With a population of only 15 million in a country roughly the size of Western Europe, Kazakhstan has large reserves of cheap and generally low-quality coal from which it generates 85% of its electricity. The country's aging, Soviet-era power stations are located on the coalfields, requiring transmission of electricity over vast distances, with losses as high as 28% in outlying areas. According to the UNDP, significant investment in generation, transmission and distribution will be required over the next 15 years to meet rapidly rising demand for power.
As a result, the government is taking renewable energy increasingly seriously. The development of renewables will not only increase security of supply and help hedge against the effect of rising fossil fuel prices on the world market, but also partly offset the country's high greenhouse gas emissions. In addition, locally generated renewable energy will mean less strain on the transmission system and reduce power shortages in remote areas.
"It makes no sense to centralise power generation around the coal production areas," says Peter Dickson, UNDP project advisor in Kazakhstan. "Meeting power demand in southern Kazakhstan by adding capacity at Ekibastus [in east Kazakhstan] is like building a power station in Germany to supply power to Spain." The UNDP considers that rising fossil fuel prices could make renewables commercially competitive in the Kazakh market by 2020, or 2015 if transmission rates reflected the distance covered instead of being set on a regional basis as they are now.
Although the details of the draft law are not yet finalised, Dickson expects it will include firm renewables targets, possibly 2 GW of wind power and 1 GW of hydro by 2023. Conventional power generators will be required to buy renewables certificates which will provide additional income for green energy producers. The certificates will have a fixed price, be allocated in a one-off competitive bidding process and will not be openly traded.
A new body, currently known as the Renewable Energy Agency, will be established to administer the system and to provide counterparty security in contracts for certificate purchases. All being well, the draft will be presented to the legislative commission this month and go before parliament before the end of the year, following which it will require presidential approval.
Meantime, the UNDP and the energy ministry are already working on a proposed pilot wind project in the easterly Djungar Gates area, on the Chinese border, where a pass between two mountain ranges produces strong and consistent winds with an average speed of 9.5 m/s. Other areas being eyed for development are the south, the western region on the shores of the Caspian sea and around the capital, Astana. Many of the areas with a high wind resource are also those experiencing rapid economic development and power shortages.