Electricity In Belarus: Cheap, But Why?

Belarus has one of the cheapest electricity prices in Europe, with residential electricity prices 48.22% lower than the world average and 31.98% lower than the European average. The country's electricity sector is operated by BelEnergo, a single vertically integrated national energy company. Belarus relies heavily on energy imports, particularly from Russia, to meet its energy needs. The country's energy sector is state-owned and controlled by the government, which believes that this ownership structure ensures a stable and secure energy supply. The country's diversified industrial profile, efficient energy transmission, and low electricity prices contribute to its competitive advantage in the energy market.

Belarus's electricity is generated mostly by natural gas

Belarus is a net energy importer, and in 2015, its energy imports vastly exceeded its energy production. This makes Belarus one of the world's least energy-sufficient countries. In 2018, Belarus's total energy consumption was 27.0 million tonnes of oil equivalent (Mtoe), similar to consumption in Norway and Hungary. The country's primary energy use in 2008 was 327 terawatt-hours (TWh) or 34 TWh per million persons.

Belarus is the world's leading importer of natural gas among the EU4Energy countries, which include Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. In 2018, the country imported an estimated 17 Mtoe (20 billion cubic metres) of natural gas. This is a significant amount, as it is almost equivalent to the country's total energy consumption.

Nearly all of Belarus's electricity generation came from natural gas in 2018, amounting to 97% or 39 terawatt-hours (TWh). This is a notable increase from 1990, when natural gas constituted 52% of electricity generation, with oil generating the remaining 48%.

The country's electricity sector is operated by a single vertically integrated national energy company, BelEnergo, which is state-owned and controlled by the government. The government's control over the energy sector, including electricity and natural gas distribution, is believed to guarantee a secure and stable energy supply.

The residential electricity price in Belarus is BYN 0.246 per kilowatt-hour (kWh) or USD 0.075. These prices are significantly lower than the world and European averages. For example, residential electricity prices in Belarus are 48.22% of the world average and 31.98% of the average price in Europe.

In summary, Belarus's electricity is predominantly generated by natural gas, with a 97% share in 2018. The country relies heavily on energy imports, particularly natural gas, to meet its energy demands. The government controls the electricity sector through BelEnergo, ensuring a stable supply of electricity for its residents at relatively low prices.

The country's energy sector is state-owned

Belarus ranks third among European countries with the cheapest electricity. The country's energy sector is state-owned and operated by the government, with the president holding the exclusive right to make all strategic decisions. The electricity sector is run by a single vertically integrated national energy company, BelEnergo, which owns and operates generation, transmission, distribution, and retail sales of electricity and heat. BelEnergo is supervised by the Ministry of Energy, which is responsible for managing the country's fuel and energy sector.

The long-time president of Belarus opposes the privatisation of state enterprises, and the government believes that maintaining control over the entire energy sector will guarantee a secure and stable energy supply. The Ministry of Energy also oversees the state-owned Belarusian Nuclear Power Plant (BelNPP) and other state-owned organisations operating in the energy sector.

BelEnergo produces about 50% of the country's heat supply, with the remainder provided by local district heating companies owned by municipalities. The company also plays a crucial role in the development and adoption of legal acts necessary for the regulation of the electricity sector, addressing the degree of state involvement in managing and regulating electricity and thermal energy tariffs.

In addition to BelEnergo, other state-owned companies in the energy sector include BelTopGaz, which handles gas distribution and retail sales, and Gazprom-TransGaz, which operates high-pressure transportation, transit, and storage systems for natural gas. The peat market is also controlled by BelTopGaz, which manages production, distribution, and retail marketing.

The Ministry of Energy organises and coordinates the production of nuclear energy and the construction and operation of nuclear power plants in Belarus. The Republican Unitary Enterprise Belarusian Nuclear Power Plant is responsible for commissioning, operations, performance control, lifetime extension, and decommissioning of the country's nuclear power plants.

The state regulation of the energy sector, including energy efficiency and renewable energy initiatives, is carried out through decrees, presidential directives, government decisions, and the Ministry of Antimonopoly Regulation and Trade. Local councils, executive authorities, and administrative bodies implement state energy policy, and there are public and non-governmental organisations active in the field of energy efficiency, renewable energy, and environmental protection in Belarus.

Belarus is one of the world's least energy-sufficient countries

Belarus's energy sector is dominated by state-owned companies, with the government believing that maintaining control over the sector will guarantee a secure and stable energy supply. The country's primary sources of energy are natural gas, oil, and nuclear power, with renewable energy sources accounting for only a small percentage of the energy mix. In 2018, nearly all electricity generation (97%) came from natural gas, with oil and nuclear power also contributing significantly.

To reduce its dependence on energy imports, Belarus has been working to diversify its energy sources and increase energy efficiency. The government has introduced policies to promote the use of coal and renewables, and has been constructing nuclear power plants to meet the growing demand for electricity. Belarus is also an important part of Russia's gas transit corridor to Western Europe, which has helped to secure natural gas supplies for the country.

Despite these efforts, Belarus remains heavily dependent on energy imports, particularly from Russia, and continues to face challenges in ensuring a stable and secure energy supply. The lack of structural reform, foreign investment, and long-term policy planning in the energy sector contribute to this ongoing energy insecurity.

The country has a low cost of living

Belarus's diversified industrial profile has also contributed to its low cost of living. Despite a lack of natural resources, the country has achieved solid economic growth through manufacturing and exports, including machinery, equipment, chemicals, metals, and textiles. This has resulted in a stable economy and affordable energy prices for its citizens.

Additionally, Belarus has a relatively low population density, with 9.4 million inhabitants spread across 207,595 square kilometres. This means that there is less demand for energy compared to more densely populated countries, which can help keep prices low.

The country's energy policy also plays a role in keeping costs low. Belarus's energy sector is highly regulated by the government, with state-owned companies operating under the supervision of the Ministry of Energy. The government sets electricity tariffs and provides subsidies to end users, ensuring that energy remains affordable for the population.

Furthermore, Belarus has been working to improve energy efficiency and reduce its dependence on energy imports. The country has introduced a green feed-in tariff to attract investment in renewable energy sources and is also phasing out subsidies for electricity, heat, and gas to make the energy sector more market-focused and attractive to private investors. These efforts are expected to further stabilize and potentially reduce energy costs in the country.

Overall, the combination of government regulation, diversified industry, and low population density has contributed to Belarus's low cost of living, including affordable electricity prices for its residents and businesses.

Belarus is a large oil refiner

Belarus's oil shale reserves are estimated to contain 5-11 billion tonnes, with up to 3.6 billion tonnes of recoverable reserves in the Pripyat Basin. Despite this, oil shale in Belarus remains largely unexplored due to its high ash and sulphur content, low heat of combustion, and high extraction and processing costs. The rock must first undergo pyrolysis to produce shale oil, oil shale gas, and other factions that can be used for fuel.

The country relies heavily on imported oil and gas from Russia, and the refineries in Belarus primarily use Russian oil as a feedstock. Russia has also been known to import gasoline from Belarus, particularly when facing fuel shortages or refinery disruptions.

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