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Analysis of the Potential and Market Entry Barriers to Solar Power Projects in Kyrgyzstan

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Analysis of the Potential and Market Entry Barriers to Solar Power Projects in Kyrgyzstan Analysis of the potential and market entry barriers to solar power projects in Kyrgyzstan Study supported by the German Federal Foreign Office Implemented by Published by: Eclareon GmbH Albrechtstraße 22 10117 Berlin, Germany E: [email protected] / [email protected] T: + 49 30 88 66 74 00 Fax: + 49 30 88 66 740 10 Authors: Jurga Tallat-Kelpšaitė (eclareon GmbH) Silke Mooldijk (eclareon GmbH) Robert Brückmann (eclareon GmbH) Cristina Blajin (eclareon GmbH) Prof. Dr. Ing. Andreas Gerhard Goldmann (Beuth University of Applied Sciences Berlin) Johannes J. Hirning (Beuth University of Applied Sciences Berlin) Lukas Torliene (Beuth University of Applied Sciences Berlin) Funding by: Federal Foreign Office (www.diplo.de) Project number (Förderkennzeichen – FKZ): ZMVI6-2517AA0554 Design: eclareon GmbH Place and date of publication: Berlin, XX 2018 1 Executive Summary The mitigation of climate change and adaptation to global warming are key priorities for both the Kyrgyz Republic and the Federal Republic of Germany. This study looks at the history and current state of collaboration between the two countries in the clean energy sector, and particularly in the field of solar power. It gives special attention to Kyrgyz-German economic and academic exchanges, and also provides detailed information on Kyrgyz solar projects for the international solar power community. Kyrgyzstan has made significant investments in renewable energy. Over the past decades, it has pursued a determined policy of developing hydropower; it has also drawn on its rich resources of silicon to develop an PV manufacturing industry. These projects demonstrate Kyrgyzstan’s clear interest in deploying domestic, decentralized and sustainable energy sources. However, further diversification of the power sector is advisable, and Germany and Kyrgyzstan, which already share 25 years of successful and mutually beneficial collaboration, stand to be partners in the development of solar power. The potential for solar power in Kyrgyzstan is staggering and by no means exploited. The solar radiation in Kyrgyzstan outshines the sunniest regions in Germany by more than 50%. Nevertheless, Kyrgyz solar power utilization is still in its infancy. To date, solar power deployment in Kyrgyzstan has taken place either in the form of first pilot projects or mini-off- grid-installations. The reasons for this surprising gap between potential and reality are multiple and complex. First, policymakers remain focused on hydropower generation, leaving targets for developing solar power insufficiently concrete. Second, although Kyrgyzstan became a regional frontrunner when it introduced Central Asia’s first renewable energy law regulating support of the renewable energy sector, ambiguities in the law and lack of additionally required legislation have created barriers for national as well as international installers and investors. Finally, there is concern that financial incentives that would tempt investors might come at great costs for the Kyrgyz economy. Nevertheless, our investigations strongly suggest that these challenges can be overcome. The yet unpredictable ramifications of climate change on the Kyrgyz hydropower sector make the search for alternative energy sources indispensable. Germany and Kyrgyzstan have laid the foundation for productive collaboration on solar power development. Active scientific exchange between Kyrgyz and German universities offers a promising starting point for further international cooperation. This report outlines how concrete, co-led solar power projects can help the Kyrgyz renewable energy initiative reach its full potential. 2 Table of Contents Executive Summary .............................................................................................................. 2 I. Figures and Tables ............................................................................................................. 5 II. List of Acronyms ................................................................................................................ 6 1. Introducing Kyrgyzstan ...................................................................................................... 7 1.1. Country information ..................................................................................................... 7 1.2. Kyrgyz-German cooperation ....................................................................................... 8 1.3. Impact of global warming on Kyrgyz hydropower resources ........................................ 9 2. Overview over the Kyrgyz Electricity Market .....................................................................15 2.1. Overall electricity generation and share of renewable energy generation ...................15 2.2. Electricity consumption ..............................................................................................18 2.3. Import and export of electricity ...................................................................................19 2.4. Transmission and distribution of electricity .................................................................21 2.5. Regulation of the electricity market ............................................................................22 2.6. Challenges in the Kyrgyz energy sector .....................................................................25 3. Kyrgyz Solar Power Market and Potential .........................................................................27 4. Key Stakeholders Involved with PV in Kyrgyzstan ............................................................32 4.1. Parliament (Jogorku Kengesh) ...................................................................................32 4.2. The Government of the Kyrgyz Republic ....................................................................32 4.3. Transmission System Operator (TSO) .......................................................................35 4.4. Electricity distributing companies ...............................................................................35 4.5. Main electricity producer ............................................................................................35 4.6. Financial institution - KyrSEFF ...................................................................................35 4.7. Renewable energy association ..................................................................................36 4.8. Research & Development ..........................................................................................36 4.9. Non-Governmental Organizations (NGOs) .................................................................36 4.10. Further relevant stakeholders ...................................................................................36 5. Policy Framework for Renewable Energy Sources in Kyrgyzstan .....................................38 5.1. Relevant strategies, concepts and programs .............................................................38 3 5.2. National greenhouse gas and renewable energy targets ............................................42 6. Legal Regulation of Renewable Energy Technologies ......................................................44 6.1. The Rules for the Kyrgyz feed-in tariff ........................................................................44 6.2. Further incentives for renewable energy producers ....................................................47 7. Planned Changes to the Legal and Political Framework ...................................................49 7.1. General discussion and process of amendments .......................................................49 7.2. Particular legislative changes .....................................................................................49 8. Project Implementation Steps of Renewable Energy Projects ..........................................54 8.1. Applicability of project regulations to PV projects .......................................................54 8.2. Overview of development steps .................................................................................54 8.3. Description of single steps .........................................................................................55 9. Barriers to PV Development .............................................................................................63 9.1. Strong focus on hydropower ......................................................................................63 9.2. Lack of legally binding targets ....................................................................................63 9.3. Lack of implementing legislation ................................................................................64 9.4. Financial barriers and insufficient support scheme .....................................................65 9.5. Other barriers .............................................................................................................68 10. Future Academic Collaborations between Kyrgyz and German Institutions ....................69 10.1. Introduction of RES Department at KSTU ................................................................69 10.2. International Cooperation with Department of Renewable Energy Sources ..............69 10.3. Future cooperation with KSTU .................................................................................74 11. Outlook ...........................................................................................................................75 11.1. Short and medium-term market
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