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Kazakhstan plans to change a number of legislative acts for the development of electric power industry and renewable energy sources

08 октября 2020
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On October 7,  the plenary session of the Lower House of the Parliament of the Republic of Kazakhstan approved in the first reading, the draft law "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Supporting the Use of Renewable Energy Sources and Electric Power Industry ", the press service of the Ministry of Energy of the Republic of Kazakhstan reported.

The main conceptual innovations of the proposed bill are:

1) Stimulation of the construction of flexible generating capacities.

Today in the Republic, the surplus of electric power (2000 MW) is accompanied by a shortage of flexible capacities. Electricity consumption during the day is uneven, with an increase in the evening hours and a decrease at night, requiring an operational variable functioning of power plants. The existing load-frequency control capabilities of the existing power plants are insufficient, and therefore the system operator is forced to use the load-frequency control from the Russian energy system. The imbalances covered by the UPS of Russia reach 600-800 MW.

The development of flexible capacities to attract them to the regulation of production-consumption imbalances will make it possible to redirect the purchase of some services for compensating deviations at power plants in Kazakhstan, instead of using Russian load-frequency control.

The selection of projects for the creation of flexible generation will be carried out through the use of auction selection, which will give impetus to the construction of such capacities, to select the most effective projects with minimal impact on prices for end users.

2) Establishing an end-to-end tariff for the support of RES.

With the commissioning of new renewable energy facilities, tariffs and shares of electricity purchase from Accounting and Finance Center (AFC) for supporting renewable energy by operational energy-producing organizations are increasing. In this connection, traditional energy producing organizations (EPO) incur uncovered losses until the time of the corresponding adjustment to the maximum tariffs. Changes in the costs associated with the development of renewable energy sources require constant and timely adjustments to the maximum EPO tariffs.

In this regard, there is a need to separate the costs of purchasing electricity from the AFC for the support of renewable energy sources from the ceiling tariff and consider the costs of renewable energy sources as a surcharge over the ceiling tariff.

3) Creation of favorable conditions for the development of renewable energy.

Currently, significant investments are being made in the development of renewable energy.

Target indicators for increasing the share of renewable energy sources in total electricity production provide for bringing its share to 3% in 2020, to 6% in 2025, and 10% by 2030. By 2050, renewable and alternative energy sources should account for at least half of all total energy consumption.

To achieve these indicators, the draft law proposes to introduce the following:

1. Provision of financial support from the Government to the accounting and financial center in case of failure to fulfill its obligations on payments to RES projects (in order to increase the creditworthiness of the AFC).

This rule will reduce the risks for investors and, accordingly, will reduce the price at the auction for electricity generated by renewable energy facilities. In addition, the introduction of this norm will increase the investment attractiveness of the RES sector in Kazakhstan.

2. Extension of the contract for the purchase of electricity from the current 15 years to 20 years.

This mechanism is necessary  to increase the attractiveness of the RES market for future investors and will lead to decrease in auction prices.

3. Implementation of the centralized purchase and sale of flood electricity through the AFC.

In accordance with the current Law "On the Electric Power Industry", it is stipulated that energy-producing organizations - hydroelectric power plants are obliged to sell the electricity generated during the period of environmental water releases at centralized auctions. According to the data of the system operator, the annual volume of the actual balance of production and consumption of electrical energy is on average 300 million kWh. At the same time, about 50% of flood electricity is purchased at centralized auctions by traders whose pricing is not regulated by the state.

Taking into account the above factors, it is proposed to legislate the obligation of energy producing organizations (hydroelectric power plants) to sell flood electric energy to AFC, which in turn will distribute this inexpensive flood electric energy among all consumers of the Republic of Kazakhstan, through the existing mechanism of centralized sale of RES electricity.

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