy, health, the home, transportation and finance, and is the world’s fourth-largest company in 2013, according to the Forbes Global 2000, Forbes magazine’s ranking of the top 2000 public companies in the world.

RDIF is a $10 billion fund that was established by the Russian government to make equity investments, mainly in the Russian economy. It is a subsidiary of Vnesheconombank, Russia’s state development bank.

In April this year, RDIF and Vnesheconombank set up a Russian-Japanese investment platform with Japan Bank for International Cooperation (JBIC) into which RDIF and JBIC both invested $500 million.

The previous month, RDIF and Vnesheconombank signed an agreement with China Investment Corporation and the Russia-China Investment Fund to invest in projects in Russia’s Far East region.