Alternative energy
The sharp slowdown in economic activity, and especially the steep decline in mining and metals processing, has had the completely unintended benefit of banishing earlier fears that years of underinvestment had left Kazakhstan dangerously short of electricity.
Over the first two months of 2009, electricity output declined by 9.7 per cent compared to the same period a year earlier, when the economy was still expanding at close to double digits. With output expected to rise only slowly, the economic slowdown provides a welcome respite for the power companies. It gives them breathing space to start building coal-fired power stations, as at Balkhash, or refurbish older Soviet-era power stations at Ekibastuz and elsewhere.
The decrease in demand for energy also provides extra time in which to complete construction of a north-south extension to the national power grid. This is needed to bring reliable power to the more heavily populated south of the country where the two biggest cities, Almaty and Shymkent, are situated and where most people live. The fragility of the supply situation here was underlined in April when much of Almaty was plunged into darkness by a breakdown in hydro-power supplies from Kyrgyzstan, whose Toktogul hydropower reservoir ran out of water before the end of winter.
Such problems should be eliminated once the first stage of the 3,000km gas pipeline, which will carry up to 30 billion cubic metres (bcm) of Turkmen, Uzbek and Kazakh gas east to China, is completed later this year. The new export line will give a steady and secure supply of gas to the whole of southern Kazakhstan, for the first time.
The new export pipeline to China does not run from south to north, as pipelines did in Soviet days to carry Central Asian gas north to Russia, but from west to east, along Kazakhstan’s southern borders with its gas-rich Central Asian neighbours. While the bulk of gas will be exported to China, up to 10bcm annually will be available for consumption in southern Kazakh homes, power stations and factories.
What remains to be seen is whether the combination of tighter credit and reduced fears of power shortages will slow development of alternative energy sources, which were building momentum before the global crisis struck the Kazakh economy, and especially its power-hungry metals, mining and cement sectors.
AFTER A DECADE of heavy investment to develop the country’s on- and offshore oil and gas fields and coal -mines, President Nazarbayev has given his backing to greater investment in non-conventional or alternative sources of power – for which Kazakhstan has huge potential.
President Nazarbayev’s interest in improving alternative energy reflects growing awareness that Kazakhstan is an under-populated country that covers a huge area, and that there is in fact great potential for various forms of alternative energy, including wind power, solar-panel farms and biofuels. Enormous tracts of marginal farming or steppe land are potentially suitable for biofuels farming. Situated far from the oceans, much of the country enjoys plenty of sunshine, especially in the south, and constant winds blow virtually unhindered across thousands of kilometres of flat or undulating steppe, semi-desert and mountains.
At the moment, most of this potential is untapped, but that should change once the Majliis, or Parliament, approves legislation designed to promote alternative energy and its connection to the grid, where appropriate. The new interest in alternative energy also fits in with the government’s renewed focus on rural development and plans to encourage people to stay in villages and small towns. These can often be better supplied from locally produced energy than a national power grid, which is focused on supplying the main towns and industries.
At present, around 80 per cent of all energy consumed is generated in coal-fired power stations, with additional contributions from hydropower, mainly from big dams across the Irtyush river, which flows west and north for thousands of miles from China through the northern Kazakh mining belt and right across Siberia to the Arctic ocean. In the 1990s Kazakhstan lost around 90 per cent of its hydropower capacity when smaller plants were shut down.
“Renewable energy can contribute to Kazakhstan’s energy independence in areas such as north and south Kazakhstan, which currently import energy,” says Gennadi Doroshin, head of UNDP’s Kazakhstan Wind Power Market Development Initiative. It can provide power to remote consumers, reduce transmission losses and the need for power transmission lines.” The UNDP is helping the government with a national wind energy development ^ programme, which targets 250-300mw of wind installations by 2015 and up to 2,000mw by 2030.
“Kazakhstan is one of the best countries in the world for large-scale wind installations because of the high wind potential and land availability. But the potential is hardly used. On the Chinese side of the Jungar Gates border crossing, east of Almaty, for -» example, wind energy stations were set up long ago, h but in Kazakhstan they are still only at the planning stage,” he adds.
Nurlan Djienbayev, director of solar energy company ND&Co, adds: “Many villages are far from main energy networks and power is short in many regions, including Almaty. Solar batteries could have supplemented the main networks, but we cannot do this yet because of the absence of the relevant legislation, this is the main reason for slow development of alternatives.”
Two big solar projects are already in operation – at Alakol and Kuldzhinkii – and four more are planned under the UNDP initiative. But there are also smaller private schemes set up by oil companies in western Kazakhstan and in the Almaty region, where the largest helps power the IT Park free economic zone. n addition, there are a number of projects to produce photovoltaic technologies, with Germany’s Thyssen Krupp Manex supplying advanced technology to Silicium, Kazakhstan’s planned silicon metal plant in Karaganda. Kazakhstan’s Lancaster Industrial and Kun Renewables are setting up a $390 million polycrystalline silicon plant in Astana, with finance from the Investment Fund of Kazakhstan and the Development Bank.
According to the Ministry of Agriculture, Kazakhstan also has the potential to produce up to 300,000 tonnes of biofuels annually at around half he cost of production in western Europe or the US. ”Currently only one biofuel plant is operational. This is the Biochim plant in north Kazakhstan and it cannot meet demand,” says Beisen Donenov, director general of the Kazakhstan Biofuels Association, set up in 2007 to develop the industry. “The country’s food security interests impose limitations on raw material for biofuels production. Because of a smaller grain harvest h last year, the plant did not operate at full capacity.”
A second plant at Taraz was not operational at time of writing and a third is being built at Novoishimsk. The latter will be the first ‘next generation’ plant that uses non-food or agricultural waste products as raw materials. This is only the tip of a potential iceberg. Toyota has just signed an agreement with the Biofuels Association to start developing next- generation biofuels technologies and the association is also working with several US scientific institutes with the aim of producing aviation kerosene and other new-generation biofuels.
Invest in Kazakhstan An official publication of the Government of the Republic of Kazakhstan, 2009. Pages: 69-71.
Tags: Biofuel, Energy, Investment, Kazakhstan, Partners, UNDP
