IBCentre, July 2015
Today, Kazakhstan is one of the most attractive markets for renewable energy. This Central Asian country is in the focus of attention of major international players due to actively develop of sectoral legislation, “green tariff”, which acts, and enormous natural potential for renewable energy projects. Ministry of Energy of Kazakhstan Republic plays a key role in renewable energy development. It creates the game rules for the market development, as well as responsible for implementation of the strategy for renewable energy development in Kazakhstan.
In interview to IBCentre, Kazakh Energy Minister Mr. Vladimir Shkolnik talks about possibilities opening for investors entering the market of renewable energy and energy efficiency.
– Today, the pace of renewable energy development in Kazakhstan is significantly ahead of CIS countries and Eastern Europe. What indicators of sustainable energy industry development you plan to achieve till to 2020?
– According to the Strategic Development Plan of Kazakhstan for 2020 and Conception of Kazakhstan on Transition to Green Economy, approved by decrees of Kazakhstan President ought to increase the share of renewable energy in the overall energy mix to a minimum of 3% by this time. In particular, according to the Plan of Activities for Alternative and Renewable Energy in Kazakhstan, it is planned to put into operation about 28 solar energy projects until the end of 2020 with total installed capacity of 713.5 MW. Also a number of investment projects will be implemented in other areas of renewable energy for 2013-2020 timeframe.
– What are your main achievements in solar, wind and other segments in the first half of 2015?
– First of all, I would like to mention solar power plant “Stormy” with a capacity of 50 MW, which was put into operation in Zualynsky district of Zhambyl region. The official launch of the project took place on 2 July on the Day of industrialization with participation of the President of the Republic of Kazakhstan Nursultan Nazarbaev by teleconference. In general, today Kazakhstan has already 44 objects renewable energy with total capacity of 227.52 MW, which includes 55 MW solar power plants, 53 MW of wind farms and 119 MW of small hydropower stations. Also one biogas plant with a capacity of 0.4 MW for the time being works in Kazakhstan.
– By adopting a “green tariff” Kazakhstan is becoming an industry leader not only in Central Asia but also in the CIS as a whole. What new legislative initiatives you are going to implement for renewable energy market development in the nearest future?
– Forming a legislative platform for renewable energy development in Kazakhstan, we took into account the best global practices. In the end July 4, 2013 we adopted the law of the Republic of Kazakhstan “On Support of Using Renewable Energy Sources”. A new revision of this law addresses both to the support of investors, and support for ordinary consumers. The basic concept of the law is the introduction of a system of fixed tariffs, which will assure investors on return of the invested funds, will help clarify the magnitude of tariffs for renewable energy facilities, as well as to guarantee the purchase of electricity through the establishment of settlement and financial centre for support of the industry.
Also currently in the Mazhilis of the Parliament within the framework of the draft law “On Amendments and Additions to Some Legislative Acts of the Republic of Kazakhstan on Issues of Transition of the Republic of Kazakhstan to Green Economy”, the Ministry of Energy is working on corrections to make industry more attractive for investors, in particular foreign ones.
– Has the Government plans to change the “green tariffs” in the direction of increase/decrease?
– As you know, in summer of 2014 the Government of the Republic of Kazakhstan approved the fixed rates for 4 types of renewable energy: 22.68 tenge per kW ($0,121/kW) for wind farms, 34.61 tenge per kW ($0,186/kW) for solar power plants, 16.71 tenge per kW ($0,09/kW) for small hydropower and 32.23 tenge per kW ($0,173/kW) for biogas complexes. These quotes are exclusive of VAT. The fees are indexed annually according to the level of inflation.
In addition, with a view to stimulating the development of renewable energy in the country, taking into account regional and socio-economic needs, according to the current legislation on renewable sources, the Government may adjust every three years previously approved levels of fixed tariffs.
However, I would like to note that now the rule for the annual adjustment of tariffs is being considered within the framework of the draft law on “green economy”.
Fixed tariffs, probably, will be differentiated depending on the installed capacity of objects to induce the development of small renewable projects, as well as providing electricity to areas with less favourable natural, climatic, technical or other conditions for renewable energy development.
– How difficult is the project approval procedure for connection of new renewable energy capacity to the grid?
– In Kazakhstan, the process of project implementation in the field of renewable energy consists of the following steps: 1) Obtaining the land for the construction of objects; 2) Development of project documentation and passing the examination; 3) Object connection to electrical grid; 4) Signing of a contract of purchase of electric energy by the Accounting and Financial Centre. Today, the Government makes a maximum effort to each of these stages, the investor took place as quickly as possible.
It should also be noted that the Ministry of Energy developed the information guide for potential investors, which includes a complete list of documentation required to implement renewable energy projects in Kazakhstan. The guide is available on the official website of the Ministry (http://energo.gov.kz/index.php?id=2024).
– What are the plans of the Ministry regarding development of national production such as equipment, components for renewable energy plants? What is position of the Ministry of Energy regarding implementation of local content requirements?
– The production of photovoltaic modules from Kazakhstan’s silicon has been operated by the company “Astana Solar” in Astana since 2012. The design capacity of the plant is 50 MW, expandable up to 100 MW.
With regard to local content, Kazakhstan does not require it for implementation of renewable energy projects in the country. But, in accordance with the Decree of the Government of the Republic of Kazakhstan No. 644 dated June 12, 2014 the special tariff for solar projects, power plants using photovoltaic modules based on Kazakhstan’s silicon were fixed on the level of 70 tenge per kW ($0,375/kW). We believe that this is enough to support Kazakhstan’s producers, as well as to build an attractive market for foreign investors.