Golden Sun

Jun. 8, 2018

Though investment in conventional energy sources continues to increase, Kazakhstan is installing more solar and wind power plants with the help of international development institutions.

At first glance Kazakhstan seems like an unlikely country to take the lead in green energy investment. Traditional fossil fuels make up a significant portion of the country's economy, with oil exports comprising Kazakhstan's main source of export revenue and 75% of heating and electricity coming from coal. Yet, even as Kazakhstan embarks on projects to increase oil output, the country is laying the groundwork for a greener future. The government has been taking steps to build renewable energy infrastructure since 2009, when it passed a law supporting the development of renewable projects. Since then, regulatory agencies have been established, the sector has been opened to foreign investment, and Kazakhstan has begun to coordinate with international development agencies to build a stable and reliable green energy sector.

In 2013, the government announced Strategy Kazakhstan 2050, a development blueprint that established a set of renewable goals. The plan calls for solar and wind technologies to become 3% of the nation's power generation mix by 2020 and 50% by 2050. Although current renewable generation is minor, local and international industry leaders believe that Kazakhstan has tremendous green energy potential. Kazakhstan's massive land area—at just over 1 million square miles, it is the ninth-largest country in the world—and low population make it a natural fit for solar and wind projects on both large and small scales. The open steppe that makes up the majority of Kazakhstan's land area enjoys up to 3,000 hours of sunshine per year, equal to generation rates of 18,000kW per square meter. The flat plains of the steppe also generate strong winds; sources estimate that Kazakhstan's wind potential is equal to 10 times the country's current annual consumption. Renewable industry leaders also believe that aside from their environmental benefits, solar and wind projects could bring more reliable electricity coverage to rural areas by bringing generation closer to these isolated communities.
In 2014, the first large-scale renewable project was announced with the construction of a 50MW wind power plant in Yereymentau in central Kazakhstan. The project was developed in collaboration with the European Bank for Reconstruction and Development (EBRD) and the World bank's Clean Technology Fund (CTF); EBRD contributed a EUR14-billion loan to aid with construction and the CTF provided EUR18 million of financing. The plant was the first in Central Asia, but there are plans for it to be followed by a 25o MW wind farm in Aktobe, a wind farm in Burilinsky in West Kazakhstan, and a 50-MW project 40km outside of Astana. The final project will be funded by the Development Bank of Kazakhstan (DBK) in conjunction with a private construction firm, and is expected to ultimately have a capacity of 100MW once the second construction state is completed.
In solar, Kazakhstan has been using the same model of working closely with international developing agencies to help finance projects and acquire knowledge from countries with a long track record of renewable generation. In 2015, Kazakhstan partnered with EBRD and CTF again to construct the Burnoye Solar-1 plant, a USD122 million, 50-MW solar power generation plant located on a 150ha area. The three parties joined forces again two years later for the Burnoye Solar-2 project, an additional 50MW solar plant located close to Burnoye Solar-1. For the second project, EBRD announced that it would provide a USD44.5 million loan while the CTF would contribute USD10 million in funding, with the rest of the USD80-million price tag coming from private funding. Together, these two plants are expected to reduce Kazakhstan's CO2 emissions by more than 150,000 tons per year.
This model of collaboration with EBRD and similar international institutions is expected to continue in the near future. As of 2016, renewable energy generation had increased 18% to 296MW, with more coming online in 2017. That amounted to just under 1% of the nation's total energy mix, however, still below the goal of 3% by 2020. If Kazakhstan is to reach that goal, continued international investment will be key. Thus far, EBRD has invested EUR1.7 billion in renewable energy programs, making Kazakhstan the bank's second-largest country of operations.