On 28 May, 2013, the Government of theRussian Federation adopted decree no. 449 on the mechanismfor the promotion of renewable energy (RE) on the wholesaleelectricity and capacity market. Decree no. 449 integratessupport for renewable energy sources for electricity (RES-E)into the capacity market. This is a very different approachto that applied in most of the existing support mechanismsin other countries, where RES-E is promoted on the basis ofthe electricity output (MWh) rather than the installedcapacity (MW or MW per month) of RE installations. PromotingRES-E through the capacity market is a way for the Russianauthorities to overcome some of the legal and technicalchallenges faced by previous support initiatives and,importantly, to control the costs of RE. This approach fitswell with the specific regulatory architecture of theRussian wholesale electricity market, which comprises bothan energy and capacity segment. This report introducesRussia’s new capacity-based scheme and examines how theRussian authorities have integrated the variability of REsources into the regulation of capacity supply. Thisanalysis will highlight the risk of legal uncertaintyaffecting the business case for RE investors under thecapacity-based scheme. For more publications on IFCSustainability please visit www.ifc.org/sustainabilitypublications.