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OGK-2 is one of the largest Russian generating companies, owning thermal power plants in various regions of the country. Unlike the territorial companies, it does almost no district heating for cities and sells electricity and capacity on the wholesale market. Its shares trade under the ticker OGKB.
A wholesale generating company was assembled from power plants scattered across the country rather than concentrated in a single region — hence the name. Its revenue comes from selling the electricity it generates at the market price and from capacity payments, that is, payments for being ready to deliver load.
The most important part of the second stream is capacity supply agreements. Under them the state guarantees a higher payment for units built or upgraded under the programme, for a term of several years. These payments end on schedule, and the expiry of the term for a large unit noticeably reduces revenue without any change at all in how the plant operates.
Costs are driven by fuel — gas and coal — and by repairs to ageing equipment.
Thermal power plants in several regions: output is sold on the wholesale market.
Income for the availability of units, including the higher rates under capacity supply agreements.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
It generates electricity at thermal power plants in various regions of the country and sells it, together with capacity, on the wholesale market. The company does practically no district heating for cities.
It is an arrangement under which the state guarantees a higher capacity payment for a new or upgraded unit over several years. The mechanism was devised so that investment in construction pays off: without it, building a new plant is not profitable.
The unit keeps operating, but the higher payment for its capacity stops — only the ordinary market payment remains. The company's revenue falls as a result, even though nothing has changed at the plant itself.