5 July 2023
Kazakhstan is “completely dependent” on Russia when it comes to balancing energy needs and the best solution is to create a transnational electricity grid in Central Asia, similar to the one in Europe, a Kazakh expert told a Brussels audience on Tuesday (4 July).
Nurlan Kapenov, chairman of ‘Qazaq Green Association’, made this appeal at a conference titled ‘A clean energy future for Central Asia’, organised by the Brussels Energy Club, where the debate highlighted the huge potential of this region in developing green energy, but also the various challenges.
To illustrate the magnitude of the potential projects, Kazakhstan’s ambassador to the EU, Margulan Baimukhan, said his country’s green transformation will require investments in low-carbon technologies, estimated at $610 billion before 2060.
He added that the other Central Asian partners, Uzbekistan, Tajikistan, Kyrgyzstan and Turkmenistan are facing similar investment requirements for their own green transition.
Speakers from Tajikistan and Kyrgyzstan emphasised hydropower projects, Uzbekistan the solar energy, and Turkmenistan hydrogen produced from gas.
Kazakhstan, however, although still heavily reliant on coal and fossil fuel, boasts the most advanced green hydrogen project, implemented by the Svevind Energy Group in the western part of the country, near the Caspian Sea.
Kapenov said Kazakhstan really embraced green energy in 2018 when it introduced the auction system in which companies around the world could participate. To date, 200 companies from 13 countries have taken part in these auctions, resulting in 130 renewable energy projects with a total of 2.5 Gigawatt of installed capacity.
Kazakhstan has also set itself the target of a 15% share of renewable energy in its energy mix by 2030, 50% by 2050 and 80% by 2060, Kapenov said.
The targets were achievable but a big problem, he explained, was “the cheapest coal in the world”, which in Kazakhstan is extracted in open mines.
If the current low prices of energy for households (3 euro cents per KWH, compared to 35 euro cents in Belgium) were threatened by more expensive energy sources, there would be a risk of social tensions, he warned.
This price was kept artificially low by successive governments, which discouraged the owners of the power plants from modernising.
But the biggest problem, he explained, was the shortage of flexible capacity in Kazakhstan for balancing energy produced by renewable sources.
“Today, we are completely dependent on the Russian Federation with regards to balancing energy. Coal generation is not flexible generation”, especially for Kazakhstan, where 70% of electricity is produced from coal. In theory, he said, flexible generation could be achieved with big hydroelectric plants or gas power plants.
But he said the best solution was to build a transnational energy grid with “our brother countries”, based on the model of the EU, where countries are balancing their energy needs across borders.
“We should have one system operator for Central Asia,” Kapenov said.
In his words, Kazakhstan had an “evolutionary” model of introducing green energies, while its neighbour Uzbekistan had a “revolutionary” model, having started later, but having already reached the level of Kazakhstan.
“But I’m sure they will face the same problem of flexible capacity”, he said.
Vidim Sinitsa, representing the European Bank for Reconstruction and Development, was asked if the bank would be interested in financing a transnational electricity grid as described by Kapenov. He gave a positive answer but said that such projects had not been yet submitted for consideration.
Stefano Signore, representing DG International Partnerships of the European Commission, appeared to leave the door open for a project by described by Kapenov. He said that indeed, the Commission’s goal was to support the development of renewables, but also regional cooperation in Central Asia.
Fossil fuels still dominate in Central Asia more than any other region, said Mehmet Ogutcu, a senior adviser of the Brussels Energy Club. In his words, the potential is there for developing green energy but financial resources are needed.
“Central Asia cannot do it on its own”, he said, highlighting the need to modernise the ageing Soviet-era electric grid, but also warning about corruption as a problem the countries of the region need to overcome.
To inspire trust among investors, fostering regional cooperation is key, he said.