Transition To A New Market Model For The Centralised Electricity Sales System

• Published date: 22 January 2024
• Subject Matter: Energy and Natural Resources, Energy Law, Oil, Gas & Electricity, Renewables
• Law Firm: Unicase Law Firm
• Author: Unicase Law Firm

Purpose and reasons of the amendments to the energy sector

• the problem of significant deviations of actual electricity balances from the planned values;
• lack of financial responsibility for the imbalances created (deviations of hourly actual electricity generation-consumption volumes from hourly planned values) and economic incentives for balancing on the part of market actors, leading to disinterest of these actors in optimally planning the electricity generation-consumption schedule and participation in covering deviations;
• the current electricity sale and purchase mechanism allows energy producing organisations to limit consumers' access to inexpensive electricity;
• at present, electricity prices differ greatly between regions of Kazakhstan, which in turn creates unequal conditions for households and businesses.

The positive effects of adopting the amendments would be as follows:

• increasing the investment attractiveness of the sector;
• reduction of imbalances in the electricity system of Kazakhstan;
• reduction of imported electricity, resulting in a lower tariff burden and more efficient use of existing capacity;
• equalisation of tariffs of energy producing organisations for consumers in all regions of Kazakhstan.

Implementation of a Balancing Electricity Market (BEM)

The electricity will not be traded at actual volumes of electricity consumed, but only at planned volumes (i.e., electricity on the electricity market will not be paid at the actual balance, but at the planned contractual volumes resulting from the daily schedule for the coming day, and therefore at the prices at which these planned volumes have been sold).

The goals of a balancing electricity market:

• to ensure financial settlement of imbalances in the unified electricity system of Kazakhstan;
• to encourage BEM actors to participate in the resolution of imbalances;
• to ensure the targeted distribution of imbalance payments.

Two types of goods in the BEM:

• Balancing electricity
  
  Electricity intended to cover positive imbalances when the system operator implements the approved hourly daily schedule of electricity generation-consumption.
  
  
• Negative imbalance
  
  Imbalance is the difference between the planned and actual generation-consumption balance, in kWh. Negative imbalance is

Single Electricity Purchaser & Balancing Market Settlement Centre

Financial Settlement Centre for...