Fresh wind from Kazakhstan: new renewable energy law

17-06-2009, Almaty, Kazakhstan

On 17 June 2009, Kazakhstan’s Parliament passed the final amendments to a Law on the Use of Renewable Energy Sources, which establishes a full regulatory framework for renewables in that country: the result of a REEEP-funded project implemented by UNDP.

Although Kazakhstan has huge renewable energy potential, particulary wind, it is almost completely untapped; at present, renewables only represent about 1 percent of Kazakhstan’s energy balance.  Coal dominates Kazakhstan’s energy mix, and coal-fired plants generate some 45 percent of Kazakhstan’s total GHG emissions, which are expected to reach their 1990 level (100 million tons of CO2 equivalent) by 2012.

Renewables are therefore featuring prominently in discussions about reducing energy intensity and pollution. The national programme for transition to sustainable development calls for increasing renewables’ share in Kazakhstan’s energy balance to 5 percent by 2024. Wind power could play a particularly important role here: in a number of Kazakhstan’s regions, average annual wind speeds exceed 5 metres per second, quite high by international standards.

Expert assessments also indicate that Kazakhstan’s wind power potential exceeds 1.8 trillion kilowatt hours (kWh) per year. Up to now, the absence of appropriate legal and regulatory frameworks for renewable usage on power market was a major barrier to exploiting this.

The two classic mechanisms for promoting renewable sources such as wind are feed-in tariffs and renewable energy certificates. Feed-in tariffs are common worldwide, and guarantee an artificially high price for the individual producers who sell to the electricity distributors. However, given Kazakhstan’s large size (9th largest country in the world), numerous electricity distributors and low population density, it is difficult to spread these higher costs across users in areas far from where wind turbines might be located.

In contrast, with renewable energy certificates, electricity distributors or users must document that a certain share of the electricity they purchase is generated from renewable sources. This is done via a system of trading renewable energy certificates that register the production, consumption, and source of the “clean” electricity.  This spreads the additional costs of renewable energy across all users and makes the increase in electricity tariffs for any given user negligible.

With the support of REEEP, the UNDP and the Global Opportunities Fund assisted the Kazakh government in drafting the Renewable Law with a certificate system.  After discussion and debates around the complexity of implementing a certificate system in Kazakh conditions, the government also decided to include feed-in tariffs in the RES regulation.

The new law allows the state to:

  • align the expansion of renewables sector according to state plan for renewables usage and
  • attract private investment to renewable energy production by reserving land, by obliging electricity transmission companies to allow renewables to connect to the grid, and by concluding long-term contracts for covering the transmission losses at prices grounded in feasibility studies provisionally adopted by authorized government bodies.

The government approved the draft legislation for this framework in 2008, and its final revisions were passed by Parliament on 17th June, 2009.

“Expert assessments suggest that the market could today absorb some 3 billion kWh of electricity generated from renewable sources. By 2024, this figure could rise to 10 billion kWh, covering some 6 percent of Kazakhstan’s total electricity needs. The resulting reductions in GHG emissions during 2010-2024 are estimated at 70 million tons of CO2 equivalent.  Kazakhstan’s experience with renewables regulation could be useful for  neighbouring CIS countries, where climatic conditions and the situation with regards to renewable energy development are similar,” notes Gennady Doroshin, head of the UNDP and Kazakhstani Government Project on Wind Energy.

Marianne Osterkorn, International Director for the Renewable Energy and Energy Efficiency Partnership (REEEP) stated, “It is very gratifying to see a REEEP-funded project have such a far-reaching effect on policy, and it proves that relatively small interventions can have a very wide effect.  It's also exciting to see a fossil-fuel dependent emerging economy like Kazakhstan take such a major step towards exploiting renewables.”
 

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