Kazakhstan Institute for Strategic Studies

under the President of the Republic of Kazakhstan

The President's Address to the People of Kazakhstan

Growing welfare of kazakh citizens: increase in income and quality of life


Well-being of the population and accession of Kazakhstan to the list

of 30 developed countries are the long-term goals of our independent state.

Future of Renewable Energy in Kazakhstan
Eugene Hong, Research Fellow, KazISS under President of Kazalhstan

In November 2011 Kazakhstan brought a motion to include the Global Environmental and Energy Strategy of Sustainable Development in the XXI Century into the agenda of the UN Conference on Sustainable Development that is scheduled for June 2012 in Rio de Janeiro. The similarly named book written by President of Kazakhstan Nursultan Nazarbayev provides the explanation of the Strategy and describes the practical ways for its implementation. The ultimate goal of the Strategy is that by the middle of the XXI century the world will have achieved the optimum level to meet the needs of all countries in energy and other natural resources through comprehensive improvement of the use of renewable energy sources (RES).

The development of renewable energy is also a priority to build the "economy of the future" declared by the State Program for Rapid Industrial-innovative Development for 2010-2014. It is also included into the program for development of the electric power industry of Kazakhstan for 2010-2014 and regulated by the Law of the Republic of Kazakhstan "On Supporting the Use of Renewable Energy" of 2009.

The experts emphasize the significance of building a new energy system that would be based on renewable energy although Kazakhstan economy has sufficient supply of conventional fuels. There are two main reasons.

Firstly, there is a critical need to reduce emission of greenhouse gas and other pollutants, the major producer of which is the fuel and energy complex of Kazakhstan that mostly burns fossil fuels, namely coal, oil and gas.

Secondly, energy deficit is growing and that can be a limiting factor for further economic growth.

It is also worth noting that the rate of specific energy consumption per GDP unit in Kazakhstan is 1.9, this is several times higher than in the developed countries, the member of the OECD. High level of energy consumption has negative consequences; it makes manufactured goods less competitive and increase significantly environmental pollution. According to the Ministry of Environment of Kazakhstan, the country ranks first in the world in terms greenhouse gas emissions intensity per GDP (3.38 kg per every GDP dollar).

Kazakhstan is a party to the UN Framework Convention on Climate Change (1995) and ratified the Kyoto Protocol in 2009. Kazakhstan has committed to reduce greenhouse gas emissions. Having more renewable energy in the energy balance of Kazakhstan is one of the most effective mechanisms to reduce harmful effects of the energy sector and to diversify the national power generation capacity.

Despite the enormous renewable energy sources potential, its share in the total electricity generated in Kazakhstan is only 12.5%, taking into account the large hydroelectric power plants, 0.5% of which are non-traditional renewable energy sources. For comparison, in Denmark and Iceland the RES is 29%, in Portugal and China it is 18%, Spain has reached the figure of 42.2%, the share of the RES in the USA energy balance is 10%, Russia has only 1.5% of energy produced trough using of the RES. 19-20% of all energy produced globally is the RES electricity.

Interestingly, the technical potential of wind renewable energy in Kazakhstan is about 1820 billion kWh per year and that exceeds the current needs. However, less than 0.05% of this potential is used. According to the data, production of renewable electricity in 2011 totaled 423 million kWh, this is 20 million kWh or 4.73% growth of the RES electricity production compared with 2010.

Under the State Program for Rapid Industrial-innovative Development, the volume of renewable energy generated in Kazakhstan in 2014 is to amount to 1 billion kWh and power consumption of "green" energy must be more than 1% of total consumption. Most renewable energy facilities will start working in 2013-2014 because all necessary feasibility study will take a year or more.

Kazakhstan is currently developing its RES industry is the following branches:

Hydropower energy; capacity of the operating power plants is estimated at 2068 MW with annual energy production of 8.32 billion kWh. The hydropower potential is about 170 billion kWh, while 27-30 billion kWh can be produced more cost-effectively. The prevailing part of the hydroelectric resources is located in the East and South-East regions of Kazakhstan.

Smaller hydropower plants (less than 35 MW) are particularly relevant in the Southern regions of Kazakhstan suffering form energy deficit. They have low production costs and harmful impact on the environment. There are a number of rivers in the region with greatest hydropower potential: the Ili, Charyn, Chilik Karatal, Koksu, Tentek, Horgos, Tekes, Talgar, Big and Small Almatinka, Usek, Aksu, Lepsy, Yrgayty. According to the experts, provided the smaller hydropower stations are installed about 8 billion kWh can produced per year and this is more than enough to meet the demand that is now satisfied through imports from Central Asia.

In December 2011 the Moynak HPP (300 MW) was put into operation within the realization of the State Program for Rapid Industrial-innovative Development. A number of the projects to build smaller hydropower plants are being implemented in southern Kazakhstan.

Wind energy; due to its geographical location in the wind belt of the northern hemisphere and the strong air currents, Kazakhstan has a vast potential for wind energy development. In some areas the average annual wind speed is more than 6 m / s that makes them attractive for the development of the industry. According to expert estimates, Kazakhstan's wind energy potential is 929 billion kWh per year.

Currently, the Ministry of Industry and New Technologies selected 10 sites to build large wind power plants (WPP) with total capacity of 1,000 MW with a view to commercial production of electricity in the amount of 2-3 billion kWh. Currently only one wind energy plant is operating in Kazakhstan; the Kordai wind power plant with 1500 kW capacity was launched in December 2011 in Zhambyl region.

Solar energy; Kazakhstan has favorable climatic conditions for the development of solar energy. The number of sunny hours is 2200-3000 per year, therefore, the solar energy is 1300-1800 kW per 1 m2 per year. The South-Kazakhstan, Kyzylorda oblast and the Aral region are the most suitable locations to build solar power plants.

The most significant project in this field implemented in 2002 in Kazakhstan and financed by the UN was to install 50 prism solar power plants with capacity of 100 liters of water each, and 50 solar stills, using the water from the Syr Darya river to provide the residents of two villages in the Aral region for drinking water and heating.

However, development of alternative energy in Kazakhstan is constrained because implementation of such projects requires bigger initial capital investments and recoupment period is longer. Given that the hydrocarbon resources of Kazakhstan are suffice and relatively inexpensive the government should create the conditions when the investors would be economically interested in such projects to make the investments in renewable energy profitable.

As construction of renewable energy facilities, their development as well as purchase and installation of equipment is quite expensive, direct project financing from the republican and local budgets may be considered as a possible stimuli.

Public-private partnership may be quite effective policy as the investment risks in this case are proportionally divided between the government and the private partner. The responsibility for the production costs and direct management of the facility will be on the private party. Such cooperation may be beneficial because the national industry will have the facility at a lower cost and the amount of investment from the business partner will also be reasonable. Moreover, this mechanism does not mean a significant increase in the tariffs because the private investor would only recover its expenditures, the cost energy, therefore, will be considerably lower.

Introduction of certain tax breaks for those banks that support "green" energy technology development could also be quite useful. This economic stimulus, in the first place, will encourage the banks to provide new types of loans and, accordingly, contribute into development of risk management and analytical services in the field of alternative energy.

In conclusion, it should be noted that constantly growing cost of mineral resources extraction as well as unacceptably high level of emissions will make Kazakhstan to pay more attentions to alternative energy. However, this sector will become a considerable part of the energy balance of Kazakhstan only with a comprehensive government support and economic incentives for potential investors.

Published in the “Delovoi Kazakhstan” 01.06.2012