Renewable energy potential attracts greater investment to Kazakhstan, says scholar

ASTANA – Central Asia’s renewable energy transformation is gaining momentum and market leaders are taking note, with increased investments flowing in from the East and West.

Natalie Koch. Photo credit: syr.edu.

Natalie Koch, an associate professor at Syracuse University’s Maxwell School of Citizenship and Public Affairs studying resource-rich states in Central Asia and the Arabian Peninsula, recently authored “The geopolitics of spectacle: Space, synecdoche and the new capitals of Asia” and “Critical geographies of sport: Space, power and sport in global perspective.” In an exclusive interview with The Astana Times, she illustrated Kazakhstan’s current and future energy landscape.

Photo credit: nataliekoch.com.

The country generates approximately 87 percent of its electricity by hydrocarbon-powered plants, 75 percent of which are coal-fired stations and 12 percent gas-fired plants.

“The remaining 13 percent comes mostly from hydroelectric power stations, with a negligible amount coming from renewable energy sources like solar. However, Kazakhstan’s National Concept for Transition to a Green Economy sets a timeline to move Kazakhstan from under 1 percent renewable energy sourcing, when it was adopted in 2013, to 3 percent by 2020, 30 percent by 2030 and 50 percent by 2050,” she said.

Within this energy landscape, Koch singles out the crucial presence and contribution of the European Bank for Reconstruction and Development (EBRD), Central Asia’s largest institutional investor with approximately $14 billion committed to more than 750 projects.

Cooperation between the bank and the Kazakh government on green economy began with the signing of the 2008 Sustainable Energy Action Plan on investment and technical assistance and continued with support for the Law “On Supporting the Use of Renewable Energy Sources.”

“[The law] lacked a regulatory component and a feed-in tariff system. Without this, renewable energy producers could not realistically be expected to compete with traditional fuel supplies, which have long been, and continue to be, aided by artificially low electricity prices thanks to generous state subsidies… With more legislative support from the EBRD, Kazakhstan introduced a new tariff system in 2013, which guarantees a competitive environment for renewable energy producers for 15 years. In addition to exempting renewable energy producers from electricity transportation costs, the same law established the Cost Clearing and Settlement Centre, which centralised the purchase and sale of renewable energy,” said Koch.

In 2014, the country’s first large-scale wind power project in the Yereymentau region was supported with a $70 million loan from the bank and the Clean Technology Fund (CTF). EBRD and CTF also supported Burnoye Solar-1 and Solar-2 in the Zhambyl region with an $80 million loan in 2015 and $44.5 million in 2017. Additional funding was provided by Samruk Kazyna Invest, Samruk Energy and United Green.

With so much capital circulating in Kazakhstan’s renewable energy market, it is important to understand why countries are pursuing renewable energy.

“Political leaders especially emphasise the potential of renewable energy projects to attract foreign direct investment,” said Koch. “Positioning Kazakhstan as a leader in the field of sustainable energy is important in the broader global economic environment because being ‘green’ is commonly equated with being modern and cutting edge. Thus, developing a new green portfolio – both for the country and for individual companies or sectors – is an important way to demonstrate to foreign investors that Kazakhstan is moving forward with broader global trends.”

She emphasised that meaningful progress in renewable energy adoption means reshaping the country’s hydrocarbon-oriented energy landscape.

“Changing the appropriate legal and infrastructural structures is possible, but it is a slow process and the political and environmental rewards are distant. Because there are no immediate pressures on Kazakhstan’s current energy system, policymakers are more likely to accept the status quo and defer harder projects to the future,” she said.

Solar power is Kazakhstan’s most promising renewable energy source.

“Two aspects of solar that do not receive enough attention are the issues of cleaning the photovoltaic arrays and what happens to them afterward,” she noted. “First, it is important that Kazakhstan’s solar industry develops with minimal impact on its limited water supplies. When solar cells get covered with dust, they need to be cleaned. Many places use water to do this but, in arid and dusty environments like Kazakhstan, this is not sustainable.”

To adopt renewable energy sources without damaging the environment, she suggests waterless cleaning techniques used by firms such as First Solar.

“Second, there are still many problems to be resolved in the safe disposal of broken or otherwise dead photovoltaic cells. E-waste is a major problem in many developing countries, so it will be important for Kazakhstan’s leaders to think long-term,” she added.

EBRD committed to closer cooperation with China and the European Union to attract greater investment in Central Asia at Beijing’s Nov. 14 Central Asia Investment Forum.

“Kazakhstan might be able to benefit from working more closely with Chinese solar companies to grow their own renewable energy capacity, advance the green technology sector and showcase the possibilities for committing to sustainability in practice rather than just rhetoric. Given the EBRD’s wealth of experience in promoting renewable energy in Kazakhstan, it would be exciting to see more investment in this direction with their backing,” said Koch on the prospects of increased regional investment.

For further insight, Koch’s policy memos on Kazakhstan’s energy and natural resources use may be found at www.ponarseurasia.org and www.centralasiaprogram.org.