Surge of investments into the TPP upgrade program will fall on the plunge of cash flows caused by cease of DPM payments. High leverage and long periods of negative cash flows are common for the global electric power industry due to high capital intensity and long lifespans of investment projects.

According to ACRA experts, in 2018–2020 the FCF in the thermal generation sector will reach the level of ₽150 bln per year and it is likely to be the best indicator among other Russian sectors (FCF of non-oil companies reached ₽100—130 bln in 2015–2016). This is caused by the completion of investment programs (the investments of the largest companies in the sector fell to 5% of revenue in 2017) and the passing of the peak in DPM payments (special 10-year tariffs for new stations), which gave 86% of the cash flow from operations (CFO) in 2017.

ACRA expects that the thermal generation sector will increase investments by 2–2.5 times in the beginning of the 2020s. And it is this period that the CFO from DPM payments will decrease, which will not be compensated by new payments for TPP upgrade projects.

The increase in cash flow expected in 2018–2020 can be used by the sector companies to repay their debts (in 2017, the sector’s leverage slipped to 1x/CFO, while a half of the debt fell on «T plus» and «Quadra»), increase dividends, repurchase their own shares (in 2018, InterRAO has already spent ₽42 bln for this purpose) or used for mergers and acquisitions.