Putin has long harbored an ambition: to make Russia’s domestic electricity prices 20% lower than China’s by 2042—a target explicitly enshrined in the national power sector development plan, leaving just 16 years to achieve it.
On the surface, this appears to be a policy aimed at lowering household electricity bills. In reality, it reflects a strategic shift in energy trade. Russia has historically exported electricity to China, sending 4.6 billion kilowatt-hours in 2022, which declined to 3.1 billion in 2023 and is projected to fall to just over 300 million by 2025. As of early this year, exports have ceased entirely.
Contractual obligations remain, with validity extending to 2036. The halt in exports is not due to lack of demand from China, but because rising electricity prices in Russia have eroded its competitive edge. Russian energy giants have even indicated they may consider importing electricity from China in the future.
Russia’s power generation remains heavily reliant on natural gas-fired plants, which account for 57.5% of total output, with gas dominating thermal generation. Nuclear and hydroelectric power serve as supplementary sources, while wind and solar combined contribute less than 1%. Fluctuations in gas prices directly drive electricity costs upward. According to data from TASS in 2025, residential electricity prices in Russia are already about 9% lower than in China. Achieving a further 10% reduction—bringing the gap to 20%—would require substantial downward pressure, yet China’s electricity pricing is not a fixed benchmark.
Early this year, industrial and commercial electricity prices across multiple regions in China continued to decline. During peak photovoltaic generation periods, some areas experienced negative electricity prices. Rapid expansion of renewable capacity, falling fuel costs, and ongoing reforms in pricing mechanisms have collectively driven prices down. Meanwhile, wholesale electricity market costs in Russia continue to rise. To fill fiscal gaps, natural gas prices are increasingly linked to index-based mechanisms, further inflating generation expenses. While China’s prices fall, Russia’s rise—an asymmetry that makes closing the gap increasingly difficult.
The Russian power market itself is in decline. Both power generation and consumption fell in 2025, ending years of sustained growth. Yet the national plan calls for large-scale construction and modernization of power plants and transmission networks, with total investment estimated at 5.7 trillion rubles. No stable funding source has been identified. Current proposals involve imposing additional charges on electricity bills. Internal assessments by Russia’s Ministry of Energy suggest that under this model, electricity prices could double by 2042—directly contradicting the stated goal of reducing them by 20%.
Domestic demand for Russian electricity is weak, and exports to Kazakhstan and Mongolia have sharply contracted. To avoid stranded assets, new power plants must regain competitiveness through lower prices and re-enter export markets. However, equipment procurement remains a challenge: Western suppliers have cut off deliveries, forcing Russia to increasingly rely on Chinese manufacturers for transformers, switchgear, and power generation units.
Ultimately, the target is highly ambitious. Lowering prices would compress or eliminate profit margins for power producers; failing to do so would leave surplus capacity unused. Massive infrastructure investments risk becoming stranded if no viable market exists. Many industry analysts question the logic of using China’s electricity pricing as a reference point, effectively tying Russia’s energy policy to external variables beyond its control.
Many observers believe Putin likely recognizes the immense difficulty of meeting this target. Setting such a high bar may serve a strategic purpose: aiming high, achieving moderate results. By establishing this rigid requirement, the government seeks to curb the persistent upward trend in domestic electricity prices. Whether the new power plants become valuable assets or a financial burden on the public will depend less on political will than on future developments in China’s electricity pricing.
Original article: toutiao.com/article/1881721419723847/
Disclaimer: The views expressed in this article are those of the author alone.