The head of state of Kazakhstan held a meeting on the development of the electric power industry

President of Kazakhstan Kassym-Jomart Tokayev held a meeting on the development of the electric power industry. During the event, which was held in the videoconference mode, reports were made by the Minister of Energy Nurlan Nogayev, Minister of Industry and Infrastructure Development Beibut Atamkulov, Minister of Ecology, Geology and Natural Resources Magzum Mirzagaliev, Chairman of the Board of Samruk-Kazyna JSC Almasadam Satkaliev, Chairman of the Board of Directors of Kazakhstan Solar Energy Association Nurlan Kapenov, General Director of Total Energies Kazakhstan Alem Friga-Noy.

Opening the meeting, the Head of State outlined the particular importance of developing the country's electricity-producing industry. Energy plays a key role in the Kazakh economy today.

“Ensuring energy security is one of the main tasks. The rate of energy consumption in Kazakhstan is growing from year to year. But the new energy generating capacities that are being commissioned are not keeping up with the growth rates. In fact, the country's development directly depends on the stability of the energy sector, ”Kassym-Zhomart Tokayev emphasized.

In his speech, the President paid special attention to the efficient use and saving of energy.

“Kazakhstan is one of the most energy-intensive countries in the world. Kazakhstan's economy is 3 times more energy intensive than OECD countries despite the fact that in the structure of our GDP the main share is occupied by the sector of production of services. This suggests that fixed assets and equipment at industrial enterprises do not meet the modern standards of the OECD and other advanced countries of the world. Often there is an imitation rather than a real modernization of the fixed assets of our industry, ”the Head of State noted.

Kassym-Jomart Tokayev believes that fairness and affordability of tariffs is an important economic and social issue. In order to mitigate the negative impact of the pandemic, all tariffs were frozen by the end of the 1st quarter of this year. At the same time, it is not possible to keep tariffs at the same level all the time. Tariffs should cover reasonable costs and enable the industry to grow.

“It's no secret that any increase in tariffs is usually shifted first to business and budget organizations. In some areas, the difference reaches 400%! This not only distorts the market, but also does not create incentives for energy saving. Energy efficiency and energy intensity reduction targets are not being met. Why use more expensive energy-efficient materials and equipment when electricity can simply be “burned”, as they say. Also, the main principle is not observed - the targeting of the provision of social assistance. As a result of such erosion, the really needy categories of citizens do not receive benefits in the required volume”, the President said.

Noting the importance of modernization and launch of new generating capacities, the Head of State dwelled on the project of transferring Almaty CHPP-2 to gas.

“This issue is of strategic importance. The ecology of the city of Almaty and, of course, improving the quality of life of citizens depends on the solution of this problem. Therefore, I instruct the Government, the Samruk-Kazyna fund, together with the akimat, to finally decide on the project for the modernization of CHP 2 and start implementation as soon as possible. Delaying is already completely unacceptable, ”said Kassym-Zhomart Tokayev.

According to him, a stable tendency is observed all over the world - decarbonization of industry and economy. In the countries of the European Union, it is planned to reduce greenhouse gas emissions by 55% by 2030. From 2023, the EU introduces a carbon tax, which can significantly complicate the export of Kazakhstani products. Taking into account the new realities, technical regulations, standards and requirements for goods will change.

“It is important to understand that at this stage of world development, the status, authority and, accordingly, the international capabilities of any country will largely be determined by the contribution to the decarbonization of the world economy. In particular, this will be one of the criteria determining the possibility of our country being admitted to the OECD, ”the Head of State noted.

On behalf of the President, a Concept for the low-carbon development of Kazakhstan until 2050 is being developed. The government is also working on the National Electric Power Industry Development Project, and the country's energy balance is being prepared until 2035.

“The main generating capacities in Kazakhstan, including thermal power plants, have been in operation for 40 years or more. According to experts, their overall wear and tear is more than 50%. This leads to an increase in technological disruptions at power plants. In 2019 - 4,010 violations, in 2020 - 4,458 violations, thus an increase of 11%. There is a need for a large-scale technical audit of generating capacities. We must clearly understand where and when the launch or decommissioning of power facilities, their repair and modernization will take place, ”Kassym-Zhomart Tokayev said.

Kazakhstan has taken a steady course towards the development of renewable and alternative energy sources use. The country managed to achieve a qualitative increase of RES share in the structure of the total energy balance - it reached 3%.

“Earlier, we set a goal to bring this figure to 10% by 2030. Taking into account the new realities and the current positive dynamics, I set the task to increase the share of renewable energy sources in electricity generation to 15% by 2030, ”the Head of State instructed.

The President believes that Kazakhstan, being a large energy country, must maintain its leading position in the new energy sector in the future.

“The share of Kazakhstani contribution in renewable energy projects is still extremely small. It is necessary to learn not only to build new gas-fired plants, but also to develop local production, science and technology, to raise qualified domestic personnel. Otherwise, it will turn out that the whole country invests in foreign goods and technologies, paying for it through tariffs. I instruct the Government to carefully study and apply the best international experience in localization in the field of renewable energy sources and energy in general, ”said Kassym-Zhomart Tokayev.

The President noted the need to stimulate the use of renewable energy sources among the population and proposed, as part of the development of smart cities, to implement pilot projects for the operation of solar panels and micro-power plants.

“I am a supporter, and a firm supporter, of the development of clean energy and, in general, green technologies. I support the construction of power plants using renewable energy sources, ”the Head of State said.

Kassym-Jomart Tokayev agreed with the opinion of experts who believe that it is premature and wrong to completely write off nuclear power.

“The entire developed world relies on nuclear energy. Phobias are inappropriate here. But persistent explanatory work should be carried out among citizens. We will not rush to build nuclear power plants, but we should not be late with this matter, ”the President stressed.

The speech also noted the need to bring order to the activities of power grid companies. The government and akimats of the regions were instructed to take a set of measures to gradually reduce the level of physical wear and tear of power grids. In addition, the personnel problem is becoming critical.

“There are not enough electricians, high-voltage line repairmen, and other blue-collar workers. And this is despite the fact that there are 24 universities in Kazakhstan that train personnel for the energy industry. The average age of engineering and technical personnel is about 50 years. This situation is also complicated by the insufficient level of average wages. As a result, staff turnover in 2015-2020 increased from 4% to 15%. This issue must be resolved promptly, otherwise we may face a "shortage of personnel" in the near future. I instruct the Government to implement measures to form the professional staff potential of the industry and a competitive level of remuneration, ”said Kassym-Zhomart Tokayev.

The head of state called it an important task to attract international investors to the development of the industry. On his behalf, negotiations are underway with investors from the United Arab Emirates, France and other European countries.

“Stability of supply, affordability of tariffs are key components of national competitiveness. Therefore, it is important that the price of electricity is based on its fair market value. Today, the wholesale electricity market is dominated by only three companies, accounting for 70% of the market. This is not entirely correct. Wholesale of electricity under bilateral agreements creates barriers for new sales companies and hinders the development of competition in the retail electricity market. This is a direct path to inflated prices for end consumers, ”the President noted.

The Ministry of Energy, together with the Agency for the Protection of Competition, were instructed to thoroughly study this issue. In addition, the Government will have to ensure the restart of the greenhouse gas emissions trading system.

“New technologies for energy generation and storage appear and are being tested in the world. Given the leaps and bounds of technological progress, very soon they may become a reality. In particular, we are talking about a possible breakthrough in the development of hydrogen energy. We must be prepared for such a scenario. It is necessary to have a pool of specialists capable of working with such technologies. I propose to create a Competence Center for New Energy, where the experience of using high-tech innovations in the energy sector will be developed in an experimental mode, "Kassym-Jomart Tokayev suggested.

In his opinion, the growth of population and economy will inevitably require the commissioning of new capacities. However, the possibilities are not endless, so reducing the energy intensity of the economy is a major challenge. Its solution will have the most direct effect on the competitiveness of our products and entire industries. The head of state instructed the Government to keep this issue under control.