Kazakhstan has set itself such ambitious targets on renewables that its progress will need to be frenetic rather than leisurely.
Some eye-catching deals inked at the COP-28 summit offer room for optimism.
On December 2, United Arab Emirates-based company Masdar announced that it had signed a development agreement with a group of other companies to install 1 gigawatt of wind power in Kazakhstan.
Kazakh Energy Minister Almassadam Satkaliyev, who was present at the signing ceremony, said this agreement would help his country meet the goal of achieving carbon neutrality by 2060.
That is not all.
When French President Emmanuel Macron visited Astana in November, Kazakhstan’s President Kassym-Jomart Tokayev talked up how French company TotalEnergies was poised to invest $1.3 billion on likewise implementing wind projects with a 1 gigawatt output. Over the weekend, the Kazakh government, TotalEnergies and Turkey-based Aktas Energy signed an energy pact envisioning 1 gigawatt wind power generator along with a power storage facility in the southern Zhambyl region.
In yet another deal, Saudi-based ACWA Power reached an agreement with the Kazakh wealth fund Samruk-Kazyna to build wind power plants with, again, a total installed capacity of 1 gigawatt. Related: Oil Rig Count Sees Small Loss As WTI Recovers To $70
For context, the United Nations Development Program estimates that Kazakhstan currently has around 2.5 gigawatts of installed capacity in renewable energy sources across the board.
The government is seeking to draw interest from smaller investors too. Companies are routinely invited to take part in wind and solar power plant construction projects.
A seemingly encouraging precedent was set at one auction in November when a Kazakh company called Uranus Wind secured its bid by offering to sell electricity produced at a projected 50-megawatt plant in the Turkestan region at a record low rate of 10.49 tenge ($0.023) per kilowatt hour. Uranus Wind beat out three other contenders.
As Timur Shalabayev, executive director of the Qazaq Green Association for Renewable Energy, a lobby group, told Eurasianet, reliance on auctions as a way to hand out smaller renewables contracts has gained momentum. Over several years, up until 2021, the government was annually awarding projects amounting to an overall of just 250 megawatts. This year, the figure has gone up to 850 megawatts, which has piqued the interest of larger investors.
“The Chinese have become particularly active,” Shalabayev said. “They scooped up most of the wind projects, for an aggregate capacity of 500 megawatts, pushing out the Europeans, who used to dominate the sector.”
Another 250 megawatts of hydroelectric projects were snapped up by local investors, while the 100 megawatts for solar power projects were given to Kazakh and other foreign companies. The contracts are granted for 20-year periods.
This eagerness in the market is in part due to the government’s support.
Between 2014 to 2018, the government purchased all electricity produced by renewable energy facilities at fixed high tariffs to guarantee that investors were able to count on relatively risk-free income. To keep interest in the sector high, other incentives have been introduced. These include priority access to the energy grid, commitments to purchase all power produced, and tax breaks.
This approach has seen the green energy industry grow more streamlined and market-oriented, according to the Energy Ministry.
This is just as well since Kazakhstan has a lot of work before it.
These are the self-imposed milestones the country needs to reach: at least 15 percent of all electricity generated to be provided by renewable energy sources by 2030, and at least 50 percent by 2050.
The current pace looks suitably breakneck.
From January to September this year, around 4.91 billion kilowatt hours were produced across the more than 130 renewable energy facilities dotted across the country. That was 25 percent more than over the same period in 2022 and takes the share of renewables in the total pot of electricity production to just a whisker under 6 percent. The government had previously said it wanted to reach the annual 6 percent target by 2025.
Still, 70 percent of Kazakhstan’s electricity is provided by the dirtiest source of all: coal. And a relatively meager seven years remain to hit the 15 percent renewables objective.
According to Energy Ministry data, two-thirds of renewable power comes from wind farms – the dealmaking at the COP-28 summit suggests this may remain the case for the foreseeable future.
If solar power is to be harnessed, southern regions, parts of which are blessed with up to 300 days of sun across an average year, hold out the most promise. Samruk-Kazyna, the wealth fund, has estimated that Kazakhstan’s notional solar energy potential stands at around 2.5 billion kilowatt-hours per year. Hydropower offers another purely theoretical 62 billion kilowatt-hours per year, although experts consider only half of that to be economically feasible.
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There are critics of how the government is pursuing the renewable energy agenda, however.
Aidar Alibayev, the head of the Union of Financial Services Consumers, worries that the way in which large projects are being handed out to international companies without resort to competitive processes opens up room for corrupt practices.
“It is possible that our officials have taken money abroad to bring it back into the country as an investment,” he told Eurasianet.
The constant specter of efficiency-sapping graft makes it unlikely that Kazakhstan will meet its targets, Alibayev believes.
Shalabayev, head of Qazaq Green, is more optimistic, but he argues that policymakers need to consider a more flexible approach and consider energy sources that would be able to replace renewables when weather conditions are not propitious.
“They have a lot of renewable energy in Europe because they have electricity grids linking neighboring countries to ensure an energy balance, but we don’t have that,” he said.
By Almaz Kumenov via Eurasianet.org
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