As of 2017, electricity generation from small hydropower plants (HPPs) was 649 10 KEY CONSIDERATIONS million kWh.6 (p.3) H Y D R O P O W E R P L A N T P R O J E C T I M P L E M E N T A T I O N I N K A Z A K H S T A N The largest HPPs in Kazakhstan are: Bukhtarma HPP of Kazzinc LLP; Kazakhstan positions itself as a Ranking third among CIS countries in AES Ust-Kamenogorsk HPP LLP; promising country for the development water resource potential, Kazakhstan AES Shulbinskaya HPP LLP; and implementation of hydropower has an estimated potential of 170 billion JSC Moinakskaya HPP. projects on its territory. The state sets an kWh per year, of which about 62 billion ambitious plan of achieving the 50% kWh are technically feasible. share of electricity production in the The annual hydropower potential of country using renewable energy sources medium and large rivers is 55 billion by 2050 (hereinafter – the “RES”). kWh, and 7.6 billion kWh from small A U C T I O N rivers. About 8 billion kWh from small H Y D R O P O W E R P L A N T S I N hydropower plants are estimated to be K A Z A K H S T A N . technically feasible. To ensure the interests of the state and the formation of a competitive market of the electricity production, the Nowadays, 34 hydro power plants Hydro energy resources are distributed government of Kazakhstan executes land (hereinafter – the “HPP”) are located on throughout the country, but three areas plots for RES projects via auctions. the territory of Kazakhstan. have particularly large resources: the An auction is a process carried out on USAID power the future regional Irtysh River basin and its main the basis of the principle of competition program (2019) explored that tributaries (Bukhtarma, Uba, Ulba, between potential buyers to choose hydropower is the second-largest RES in Kurchum, Kardzhil), the southeast zone projects of HPP for implementation on Kazakhstan. As of 2017, it accounts for with the Ili river basin, and the south the territory of Kazakhstan. about 10.9% of the country’s generating zone with the Syrdarya, Talas and Chu capacity. river basins. page 1 T R A D I N G P R O C E S S 10 KEY CONSIDERATIONS H Y D R O P O W E R P L A N T P R O J E C T I M P L E M E N T A T I O N A trading session consists of the I N K A Z A K H S T A N following steps: the organiser opens the trading session The Ministry of Energy of the Republic P A R T I C I P A T I O N I N A U C T I O N the participants submit their bids of Kazakhstan (hereinafter – the “MoE”), through the trading system 3 months before the start of the auction, For subsequent participation in the the organiser closes the trading publishes on its electronic resources a auction at least 2 (two) business days session schedule of auctions for the calendar before the date of the auction, the the results of the auction are year with a full description of land plots, applicant must provide a financial summed up, including the technical specifications, and the guarantee to the Financial Settlement determination of auction prices possibility of generating a certain Center (hereinafter – the "FSC"). In case the organiser compiles the register amount of electricity from the allocated of winning the auction, this financial of auction winners and publishes it land plot. guarantee is necessary for the applicant on its website. Potential bidders need to register on the / seller and FSC to sign the power auction organiser's website and provide purchase agreement (hereinafter – the the necessary documentation. "PPA") and fulfill all conditions in R E S U L T Potential bidders should conclude an accordance with the Rules for Agreement for the provision of the service organising and conducting auctions. for organisation and holding of the The Organiser selects the winners based Government of RK designated the auctions (The Auction Services on the lowest proposed price for the Agreement) and pay for the services of the Financial Settlement Center for the implementation of the RES project and Organiser. Support of Renewable Energy Sources the establishment of competitive MoE RK designated Kazakhstan Operator LLP as the Financial Settlement Center market prices for renewable energy and of the Electricity and Power Market JSC as for the Support of Renewable Energy includes them in the register of auction the Organiser of the auction. Sources. winners. page 2 P O W E R P U R C H A S E A G R E E M E N T It should be noted that due to the huge 10 KEY CONSIDERATIONS support from the government of Kazakhstan in the development of RES, H Y D R O P O W E R P L A N T P R O J E C T I M P L E M E N T A T I O N the legislation of Kazakhstan has many I N K A Z A K H S T A N advantages for the construction of HPP. One of these advantages is that the sale and purchase of electricity generated Based on the results of the auction, the cities of republican significance, and the from RES is carried out centrally - by Organiser, within 1 (one) hour after the capital, until the auction winners are the Settlement and Financial Center for close of the trading session, sends to the granted rights to the land plot. The the Support of Renewable Energy Participants in electronic form relevant information shall be sent to the Sources LLP. This is a guarantee of the notifications of the results of the past MoE RK. buyback of the generated electricity. auction. In this regard, after the end of the Not later than one working day after the The grid connection points provided by auction, it is necessary to conclude PPA trading session closes, the Organiser the energy transmission organisations between the auction winners and FSC. shall provide MoE with a summary of to the MoE RK and specified in the PPA with the FSC must be concluded the auction results, an explanation of the Schedule are reserved until the auction for 15 years. auction procedure, and comprehensive winners conclude an agreement on RE L A N D R I G H T S information about all bids submitted to facility connection and/or the technical the trading system, as well as the register specifications for grid connection are of auction winners. issued. The relevant information shall As of direct sales of land, the procedure be sent to the MoE RK. of obtaining a land plot consists of 4 G O V E R N M E N T A L Thus, the winner of the auction receives stages: G U A R A N T E E a land plot with a prepared branch for Land selection; connection the grid connection points Obtaining of a permit from Akimat to provided by the energy transmission use the land plot for design and The land plots specified in the schedule organisations. survey work; are reserved by the local executive Design and survey work; and authorities of the regions, Obtaining the land plot right. page 3 the commissioning of the renewable energy facility within the validity period of the technical specifications. Technical Dispatching Agreement shall 10 KEY CONSIDERATIONS be taken into consideration before the start of comprehensive tests and H Y D R O P O W E R P L A N T P R O J E C T I M P L E M E N T A T I O N obtaining access to the grid. I N K A Z A K H S T A N An energy generating organisation is obliged to conclude a contract with the In addition, agreement on connection of energy transmission organisation for O B L I G A T I O N S O F E N E R G Y G E N E R A T I N G the RES facility stipulates that the the transmission of electric energy O R G A N I S A T I O N transmission company shall provide the before the beginning of comprehensive RES facility with access to the network tests and access to electric grids. The Law on Support for the Use of RES by providing the connection point E N V I R O N M E N T A L creates an obligation for energy specified in the Technical Specifications C O N S I D E R A T I O N S transmitting organisations to ensure (TS). This agreement is valid between unimpeded and non-discriminatory the date of the technical specifications The last stage of implementing HPP determination of the closest electric and the signing of the grid connection project is Environmental Impact network connection point that act. Assessment (hereinafter – the “EIA”) corresponds to the voltage class and to Further requirement for HPP project which will be made by the authorized ensure connection of RE facilities. implementation is Signing an agreement environmental protection body - the After obtaining land plot entities, must on connection of, as well as Rules for Ministry of Ecology, Geology and establish grid connection to implement Concluding the Contract.