The Kazakhstani electric power industry was growing even during the crisis year. The sagging consumption of the service sector was compensated by large industrial enterprises, for most of which the year was marked by an increase in output. There are no changes in the rating of the largest power generating assets. Another important event in 2020 – the share of renewable energy sources in generation has reached 3%.

The growth in electricity generation in Kazakhstan, according to the Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan, amounted to 2.5%. Calculations, according to the operational data of the Kazakhstan operator of the electricity and capacity market (KOREM), indicate a growth close to 2%.

The positive dynamics was caused by several factors: against the background of a decrease in consumption by energy sales companies in large cities, supplies to some industrial enterprises increased; in addition, in the fall, the power plant was rescued by exports to Central Asian countries.

The prospects for renewable energy sources (RES) are improving: at the end of the last year, they showed an increase in generation by 36%; at the end of the year, another 16 producers with a capacity close to 150 MW gained access to the market through auctions.

However, the industry is still problematic: the recovery in investment in the sector in 2020 after some tariff adjustments did not compensate for the blow from the tariff cuts in 2018.

Twice two and a half
The standard reaction of the economy to the crisis is to reduce electricity consumption. But the Kazakhstani economy does not strictly obey this rule. If in 2015, against the backdrop of a recession in the economy, electricity production reacted by reducing by 3.3%, then in the year of 4.5% economic growth, generation fell by 0.7%. And in 2020, when the GDP decreased by 2.6%, in the electric power industry there was an increase of 2.5%, to 109.2 billion kWh – this is the data of the BNS ASPR of the Republic of Kazakhstan. Analysis of KOREM’s operational information (monthly reports) also confirms that electricity generation increased by 1.9% (107.9 billion kWh).

Thermal power plants still dominate in the structure of electricity production: their share in the structure of production is 88% (including gas turbine power plants), the share of hydroelectric power plants is 9%, and renewable energy sources are 3%.

There are two stable trends: an increase in generation from renewable energy sources, as well as a reduction in generation at hydroelectric power plants, while coal and gas thermal power plants continue to increase production: in 2020, thermal power plants generated 0.4% more electricity than last year, and hydroelectric power plants – by 4.3% less …

Analysis of the curves of production and consumption of electricity by months in 2020 and 2019 shows that quarantine restrictions had a slight impact on consumption in the spring, but were noticeable in the summer.

For the year as a whole, consumption remained below last year’s level, but in several months it was noticeably lower (July, August), and a decrease was noted in all three zones of the national energy system. A complete recovery in consumption (exceeding last year’s indicators in all three zones) took place in December.

Majors on fire
The rating of the largest energy producing enterprises in Kazakhstan includes 14 organizations (individual stations or groups represented by several sources), which are highlighted in the operational statistics of KOREM. In 2020, these 14 enterprises accounted for 65% of all electricity produced in the country, with the top 10 – 59%, and the top 5 – 48%. The generating segment of the Kazakhstani electric power industry has remained highly concentrated since the Soviet period, the degree of dependence on a number of energy sources is extremely high.

There were no changes in the rating of the largest energy producing enterprises for the year. Like a year ago, the leader is Ekibastuz GRES-1 (an asset of the Samruk-Energo national company; a station with an installed capacity of 4000 MW), the production volume of which in 2020 amounted to about 19.5 billion kWh, which is 6.4 % above the level of 2019. The last five years have been a period of restoration of its former potential for the plant – several units were overhauled, as a result of which the average growth rate of generation was 23.7%. The station provides electricity to the energy deficient zones of the country (South and West), and also exports.

The second number on the list is Aksu GRES EEC (energy asset ERG; Eurasian group; installed capacity – 2,450 MW), where generation amounted to 14.0 billion kWh, an increase of 1.8%. The station is a vivid example of the so-called coupled generation, it meets the needs of the largest metallurgical plants of the Eurasian group – Aksu Ferroalloy Plant, Pavlodar Aluminum Plant and Kazakhstan Electrolysis Plant.

In third place is another asset of Samruk-Energo – Ekibastuz GRES-2 (installed capacity – 1000 MW) with 5.0 billion kWh and an increase of 0.9%. The fourth in the list – Topar GRES (former Karaganda GRES-2; installed capacity – 743 MW), controlled by the Kazakhmys corporation and designed to meet the needs of the mining and metallurgical enterprises of the corporation in the Karaganda region, reduced output by 1.6% (to 4.6 billion kWh).

The top five is closed by Karaganda CHPP-3 (part of the Kazakhstan Utilities Systems; KKS; installed capacity – 670 MW), where, according to KOREM’s operational data, generation decreased by 5.3%, to 4.2 billion kWh, but in a five-year retrospective the station is increasing production by an average of 4.6% per year.

The five largest stations in 2020 increased their output by 2.5%, the dynamics of the top 10 energy producing enterprises – +1.7%.

Corporations plan to grow
In the “team classification” the first place is held by the state holding “Samruk-Energo”, which accounts for about 30% of generation (in 2020 – 28.7%). The company controls both Ekibastuz GRES, as well as the AlES power plants, the Moinakskaya and Shardarinskaya HPPs and the Ereymentau wind farm (PVES LLP). The company has a strong position in the power market: for example, in 2020, out of 5179 MW of capacity, for which the auction was held in the Northern and Southern zones of the energy system of the RK Samruk-Energo, closed 2,768 MW (53%). Most of this volume falls on EGRES-1 and EGRES-2. Samruk-Energo also provides electricity export: in 2020, about 1.1 billion kWh were supplied to Uzbekistan and Kyrgyzstan.

One of the important events for the generating assets of the national company in 2020 is the decision to transfer CHP-2 and CHP-3 in Almaty from coal to gas. The company has already prepared a feasibility study, and the sources of financing have yet to be determined. Another promising project is the restoration of power unit No. 1 at EGRES-1 (540 MW) and the construction of power unit No. 3 (636 MW) at EGRES-2. Both projects will be implemented in the 2024–2025 horizon. “Samruk-Energo” plans to develop renewable energy sources: increasing the capacity of the WPP from 45 to 50 MW, the construction of a 60 MW wind farm in the Almaty region and 50 MW in the Akmola region.

For EEC (Aksu GRES), the year was marked by the completion of the reconstruction of power unit No. 5, overhaul of power unit No. 6, medium repair of power unit No. 2 and the continuation of overhaul of power unit No. 1 (all units with an installed capacity of 325 MW).

The Central Asian Electric Power Corporation (CAEPCO), which controls Pavlodar CHP-2 and CHP-3, as well as Petropavlovsk CHP-2 and Ekibastuz CHP (total installed capacity – 1218 MW), received neutral results this year: increased by 4.2% (to 3.6 billion kWh), in Petropavlovsk it decreased by 4.7% (to 3.3 billion kWh).

In 2020, the company aims to reduce greenhouse gas and particulate matter emissions. At Pavlodar CHPP-2 and CHPP-3, battery emulsifiers, ash collection and aspiration units were repaired. The goal is to ensure the efficiency of ash collection at the level of 99.5%. CAEPCO, which reports in detail on CO2 emissions, records a 10% reduction in emissions from Pavlodar stations (data for January – September 2020).

Green march
The share of renewable energy sources in the energy balance of Kazakhstan in 2020 reached 3%, as planned in the concept for the transition to a green economy. According to the Ministry of Energy of the Republic of Kazakhstan, the total volume of generation from renewable energy sources amounted to 3.2 billion kWh, having increased by more than a third compared to the previous year. The most dynamic growth is recorded in the segment of solar power plants (SPP), the generation of which increased by 140% over the year (up to 1,350 million kWh), and over five years – 15 times. Production at wind power plants (WPPs) increased fourfold over the five-year period and at the end of 2020 amounted to 1,077 million kWh (+ 50% per year). Small hydropower plants produced 812 million kWh of electricity, which is 27% less than the result of 2019, but almost one and a half times higher than the output in 2016.

In 2020, eight auctions were held to distribute the capacity of sites for the construction of renewable energy sources, as a result of which 16 winners were determined who were given the opportunity to build renewable energy sources with a total installed capacity of 148 MW: three 65 MW wind farms, four 60 MW solar stations and nine mini -HES 23 MW. The average tariff was KZT 15.80 per 1 kW * h. The lowest tariffs were for hydroelectric power plants – from 13.48 tenge, the minimum tariff for solar power plants was 14.58 tenge, for wind farms – 15.90. Most of the renewable energy capacity approved in 2020 is located in the energy-deficient southern zone of the country’s energy system.

Last year, an attempt was made to reform the legislation on renewable energy sources. On December 7, 2020, the law “On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Supporting the Use of Renewable Energy Sources and Electricity” was adopted. The law provided for the stimulation of the construction of flexible capacity (the demand reaches 600-800 MW, which is now satisfied by flows from the Russian Federation) through a payment for the maintained capacity. The selection of the capacity supplier will be carried out through a price selection auction.

The law also establishes the so-called end-to-end tariff for renewable energy support. Previously, traditional sources (TPPs) received a marginal tariff, which included the operating and investment costs of the plants. However, they had to spend part of the incoming cash flow for the purchase of renewable energy from the KEGOC financial settlement center (RFC). The meaning of the innovation is to separate the flows: the marginal tariff, which includes production costs and the rate of return calculated according to a certain method, and the costs of purchasing electricity from renewable energy sources, for which traditional sources are entitled to a surcharge in excess of the marginal tariff.

The third group of innovations is a package of incentives for renewable energy sources. RFC will receive financial support from the government, which will allow renewable energy investors to be more likely to plan operational cash flow. The duration of contracts for the purchase of electricity from renewable energy sources has been increased from 15 to 20 years. Extending project timelines should encourage investors to lower auction prices for new projects. For hydroelectric power plants, an instrument of centralized purchase and sale of flood electricity is being introduced. The obligation to sell electricity generated during environmental water releases was formulated long ago, and HPPs sold the resulting volumes to traders at low prices. Now this electricity will be bought by the RFC.

The tariff is low now
The past year continued the period of low tariffs, which began after the end of the tariff-for-investment program in 2018 (formally, the program operated from 2009 to 2015, but was extended for two years with the investment component fixed at the same level until the capacity market was launched in 2019), when the tariffs of power generation, transmission and distribution companies were reduced.

The first signal that low tariffs do not allow energy companies to provide reliable power supply came when in 2019 an accident occurred at the Levoberezhnaya substation in Nur-Sultan: a part of the left bank of the capital, including Akorda, remained without centralized power supply. In 2019, tariffs for both generators and transmission and distribution companies were revised with some increase.

At the end of 2019, the power supply sector recorded an increase in investments in fixed assets of electric power enterprises (generation and transmission of electricity) by 64%; most likely, the growth occurred by inertia – companies were completing large investment programs. In 2020, there was a 20.5% reduction in capex. As can be seen from the information provided by large energy companies about their investment programs, the enterprises did not commission new capacity, limiting themselves to major overhauls. In particular, due to a lack of funds, the construction of a new ash dump at Pavlodar CHP-3 was suspended.

2020 and the beginning of 2021 were marked by several accidents at the Topar GRES and Karaganda CHP-2 serving ArcelorMittal Temirtau. In June 2020, the Ministry of Energy of the Republic of Kazakhstan gave an assessment of the situation: at a government meeting, Energy Minister Nurlan Nogayev said that problems with energy and heat supply to the city of Temirtau are due to the fact that the station’s boilers in winter are often taken out in an emergency, and the power reserve is not enough covering the needs of the city.

In 2017, projects were discussed for the modernization of Karaganda CHP-2 and CHP-PVS, which meet the needs of AMT and the city, however, agreements with the most likely partner – CAEPCO – could not be reached (the project cost was then estimated at 83 billion tenge), and after changes in tariffs in In 2018, investments in generation had to be forgotten for several years.

Since July 2020, the tariffs of power plants have been revised in Kazakhstan again. For the most part, 34 out of 44 groups, the tariff was increased (EGRES-1 by 0.7%, EGRES-2 – by 18.1%, Aksu GRES – by 23.3%, Karaganda – by 18.0%), nine were left at the same level (including Karaganda CHP-2 and CHP-PVS, which are under the control of AMT), one (Shardarinskaya HPP) was reduced.

The correction was explained by an increase in the cost of purchasing fuel, an increase in generation from renewable energy sources (this volume is purchased at higher tariffs by coal-fired thermal power plants), an increase in prices for the services of a system operator, as well as mandatory payments to the budget. Despite the growth, many market experts consider the tariff and capacity fees insufficient to restore investments in new capacity at large energy sources, which would solve the problem of accumulated depreciation.


March 15, 2021