A Decade Of Legislation On Renewable Energy In Kazakhstan: A Brief Review

July 4, 2019, is the 10th anniversary of the adoption of the Law of the Republic of Kazakhstan "On support of the use of renewable energy sources" № 165-IV ZRK ("Law on RES"). While being ranked ninth in coal reserves, 12th in oil reserves and first in uranium mining, Kazakhstan supports the development of renewable energy sources ("RES") and plans to bring the production of electric energy by RES up to 50% by 2050.

The initial RES projects were implemented through a scheme of development of a feasibility study indicating the price, payback period and etc. Power purchase agreements were then concluded at the price and payback period specified in the feasibility study. Where the RES facilities were connected to a regional energy company ("REC"), the latter should acquire electricity produced by the RES facility to compensate for the normative(permitted) electric energy losses in their networks, but not more than half the power produced; and in the case where this exceeds the amount produced by the RES facility, the remaining amount should be purchased by the system operator (JSC "KEGOC"1 ). In the case where a RES facility is connected to the power grids of the system operator, the latter was obliged to purchase all the electricity produced by the RES facility.

On July 4, 2013, amendments were made to the Law on RES, as a result of which a new scheme for the implementation of RES projects was introduced − the fixed tariff ("FIT") scheme. Under this, the government set FIT for each category of renewable energy sources (wind, sun, hydro and biogas), investors independently received a connection point, developed a power distribution scheme, on the basis of which a REC or the system operator (depending on the connection point) issued technical conditions for connection, after which the investor applied for inclusion into the RES location plan2 and entered into a connection agreement. The final stage of such a permitting procedure was the inclusion of the project into the authorized body's3 list of RES objects4 and conclusion of a power purchase agreement ("PPA") at the FIT between the investor and the financial settlement center ("FSC"5). After that, the investor had to start and complete the construction of the RES facility in the timeframe specified by law. The principal difference between the feasibility study and the FIT schemes were the establishment of tariffs and the introduction of FSC as a buyer of energy produced by the RES. Where the...