Kazakhstan’s only significant renewable energy source at present is hydropower, accounting for 3 percent of total energy consumption in 2006.  At a June 2008 meeting of the Foreign Investors’ Council, Kazakh President Nursultan Nazarbayev called on the Kazakh Government to address the need for the development of renewable energy, taking into account the country’s wind and solar resources.  Initiatives proposed by the government have the potential to help certain localities address existing electricity deficits and could provide economic incentives for blending gasoline and diesel with more eco-friendly bio-fuels.  Renewable energy initiatives in Kazakhstan are very modest in scope, however, and the main focus of the country will continue to be on the development of hydrocarbons. 

Hydropower Initiatives

Kazakhstan’s five hydropower plants produce about 12 percent of the country’s electricity, while coal-fired plants account for over 80 percent of electricity generation. The government is planning to construct a number of large and small hydropower stations in the Almaty region.  A major ongoing project is the 300 MW Moinak hydropower station, which is estimated to cost about $300 million, including a $200 million credit from China’s Development Bank. 

Bio-fuel Initiatives

Kazakhstan’s bio-fuel sector is in its infancy, and new legislation in the works will for the first time outline the scope of state regulation of this sector.  The Kazakhstan Bio-Fuels Association was founded only in 2007.  The Ministry of Agriculture is expected to present technical standards in 2009 for gasoline and diesel blended with up to 7 percent bio-fuel.

Kazakhstan has the potential to produce 300,000 tons of bio-diesel a year and export half of the output, according to the Ministry of Agriculture.  Kazakhstan, the largest producer of wheat in Central Asia, started to grow rapeseed in its northern provinces not long ago.  In 2007, Kazakhstan was the third largest non-EU exporter of rapeseed to the EU, after Ukraine and Russia.  Kazakh federal authorities posit that surplus farm crops could be used in the production of bio-ethanol and bio-diesel.  Bio-fuel production costs in Kazakhstan may be 50 percent lower than those in the EU and the United States, according to various estimates. 

The Biohim company uses non-food quality wheat and grain waste to produce ethanol for domestic use.  The company sells a five-percent ethanol-blended gasoline in Almaty, with plans to reach out to other major cities.  Biohim consulted with Germany’s BASF to ensure the quality of its bio-fuel.  The company plans to boost bio-ethanol production to over 50,000 tons a year and is interested in exporting bio-ethanol to the European Union, Russia, and China.  In addition to the Biohim plant, three more plants are planned in 2009 for the production of bio-fuel from wheat and other crops.  

The draft law on “State regulation of production and turnover [sales] of bio-fuel” [1] was approved by the Kazakh government in May 2008 and submitted for consideration by the Parliament in June 2008.  The Agrarian Committee is expected to provide its comments on the draft law by the end of January 2009.  The draft law seeks to create incentives for the development of a bio-fuel sector.  To this end, the state is willing to fund bio-fuels research and assist with “organization of lease deliveries of machinery and equipment for participants in the bio-fuels market.”  This might include assistance with the leasing and financing of imported equipment.  In order to manage the impact of the bio-fuel sector on the state-regulated grain market, the Government is going to set caps on bio-fuel production and levy quotas on the amount of raw materials that can be used to produce bio-fuel.  Moreover, construction of any bio-fuel plant in Kazakhstan will require approval of an authorized government body charged with reviewing and evaluating an investor’s business plan, granting or denying a construction permit, and closely monitoring bio-fuel producers for compliance with regulations.

Kazak companies are likely to increase production of oilseeds and import more foreign equipment for production of bio-fuels as high value-added products both for domestic use and export.

Wind Power Initiatives

Kazakhstan also has abundant wind resources.  A joint three-year project between the United Nations Development Program (UNDP) and the Kazakh Ministry of Energy and Natural Resources produced in 2006 a “Kazakhstan wind atlas,”[2] with at least 20 prospective sites for possible construction of large wind farms.  In 2007, the project produced a draft national program for the development of wind power[3] in Kazakhstan until 2015.  The draft program aims to install wind energy capacity up to 300 MW by 2015 (at an estimated cost of $375 million), with increases up to 2 GW by 2024 through domestic and foreign investment, including public-private partnerships. A pilot project to build a five-megawatt wind power plant has already been launched.  A number of wind-power feasibility studies [4] recently prepared by the UNDP Kazakhstan Initiative could be of interest to investors.

The execution of the wind power program will depend upon passage of a new draft law “On Support for the Use of Renewable Energy Sources.” This draft law seeks to create a renewable energy certificate program and enhances the economic incentives for investing in renewables.  The draft law is scheduled to be sent to the lower house of the Kazakh Parliament this fall.

Solar Power Initiatives

Kazakhstan has a number of projects to foster the development of the country’s photovoltaic sector.  For example, the German company Thyssen Krupp Mannex is a supplier of plant and technical equipment for a project to build the country’s first silicon metal plant in Karaganda.  Silicium Kazakhstan LLP is the operator of this export-oriented project.  In addition, the state-owned Investment Fund of Kazakhstan and the state-owned Development Bank of Kazakhstan have agreed to finance construction of a polycrystalline silicon plant in the Astana industrial park.  Their partners are Lancaster Industrials and Kun Renewables LLP, which is also the operator of this $390 million project.  Siemens technology will reportedly be used in production, which is expected to start in 2010.  Kazakhstan’s research institute Gidropribor is also cooperating with Russia’s scientific and industrial enterprise Kvant in a joint project to produce solar batteries.  Foreign-produced solar-powered light posts have already been installed in Almaty.  

Conclusion

Kazakhstan is taking its first important steps towards the creation of conditions conducive to the development of the renewable energy sector.  New legislation pertaining to bio-fuel projects will soon be debated in the parliament.  Other legislative actions aimed at attracting investment in renewables are likely to follow. 

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[1] http://ru.government.kz/docs/_534.htm[2] http://windenergy.kz/files/1214226182_file.pdf[3]http://windenergy.kz/files/1213794277_file.pdf[4] http://windenergy.kz/rus/pages/invest_rus.html 

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