After the collapse of the Soviet Union, economic recovery contributed to an increase in total electricity consumption from 715 billion KWh (kilowatt hours) in 1998, to roughly 980 billion kWh in 2007. Thermal power (oil, natural gas, and coal-fired) accounts for roughly 63 percent of Russia's electricity generation, followed by hydropower (21%) and nuclear (16%), (See EIA’s International Electricity data). According to state data, these plants produced 913 billion kWh in 2007, an increase of 2.2% over 2006.

Russia's power sector includes over 440 thermal and hydropower plants (approximately 77 of which are coal-fired) plus 31 nuclear reactors. Some capacity in the far-eastern part of the country is not connected to the power grid.

The system has a total electric generation capacity of 217 gigawatts (GW), with 2005 output of approximately 904 billion KWh. Updated statistics are available from EIA’s Country Energy Profiles.

After many years, the restructuring of Russia's power generation sector will be complete as of July 1, 2008, when state monopoly RAO UES dissolves. Tariff rates on the domestic market are to be made more universal instead of geographically-specific. The country's transmission grid will remain under state control. The reform has created a generating sector divided into multiple wholesale electricity companies (commonly called OGKs), which participate in a new competitive wholesale market. The creation of all 6 OGKs was completed in September 2006. Fourteen territorial generating companies (TGKs) will also be created, and these TGKs generated over $24 billion in investment from private investors in 2007. Germany's E.ON and RWE, Italy's Enel, and the Finnish Fortum are some of the most prominent foreign entities who have paid premiums for strategic or controlling stakes in the generating companies.

The current plan is to transfer the state share in the generating companies to two companies, the Federal Grid Company and the Hydro-OGK, which will remain state-controlled after UES ceases to exist on July 1, 2008. The goal is for the market to become completely liberalized by 2011.

Gazprom would like to have a key role in the electricity sector during the deregulation process in order to influence decision-making on the fuel mix and to benefit from electricity and natural gas tariff liberalization. As a result, in March 2007, Gazprom and UES signed a long term, take-or-pay agreement for gas supplies for Russian electricity generation through 2010 where UES will receive around 3.6 Tcf per year of gas directly from Gazprom. Independent gas producers will meet the remainder of UES’s fuel needs.

The Russian government has stated that it intends to expand the role of nuclear and hydropower generation in the future to allow for greater export of fossil fuels. Russia has an installed nuclear capacity of 21.2 million kilowatts, distributed across 31 operational nuclear reactors at 10 locations, all west of the Ural Mountains. However, Russia's nuclear power facilities are aging. Roughly half of the country's 31 nuclear reactors use the RBMK design employed in Ukraine's ill-fated Chernobyl plant. The working life of a reactor is considered to be 30 years: nine of Russia's plants are between 26 and 30 years old, and six are between 21 and 25 years old.

Investment in the nuclear sector is expected to double to $960 million in 2008. Gazprom has also expressed interest in building nuclear stations to free up natural gas for export. The Russian government has also made hydroelectric generation a priority, particularly in the country's Far East, where provision and delivery of electricity supply can be problematic.

There are seven separate regional power systems in the Russian electricity sector: Northwest, Center, Middle Volga, North Caucasus, Urals, Siberia, and Far East. The Far East region is the only one not connected to an integrated power system. UES, which is 52 percent owned by the Russian government (Gazprom now has a 10% stake), controls most of the transmission and distribution in Russia. UES owns 96 percent of the transmission and distribution system, the central dispatch unit, and the federal wholesale electricity market (FOREM). The grid comprises almost 2 million miles of power lines, 93,000 miles of which are high-voltage cables over 220 kilovolts (Kv).

Russia exports significant quantities of electricity to the countries of the former Soviet Union, as well as to China, Poland, Turkey and Finland. UES also has plans to export electricity to Iran and possibly Afghanistan and Pakistan from two hydroelectric stations it is currently building in Tajikistan. There are currently two efforts underway to integrate the Russian and Western European electricity grids. UES is participating in the Baltrel program, designed to create an energy ring of power companies in the Baltic states. Also, the Union for the Coordination of Transmission of Electricity (UCTE), of which 20 European countries are members, has entered into discussions with Russian colleagues over the technological and operational aspects of interconnecting their systems.