Government of the Republic of Kazakhstan and United Nations Development Program

Government of the Republic of Kazakhstan and United Nations Development Program Project “Kazakhstan – Wind Power Market Development Initiative”

Karabatan Wind Farm

Pre-feasibility Study

Site location : Karabatan, Kazakhstan (N 47°14'07.4", E 52°22'26.2”) Wind potential at 80 m : 7,88 m/s Projected windfarm capacity : 41 MW Net annual power production : 143 497 MW*h

Almaty, 2008

1 TABLE OF CONTENTS

Glossary of Terms 3 1. Project Description 4 2. Site Description 4 3. Wind Potential Assessment 5 3.1 Wind Monitoring Equipment 5 3.2 Tower Data Analysis 7 3.3 Long-term correlation 9 4. Energy Yield Assessment 9 4.1 Wind Flow Model 9 4.1.1 Climate and Topographic Data 9 4.1.2 Turbine Selection 10 4.1.3 Wind Turbine Power Curve 10 4.1.4 Wind Farm Losses 10 4.2 Wind Farm Layout 11 4.3 Summary of Energy Yield Results 12 4.4 Alternative site for wind farm layout 13 5. Commercial Modeling and Assumptions 14 6. Site Data Collection and Investigation 16 7. Grid Connection 16 8. Transportation Study 16 9. Environmental Impact Assessment 16 10. Identification of Required Permits 17 11. Conclusion 18

2 GLOSSARY OF TERMS deg Degrees IEA International Energy Agency IEC International Electrotechnical Commission IRR Internal rate of return kW, MW Kilowatts, megawatts kWh, MWh, GWh Kilo, mega, giga Watt hours KZT Kazakhstani tenge m, km Meters, kilometers m/s Meters per second mAGL Meters above ground level mASL Meters above mean sea level NCAR National Center for Atmospheric Research UNDP United Nations Development Program Vestas V82 Vestas 2 MW WTG with 82 meter rotor diameter

3 1. PROJECT DESCRIPTION The site is located 40 km to the north-east from the city of Atyrau. Atyrau is an administrative center of Atyrauskaya oblast and it is located in the northern part of Caspian Sea coast. The region demonstrates a rapid development of oil and gas extraction and refining industries. Economic development creates additional demand of electricity which exceeds current energy infrastructure capacity in the area. In 2007, Atyrau region consumed 1.185 billion kWh of electricity. Atyrauskaya oblast is connected to the western power supply zone together with Mangistau and West-Kazakhstan oblasts. Western power supply zone is isolated from the rest of the country’s power grid and it is connected to the Russian energy system. There is a deficiency of local energy sources in the region and, therefore, the deficit of electricity is covered by import from Russia. It is expected that the power deficiency will reach 1113 MW in 2015. There are plans on construction of gas-fired power stations in the region. But some concerns exist about the future market prices of natural gas which will negatively influence the development of Atyruaskaya oblast. Besides, natural gas is in a high demand on the external market, and therefore, exporting it is more economically attractive than using it for electricity production on the local market. Area around Atyrau on the Caspian shore has a significant wind potential which can be utilized for production of electricity on wind farms in large scales. Construction of a wind farm near Atyrau will contribute to energy self-sufficiency and stabilize electricity prices the region. Vast territories exist for a significant sized wind farm at the site, and limitations are only presented by suitability of grid conditions and economic considerations. Apart from local benefits, the construction of wind farms in Atyrau and taking the place of conventional coal-fired power stations, will contribute to implementation of the international obligations of Kazakhstan concerning the greenhouse gas release reduction, in compliance with UN framework convention on climate change. Kazakhstan has been the member of this convention since 1997.

2. SITE DESCRIPTION The Atyrau (Karabatan) site is located in the Atyrauskaya oblast of Kazakhstan. The monitoring tower is located approximately 37 km from the city of Atyrau. The terrain around the monitoring tower is flat with sparse grassland vegetation. Single storey man-made structures are present to the west but are sparsely distributed – none are located near enough to the monitoring tower to have an effect on wind monitoring. The site is located nearly 500 m away from railway station of Karabatan. There are approximately 20 single-storey houses around the station. A dirt road leads to an auto route Atyrau-Aktobe which is 5 km away. Along the auto route, there is a power transmission lines 110 V. At a distance of 8 km to the north from the site, there is a gas condensate processing plant belonging to AGIP KCO. An accommodation village for workers of AGIP KCO is located 5 km to the south-east from the site. On the territory of the village, there is a landing

4 strip for helicopters. Also an underground gas pipeline lies at a distance of 800 m to the north- east from the site.

Figure 1 - Map of area with an indication of mast location

3. WIND POTENTIAL ASSESSMENT In September 2006, under UNDP wind project, a 50 m monitoring mast was installed on Karabatan site with a support of the local authorities - Akimat. During 2006-2007, wind speed and wind direction were measured on the site. All measurements were conducted in compliance with international standards (IEA/IEC). Data verification and wind potential assessment were performed with a support of international company PB Power, Australia. Materials of wind monitoring and wind potential assessment are presented below.

3.1 Wind Monitoring Equipment The Karabatan monitoring tower is a 50 m tubular tower with anemometers located at heights of 51, 49 and 27 mAGL and wind vanes located at heights of 49 and 26 mAGL. Temperature was recorded at this site at heights of 49 and 26 mAGL. Pressure was recorded at a height of 4 mAGL. The image of the Karabatan monitoring tower is shown below.

Figure 2 - Photograph of the Karabatan monitoring tower facing south east

A summary of the tower location, and instrument configuration on the Karabatan monitoring tower, is presented in Table 1 below. The instrument configuration at the Karabatan monitoring tower generally conforms to relevant IEA/IEC standards.

Table 1 Sensor information for the Karabatan monitoring tower

6 3.2 Tower Data Analysis

A summary of wind data statistics for this site (including the shelter corrected wind speeds) is given in Table 2.

Table 2 Wind data statistics for the Karabatan monitoring tower

The data availability for the wind speed calculations was 95.8% for the period of 2006-2007. Incorrect data were not used due to frozen sensors.

The distribution of the wind speed and the Weibull parameters at 51 m for this site are presented in the Fig. 3 below.

Figure 3 - Wind speed distribution and Weibull parameters at 51 m for the Karabatan monitoring tower

Figure 4 - Wind direction (left) and energy distributions (right) at 51 m for the Karabatan monitoring tower

The wind direction and energy roses, as recorded at 51 m, are presented in Figure 4. The direction distribution shows a wind direction pattern with the majority of winds from the east. The energy distribution indicates that the significant majority of the energy is in easterly and westerly winds.

Figure 5 - Monthly average wind speeds for the 51 m level

The seasonal wind speed pattern presented in Figure 5 displays fairly consistent monthly wind speeds. Slightly higher than average wind speeds can be seen during the first half of the year and slightly lower wind speeds can be seen from about July to November. Note that the data recovery rate was only 23.21% during December so the above average is not

8 necessarily indicative of this month. The remaining winter months of all had lower recovery rates compared to the warmer months, due to anemometer icing. This seasonal pattern has been calculated from only 12 months of data hence the long term pattern may differ slightly from what is presented above.

3.3 Long-term Correlation

A correlation between the NCAR data and the Karabatan monitoring tower data was conducted in order to determine the strength of the relationship between these two datasets, and predict a long-term wind speed for the Karabatan site. On shorter timescales, natural variation of wind speeds may occur between sites separated by such a distance, so to minimize this effect, and account for the fact that only six-hourly NCAR data is available, the correlation was performed using daily averages of the available data. The results of the correlation are presented in Table 3.

Table 3 Results of the correlation between the NCAR wind data and the Karabatan monitoring tower (both daily averaged datasets)

The results of the correlation show a moderate correlation between the on-site monitored data and the data from the NCAR reference wind data. This correlation result is incorporated into uncertainty analysis. The on-site masts recording period coincided with a lower than average period for the long term reference site. This has resulted in the calculated long-term wind speed at the on-site mast being slightly higher than the measured average wind speeds.

4. ENERGY YIELD ASSESSMENT

4.1 Wind Flow Model

4.1.1 Climate and Topographic Data

“PB Power” has undertaken, as part of this report, wind flow modeling analysis for the Karabatan site. The following climate and topographical input data were used in the modeling:

Wind Data: Wind data from the Karabatan monitoring tower extrapolated to the proposed hub-height of 80m.

Average Air Density: Temperature, and in some cases pressure information was recorded at the Karabatan monitoring tower. The density calculated for the Karabatan site is

9 considered the average hub-height air density applicable to all turbine locations. The air density for Karabatan at hub-height is 1.231 kg/m3.

Terrain Data: Digital map of terrain for the region surrounding the Karabatan monitoring tower location was provided by UNDP with terrain contours in 10 m intervals. As terrain roughness information was not provided, “PB Power” estimated the roughness of the terrain using aerial and land-based site photos. “PB Power” determined a roughness length value of 0.03 m, which is considered suitable for farmland with scattered vegetation.

4.1.2. Turbine Selection PB Power believes the Vestas NM82 wind turbine is a suitable selection in providing an indicative energy yield for the Karabatan wind farm. The rated power of this turbine is 1650 kW, driven by a rotor of 82 m in diameter. The hub height used for the assessment is 80.

4.1.3. Wind Turbine Power Curve The power curve for the Vestas NM82 wind turbine used in the UNDP energy assessments has been extracted from an industry standard wind engineering software package. The power curve specified for an air density 1.231 kg/m3 is illustrated in Fig. 6 below:

Power Curve

) 1600

W 1400 k (

t 1200 u

p 1000 t u 800 O

r 600 e

w 400 o

P 200 0 0 5 10 15 20 25 Wind Speed (m/s)

Figure 6 - Power curve for Vestas NM82

4.1.4 Wind Farm Losses The energy losses noted below are subtracted progressively from the gross energy yield to arrive at the net energy yield. “PB Power” generally expects a certain range of losses to apply to the various inputs to the energy calculations. The table below indicates how the losses were derived (i.e. estimated/calculated and by whom).

Item Loss Source

10 Wake losses Site dependent (see Calculated by “PB Power” Sections 2.2 to 2.9)

Power curve degradation 0.5 % Opinion of “PB Power”

Turbine shutdown Minimum impact but Calculated by “PB Power” hysteresis included in energy calculation

WTG miscellaneous loss 0.5 % Estimated by “PB Power”

On-site electrical losses 3 % Estimated by “PB Power”

Long-term WTG 3 % Estimated by “PB Power” availability loss

Off-site electrical losses Not included -

Grid outage loss Not included -

4.2 Wind Farm Layout PB Power designed wind farm layout for the Karabatan site that provide an indicative energy yield for a 41 MW. The resultant wind farm layout consisted of 25 turbines arranged in a 5X5 grid, with inter-turbine spacing at six rotor diameters.

Figure 7 - Map of the Karabatan turbine layout and surrounding area

4.3 Summary of Energy Yield Results

Table 4 below presents a summary of the energy calculations performed on the Karabatan wind farm for the proposed layout.

12 Table 4

As it is seen from the calculation results, for the site average wind speed of 7.88 m/s at the height of 80 m the net energy output is 143 497 MWh. And the net capacity factor is 39.71 % which is sufficiently high indication of wind potential and shows that it is possible to construct a wind farm on this site.

4.4 Alternative site for wind farm arrangement in Karabatan

In addition to the above option for wind farm arrangement, another alternative site was considered which has a high wind potential. By the help of software program WindPRO 2.5 the correlation was done for the data of monitoring tower and NCAR/NCEP. Based on these data the detailed wind atlas of the location was drawn up. Optional site was determined approximately at 20 km to the south from the Karabatan station. The long-term average wind speed on the site is known as 8.2 m/s, which is higher than in Karabatan site. At the distance of 3.5 km there is a power line 220 kV for connection to the wind farm. There is also earth road passing nearby. The disadvantage is that this territory runs the danger of under flooding, which in turn may restrict the access to the site. Wind farm construction requires the construction of access road for transportation of large-sized loads as well as selection of appropriate materials for foundation installation for wind turbines. 25 wind turbines with total power of 41.25 MW can be arranged on this site (Fig.8).

13 Figure 8 - 41,25 MW wind farm layout on an alternative site

The main productive indications for the given wind farm are shown in the Table 6.

Table 6 Karabatan Wind Farm WTG Type Vestas NM82 No. of WTGs 25 Hub-height (mAGL) 80 Overall Wind Farm Losses (%) 10,8% Gross Energy Output (MWh/y) 161 731,6 Gross Energy Output incl. Wake Losses (MWh/y) 155 585,8 Net Energy Output (MWh/y) 144 694,8 Net Capacity Factor (%) 40,0% Site average wind speed (m/s) 8,2

Net Capacity Factor of the wind farm is 40.0% (including 10.8% wake loss),which is higher than in the first site and the net energy output is 144 695 MWh at the site average wind speed of 8.2 m/s.

5. COMMERCIAL MODELING AND ASSUMPTIONS A rough modeling exercise with these figures shows that under these circumstances a total income per kWh paid to the generator of 9,25 KZT will produce a project IRR of about 12%, which is equivalent to returns for many wind farm projects in Europe.

Cost assumptions used in the compilation of this simple model include:

14 Item Value Source

Capital Cost €1,25m/MW This price is predicted based on the internet research throughout European market for June, 2008. The installation of the equipment is included in this price.

Operations and €9/MWh European Industry average. Maintenance

Indexation of All 5% All costs predicted to rise evenly throughout the Costs project by 5% per annum. This is likely to be a conservative analysis as the inflationary pressures on power prices are likely to be higher than those on operations and maintenance. It is the responsibility of the owner and operator of the wind farm to negotiation a long term power purchase agreement with clear and secure indexation.

Taxation Regime Taxation as included in the tender documents for Djungar Gates, issued by UNDP 2005.

The project is modeled to estimate the power price necessary to achieve an Internal Rate of Return on the full capital employed of 12%, equivalent to the performance of many European wind farms. At this income, and using these assumptions, the simple payback period for the wind farm will be between 9 and 10 year. The fundamental results of the feasibility calculations are shown in Table 5 below: Table 5 Variable Value Unit Power & Capital Start year 2009 Year Design life 20 Years End of project 2029 Year Total installed capacity 41 MW Net annual power 143 497 production for site MWh / year Capital expenditure 51,250,000 € Operational Revenues Power Sale Price 9,25 KZT/kWh Operation & Maintenance/MWh 9 € Operation overheads €0 €/annum Land owner royalty 0,0% % gross income Tax

15 Corporate Tax 30% Property Tax 1% € based on €300/ha and Land Tax 54 000 30ha/turbine Tax Holiday (years) 5 Indexation of Costs 5%

Exchange Rates KZT/$ 121 KZT/€ 180 KZT/£ 244 Results Project IRR 12,0 %

6. SITE DATA COLLECTION AND INVESTIGATION

Seismic Data Karabatan is located at a zone of moderate seismic activity with magnitude 6, and therefore, it is necessary to perform further studies about influence of earthquakes on wind turbines. Geotechnical Report Site Inspection determined that Karabatan site terrain represents a soft loamy soil structure. The surface, especially low places, is partially covered with salt marshes. During spring and autumn, dirt roads turn into mud and become impassable. Ground waters are located at 3-5 m depth. Alternative site soil structure is represented by fragmented shell rock. This territory is exposed to flooding.

7. GRID CONNECTION The site is located at the distance of 200 m from 110 kV distribution network and 4 km from the distribution line 35 kV. At 3 km from the site, 110 kV and 220 kV power lines lie in parallel. The nearest substation is 35/10 kV substation which is located on the territory of accommodation village of AGIP KCO, and the distance from the selected site to this substation is 5 km. The connection to this power line is physically possible, but it is necessary to research the conditions of availability of this line to receive the electricity of different amount with different properties.

16 8. TRANSPORTATION STUDY Karabatan is located along the highway 20 km away from railways that route to Karagaily. These railways connect Karabatn directly with Karaganda and railway grid of country. Turbine, blade and tower transportation can be performed through railways from China and Europe.

9. ENVIRONMENTAL IMPACT ASSESSMENT It is a requirement in Kazakhstan that any project developer should consider an Environmental Impact Assessment. The developer must check the details of the legislation to see whether any proposed wind farm development is covered by the requirements. Any EIA will require an initial scoping study to identify areas of concern for further detailed analysis. A scoping study will identify possible problems for future analysis and should include: Flora and fauna Studies of plant life and animals found living on the site must be carried out. Studies of migrating birds should be completed to identify any possible concerns for the welfare of species. The site is located on a spring birds migration way. During site visit on August 29, 2006, there were observed the following types of birds: rooks, starlings. There wasn’t many birds on the site at the time of inspection. Turbine noise and visual impacts, including sun shadow flicker Turbine noise is a concern generally in residential areas. The sound of the tips of the blades cutting through the air causes a low-frequency sound that is perceptible up to 500m away at medium wind speeds. As the site is uninhabited and no dwellings exist within several kilometers, it is not anticipated that thee will be any concerns over noise or visual impact. Electromagnetic Interferences, Radar, radio, Television, mobile communications It is usual in cases such as this that all sources of Electromagnetic transmission near to the site are identified and studies. We judge that in this case the sources are likely to include:  Mobile telephone transmission masts located within a 25km radius  Television relay stations in 500 m from the site

10. IDENTIFICATION OF REQUIRED PERMITS The permits for construction of industrial facilities are regulated by the legislation of Republic of Kazakhstan. The following fundamental permits are required for the construction of wind farm:

17 1) Decision of local authorities to provide land, according to the governmental regulation of Kazakhstan dated on May, 6, 2008, No: 425, “Policy of registration and issue of raw materials for construction design” 2) Permit for building and assembly jobs, in compliance with sanitary norms and rules (SNiP) of RK 1.03-06-2002 “Construction industry. Organization of construction of enterprises and buildings. Issued by the officials of state architectural inspection” Other standard regulations: - SNiP RK A.2.2-1-2001. Instruction about the rules of project design, confirmation, approval, and content of design estimates for buildings construction. - SNiP RK 1.03-05-2001. HSE in construction development. - State Standard 26433.0-85. System for precise geometric parameters provision in construction development. Rules for performing measurements. General regulations. - State Standard 26433.1-89. System for precise geometric parameters provision in construction development. Rules for performing measurements. Manufactured elements. - State Standard 26433.2-94. System for precise geometric parameters provision in construction development. Rules for performing measurements of buildings and constructions parameters.

11. CONCLUSION The site selected at Karabatan is suitable for development of a wind farm. Local wind speeds are suitable for operation of turbines, access routes are clear and present few difficulties, a grid connection for the dispatch of power is readily available and the site presents few difficulties for the construction of a wind farm. As with any wind farm in Kazakhstan, the price to be paid for power to the generator must be sufficient for the financing of such a project and be secure for the long term. In addition, there are still some doubts about the site because of intensive land development near Karabatan station. An agreement with the city authorities must be established concerning a buffer zone between any wind generation project and limits of the city development in that direction. While this site is appropriate for development of a wind generation facilities, the flat topography means that some other sites around Karabatan will be equally appropriate. It would be better to confirm selection of site for the wind farm location with the local authorities. The cost of electrical energy in wind farms should be reasonable enough to attract investing of such a project and be able to provide a payback in a medium term. The price of energy should be verified prior to detailed study taking into account the cost of equipment and financing diagrams.

According to the approximate evaluations considering the perspective of increasing of market prices for energy, the cost of electric power from wind farms is supposed to be comparable with market value of electric power in this region for long-term planning.

18 It is necessary to note that there is a law draft currently being examined by government, concerning renewable energy sources. When the law is adopted, there will also be a legislative support to the wind farm project in Karabatan.