Kazakhstan sets ambitious new targets for renewable energy

By bne IntelliNews June 24, 2013

Clare Nuttall in Astana -

Kazakhstan has set the highly ambitious target of generating 50% of its power from renewable energy sources by 2050, a goal that officials say will require investment of up to $3.2bn a year.

Despite its substantial reserves of oil, gas, coal and uranium, Kazakhstan has been steadily moving towards greater use of alternative energy in the last five years. However, even with the adoption of the 2009 law on support for renewable energy use paving the way for the sector to develop, as of 2012 renewable energy accounted for just 0.5% of the total.

However, in June, Kazakh President Nursultan Nazarbayev approved a new state programme to develop the alternative energy sector, which sets the target of 50% of the energy mix being renewables by 2050. Commenting at a briefing on June 7, Environmental Protection Minister Nurlan Kapparov said that, "according to our estimates, total investments, state and private, needed to carry out this programme will amount annually to an average of $3.2bn until 2050, or around 1% of GDP."

In the shorter term, the government has drawn up investment plans for the next eight years. Outlined by Minister of Industry and New Technologies Asset Isekeshev in February, the plan's aim is to boost generation capacity by 1,000 megawatts (MW) by 2020, an increase in the share of renewables in the energy mix to 3%. Under a programme adopted by the government in January this year, there are plans to build 13 wind farms, 14 hydropower plants and four solar power plants across the country.

Kazakhstan is not an obvious candidate for alternative energy, given its abundant reserves of fossil fuels. "Kazakhstan's energy agenda is amazingly ambitious," Jeffrey Ball, scholar-in-residence at Stanford University's Steyer-Taylor Center for Energy Policy, told a press briefing during the Astana Economic Forum on May 22. "Kazakhstan is one of the worlds top 20 oil producers, among the top 10 coal producers, and since 2009 the number one uranium producer, but the government is now talking about diversifying the energy infrastructure. This is happening in the global context; it is part of a shift that is causing major economic ripples around the world."

Wind on the steppe

The first few projects in this sector have started, although some obstacles have to be overcome, including revisions to existing legislation. Would-be investors have also discovered that some technologies, such as wind turbines, need to be adapted to the harsh conditions of the Kazakh steppe.

Despite these difficulties, construction of Kazakhstan's first industrial-scale wind farm is going ahead on the northern steppe not far from Astana. The farm, which will have capacity of 45 MW, is expected to help power the "city" that will be built in Astana for the EXPO-2017. First Wind Power Plant, a subsidiary of state-owner power company Samruk Energy, is building the farm with a $94m loan from the Eurasian Development Bank. Also near Astana, in December 2012 Kazakhstan's first solar panel production plant started operations. The KazPV plant was set up by Astana Solar, a subsidiary of nuclear energy company Kazatomprom.

There is also considerable interest in the use of small-scale solar and wind installations to power remote settlements and households that are not connected to the national grid.

To encourage the use of alternative energy, Kazakhstan is expected to adopt legislation that will allow electricity generated from alternative sources to feed into the grid. A new law that would allow fixed tariffs to be set for electricity from renewable sources was approved by the lower house of parliament on May 8.

Kazakhstan's large industrial base, in particular sectors such as metallurgy, needs a stable supply of power, however. So for the time being at least that means it must come from conventional sources, with coal expected to continue as Kazakhstan's main source of electricity generation for the foreseeable future. Asset Magauov, general director of Kazakhstan's energy sector association Kazenergy, points out that many questions need to be addressed before renewables can contribute to a substantial share of Kazakhstan's energy mix. "To use renewable energy, a lot of issues have to be resolved including the tariff issue. Also, we need to introduce a capacity market like there is in Russia," Magauov told bne during the Astana Economic Forum.

At the same time, Kazakhstan has good conditions for several types of renewable energy generation. The southern regions have a high level of sunlight, while a "wind atlas" produced by the UNDP and Kazakhstan's Ministry of Industry and New Technologies demonstrates the potential for wind power generation at many sites across the country.

Siddharth Saxena, director of the Cambridge Central Asia Forum, points out that not only does Kazakhstan have favourable geographic conditions, the country's mineral resources and existing petrochemicals processing capacity could give it the potential to develop new technologies. "Kazakhstan has a petrochemicals-based economy, and is building up its capacity to produce polymers, plastics and other downstream products. It is also endowed with rare earths and other oxides, which are a very hot topic globally due to their importance in electronics, medical applications, space and other industries... Combining these things with geographical factors, Kazakhstan may have the chance to lead in this kind of sector," Saxena says, citing the example of emerging technologies such as plastic electronics in solar cells.

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