Germany's energy turnaround, or "Energiewende", has become one of that country's most far-reaching projects in industrial policy. By 2050, renewable energy resources are supposed to provide 60 percent of country's gross final energy consumption and 80 percent of its electricity supply, with an intermediate goal of 35 percent of renewable power generation in 2020, according to the current plans of the German government.

These ambitious objectives will have serious implications for Russia: First, Germany's dependence on Russian natural gas imports will decline in the longer term. But the Russian economy may benefit from Germany's experience with the transition to renewable energy sources, especially with respect to decentralized energy provision and local value creation.

In the long-term energy strategy of the German government, natural gas has been considered the ideal complement to intermittent renewable energy resources like solar power or wind, because thermal power plants running with natural gas have short ramp-up times and are less polluting than lignite or hard coal plants.

Therefore, Germany's energy utilities have planned to add capacity of more than 13 GW of highly efficient natural gas plants between 2012 until 2020. But the average annual operating time of German natural gas plants has declined from 3,400 hours in 2010 to 2,640 hours in 2012, because low wholesale electricity prices favor the dispatch of cheaper lignite plants.

Representatives of energy utilities complain that hardly any of the newly built plants is able to recoup the investments, and companies like E.ON have even threatened to mothball some of their assets.

In 2012, natural gas consumption in thermal power plants decreased by 27 percent compared to 2011. The German government is currently discussing mechanisms like capacity markets to ensure minimum availability of existing plants, but under these conditions it is highly likely that the investments in gas-fired plants will materialize according to current planning.

On the retail side, the extension of the gas distribution grid in rural areas has come to a standstill. Although the majority of heating installations are still based on natural gas or oil boilers, heat pumps fuelled by electricity combined the thermal energy from the air or the ground have been on the rise. In 2012, more than 70,000 new heat pumps were installed, which corresponds to market share of 62 percent.

The German government's generous feed-in regulation led to economies of scale in the production of photovoltaic panels, and consequently to cost reductions that are beneficial to self-producers all over the world. According to the representatives of the EU's Joint Research Council, the overall cost of a producing a kilowatt hour with photovoltaic panels has decreased to 12 euro -cents.

With average residential electricity prices of around 30 euro -cents per kilowatt hour, solar power - complemented by thermal storage devices - is likely to further erode the market share of gas boilers in the years to come. Because of the slow turnover rates for heating devices among private home-owners, there is no immediate threat to Russian natural gas sales. In the longer term, though, the trend towards self-production of energy will increase.

The second implication of the German Energiewende on the Russian energy sector is linked to local value creation. According to estimates of the German Institute for Ecological Economy Research (IOW) for the year 2011, decentralized energy provision contributed with euro 10.7bn to communal value creation in Germany. Installation, operation and maintenance of these installations are important drivers of local employment. Newly founded energy co-operatives organize communal energy services.

The number of these co-operatives increased almost tenfold from 66 in 2001 to 656 in 2012. According to Germany's renewable energies agency, there were more than 130 bioenergy villages operational or in the process of setting up their local energy supply system by mid-2013.

In most of these villages, residents use local biomass in cogeneration plants. Almost 40 million Russian citizens currently live in rural areas, often in demographically dispersed settings.

According to estimates quoted by the International Energy Agency in its report "Renewables in Russia - From Opportunity to Reality", Russia's economically viable potential of renewable energy was around 30 percent of total primary energy supply in 2001, with wind power along the coasts, in the steppes and mountainous regions, solar energy in the South, and biomass in the vast agricultural areas of the country. With substantial cost reductions in all renewable energy technologies over the last ten years, this potential is likely to be much higher nowadays. The Russian government also pushes the deployment of renewable energies.

Decree 449 "Renewable Energy Source Development Measures", released in May 2013, requests 6.2 GW of new capacity from renewable energy sources by 2020, thereby increasing the share of new renewables (except hydropower) in the energy mix from 0.8 to 2.5 percent. Germany was able to raise electricity production based on renewable energies from 3 to 25 percent within the last 20 years. Almost half of all installations are owned by private residents and farmers.

The major challenges for Russia's centralized power supply system are investments in new generation capacity and an overhaul of the existing transmission and distribution grid.

According to estimates in "Russia's Energy Strategy to 2030", the total capital investments required in generation capacity and infrastructure may well exceed euro 500bn. Russia now has the choice to invest in conventional plants and a reinforcement of the existing copper lines, or to prepare its electricity system for future challenges by promoting renewable and decentralized energy installations, and by fostering largely autonomous island grid solutions with local storage capacities.

For established energy utilities, incumbent natural gas companies, and small and medium-sized enterprises (SMEs), various new business opportunities emerge on this alternative path, either in technical and commercial services provided to municipalities, bioenergy villages and energy co-operatives, or in the delivery of natural gas to residential and commercial cogeneration units. Russia can follow Germany's footsteps and start planning a supply system for the day after tomorrow.