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Case Study on Policy Reforms to Promote Renewable Energy in Kazakhstan E/ESCWA/SDPD/2017/CP.11

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Case Study on Policy Reforms to Promote Renewable Energy in Kazakhstan E/ESCWA/SDPD/2017/CP.11 Economic and Social Commission for Western Asia United Nations Development Account project on promoting renewable energy investments for climate change mitigation and sustainable development Case Study on Policy Reforms to Promote Renewable Energy in Kazakhstan E/ESCWA/SDPD/2017/CP.11 Economic and Social Commission for Western Asia United Nations Development Account project on promoting renewable energy investments for climate change mitigation and sustainable development Case Study on Policy Reforms to Promote Renewable Energy in Kazakhstan 2 CASE STUDY ON POLICY REFORMS TO PROMOTE RENEWABLE ENERGY IN KAZAKHSTAN © 2018 United Nations All rights reserved worldwide Photocopies and reproductions of excerpts are allowed with proper credits. All queries on rights and licenses, including subsidiary rights, should be addressed to the United Nations Economic and Social Commission for Western Asia (ESCWA), e-mail: [email protected]. The findings, interpretations and conclusions expressed in this publication are those of the authors and do not necessarily reflect the views of the United Nations or its officials or Member States. The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Links contained in this publication are provided for the convenience of the reader and are correct at the time of issue. The United Nations takes no responsibility for the continued accuracy of that information or for the content of any external website. References have, wherever possible, been verified. Mention of commercial names and products does not imply the endorsement of the United Nations. References to dollars ($) are to United States dollars, unless otherwise stated. Symbols of United Nations documents are composed of capital letters combined with figures. Mention of such a symbol indicates a reference to a United Nations document. United Nations publication issued by ESCWA, United Nations House, Riad El Solh Square, P.O. Box: 11-8575, Beirut, Lebanon. Website: www.unescwa.org. Cover photo credits: Solar panel, by stevanovicigor Wind energy, by Satura Astana Kazakhstan, by Evgeny 3 Preface This case-study report was prepared for the Sustainable Energy Division, United Nations Economic Commission for Europe (UNECE) within the framework of the United Nations Development Account (UNDA) project Promoting Renewable Energy Investments for Climate Change Mitigation and Sustainable Development. The project focused on capacity-building for policymakers and project developers in order to promote investments in renewable projects. The project was led by UN ESCWA and implemented in partnership with the UNECE. The UNDA project included case studies of the experience of renewable energy policy reforms in selected countries from each of the two regional commissions. Four countries were selected from each regional commission: Jordan, Lebanon, Morocco and the United Arab Emirates from UN ESCWA Member States; and Georgia, Kazakhstan, Serbia and Ukraine from UN-ECE Member States. The present report covers the case study for Kazakhstan, and was prepared by Mr Maulit Abenov, an expert with more than 25 years of professional experience in energy sector; currently involved into the development of national policies on energy efficiency and renewable energy in Kazakhstan. Mr. Viktor Badaker, Regional Adviser, Sustainable Energy Division (UNECE), helped review and finalize the document. 5 Table of Content Preface 3 G. Social and economic development of the region 16 H. Development of the regional economy 16 Table of Content 5 III. Technical feasibility 17 List of figures 5 A. Access to energy resources in the Mangistau region 17 B. Wind potential for power production 17 List of tables 5 C. Equipment to measure wind potential 19 D. Description of wind-power unit 22 E. Power consumption 23 I. Introduction: Reforms in the energy F. Sourcing of equipment – local or foreign suppliers 23 sector of Kazakhstan 7 A. Sector characteristics before the policy reforms 7 IV. Economic feasibility 23 B. Policy reforms 7 A. Demand for electricity 23 C. Implementation of policy reform 8 B. Cost of construction 24 D. Benefits of policy reform 9 C. Fuel pricing 28 E. Pre-feasibility study on wind-power capacity in D. Electricity prices and sales 28 the Mangistau region and lessons learned 10 E. Taxes and import duties 28 II. General aspects of the project 10 V. Schedule: Progress schedule 30 A. Location of the wind farm 10 VI. Legal and regulatory aspects 31 B. Seismic data 10 C. Geotechnical survey data 10 VII. Conclusions for future national policy D. Need for electric power or heat 12 development and adoption of a similar approach E. Social and economic aspects 12 in neighbouring countries 31 F. Migration processes 13 List of figures List of tables Figure 1: The area in the vicinity of Fort Shevchenko Table 1: Electric Power Balance for the Mangistau showing the location of the proposed Region (million kWh) 12 wind-farm site 11 Table 2: Population of the Mangistau region 13 Figure 2: Wind atlas of Kazakhstan 17 Table 3: Main indicators of the manpower market in the Figure 3: Meteorological mast in the vicinity Mangistau region* 13 of Fort Shevchenko 18 Table 4: Migration processes in the Mangistau region Figure 4: Distribution of wind speed and Weibull (number of population) 14 parameters at 51 m height 20 Table 5: Basic macroeconomic indicators for Mangistau Figure 5: Wind-direction rose (left) and wind-power region, January–December 2014 14 rose (right) 20 Table 6: Mast location and configuration of instrumentation Figure 6: Monthly patterns of wind speed at 51 m height 21 and devices of Fort Shevchenko wind station 19 Figure 7: Structure of industrial wind unit 22 Table 7: Mast data analysis 19 Table 8: Modelling results for long-term average wind speed at Fort Schevhenko 21 Table 9: Taxes and import duties in Kazakhstan 29 7 I. Introduction Reforms in the energy sector of Kazakhstan A. Sector characteristics before It also provided for the need to create conditions the policy reforms encouraging the involvement of RES in the total energy balance and to develop power facilities The aggregate installed capacity of all power on this basis. In accordance with this legislation, stations of Kazakhstan is 18,992.7 MW for electricity renewable energy was recognized as the priority for production, of which 70% is generated by coal-fired the development of the power industry and for the stations, 14.6% by hydropower and 10.6%–4.9% solution of environmental problems. The mechanisms by gas- and oil-fired facilities. This situation in for the implementation of the Law were not detailed, Kazakhstan's energy sector could not lead to its being however, due to the lack of further development of recognized as a developed State. That is possible only the base subordinate legislation. by achieving a high level of environmental protection and ensuring a balanced and sustainable development In addition, the intensive development of RES in of renewable energy sources (RES). Kazakhstan has been held back by a number of other factors, the main ones being: B. Policy reforms Financial barriers related to the lack of sufficient domestic and foreign investment capital: local Within the framework of the concept of transition Kazakh companies which are interested in the of the Republic of Kazakhstan to sustainable use of renewable energy development have development adopted for 2007–2024 and approved by limited financial resources and/or restricted Decree No.216 of the President of Kazakhstan dated access to funds to be used in investment 14 November 2006, it was stated that the sustainable projects implying the use of renewable energy. economic development of Kazakhstan would be Participation of foreign capital is partially achieved through supporting the ecologically constrained by instability in business, climate effective production of energy, including the use of and economic conditions and partly due to the renewable sources and secondary raw materials. lack of an appropriate regulatory framework and effective system of enforcement of legal In order to ensure the rational use of natural obligations; resources and solve problems of environmental pollution, the uncontrolled import of outdated and Information barriers caused by the lack of “dirty” technologies and inefficient use of renewable information on technologies and their potential resources, the Head of the State, in his annual uses; address to the nation delivered on 27 February 2007, emphasized the need to formulate and establish Institutional barriers conditioned by the the legislative base of the the country in the field of insufficient legislative framework in support ecologically clean sources of power production. of renewable energy development; and an unworkable system of measures for enforcing The current Law on “Energy Saving” (approved in environmental legislation: altogether, they 1997) was aimed to promote the efficient use of are counterproductive to the growth of fuel and primary energy resources, where, among awareness and interest in developing the use of the regulated standards, it was also foreseen to more environmentally friendly forms of energy, support the use of renewable energy at the stage of such as renewable energy. developing energy and environmental
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