Energetics Publication Date 11-10-2020

Kapenov Nurlan

Chairman of the Board of Directors "Kazakhstan Solar Energy Association", Director of "Burnoye Solar-1" LLP - 100 MW solar power plant

Dear friends and colleagues, 2009 can be considered the date of the start of active development of alternative energy in Kazakhstan. It was then that the first law on RES was adopted. Single, small stations began to be built. However, the leap took place after the government adopted a change in legislation, which introduced fixed tariffs for renewable energy sources. Accordingly, it became interesting. International and ours, local investors began to develop and implement these projects, starting in 2014.

From that moment, a strong opposition to the traditional electric power industry began. But many people thought that renewable energy was bad. The first argument was that renewables are expensive equipment. At that time, solar electricity cost 34 tenge per kW, wind power - 22 tenge per kW, and this was expensive for Kazakhstan in comparison with the tariffs of traditional power plants. Traditional ones cost no more than 7 tenge per kW on average.

In Kazakhstan, such a cheap cost of electricity is due to the fact that those power plants that generate electricity are mainly coal-fired power plants (over 70% in Kazakhstan). We got them from the Soviet era, they were built in the 60-70s. Today, the wear and tear of these power plants is more than 50%. Low tariffs due to the fact that coal is cheap. Second, they don't need to make any return on investment.

Another argument is that RES brings imbalances. In Kazakhstan, there is no flexibility in capacities, that is, these are capacities that can quickly provide or reduce unplanned electricity. That is, in order for a coal-fired power plant to additionally connect some power unit, it needs almost a day to generate the required energy. This problem has not yet been resolved. Accordingly, RES, being a volatile source of energy, have only exacerbated this problem of imbalances in the energy system. To date, our company KEGOG buys energy in Russia to balance energy, and we pay a lot of money for this. There is such a concept as "energy security", each country should be able to provide itself in emergency circumstances. Now other Central Asian countries have been able to achieve this, and we are still dependent on Russia. And now, since Kazakhstan has adopted the concept of transition to a "green economy", our President has set indicators.

In 2020 - 3%, in 2030 - 10%, in 2050 - 50% of the entire electric power industry should be generated from alternative sources, that is, those sources were meant that would not create emissions into the atmosphere. Also, having signed the Paris Agreement and assuming international obligations, Kazakhstan was obliged to strive for these indicators. So far, we are on the right track and reach this 3%.

Our next indicator is to reach 6% in 2025, and this is an intermediate indicator. However, I understand that we will not be able to do this because of the imbalance in the system. Without agile balancing capacities, we will not be able to achieve the required performance.

One of the reasons that has affected the electricity industry is that the government has forced traditional electricity producers to lower tariffs. Therefore, the situation has developed in such a way that they work at the cost price level, some start to work at a loss.

For example, last year they were left with a premium at the same level, and next year renewable energy increased by 2 times. Therefore, there have been changes in the law, we have introduced such a concept as "through tariff", that is, what kind of premium came for renewable energy, one to one, the same amount will be compensated. This concept will be introduced in the near future, in a few months. To summarize, the first factor that influenced the power industry is the development of renewable energy sources.

- We want to clarify! Considering that you can't build hydroelectric power plants in our country, then you need to build gas turbine power plants that can provide the required power in a short time, right?

- I understand that it can be hydroelectric power plants, which will be built in the future, and a gas turbine power plant. There may also be accumulations of the battery system. If, of course, it is economically feasible. And back to the last topic, the second factor is economic restrictions during the transit of power last year. The third reason, a positive one, is that system operators are implementing a lot of automation and digitalization tools.

- Let's move on to the next question. If we imagine energy in the form of a technological chain, in your opinion, where is the most significant progress expected from this chain in the next 5-10 years?

- I think that due to the need there will be a breakthrough in power generation. Of course, progress in networks is needed, but whether this will happen, I do not know. Will there be funds and will the government have enough willpower to start launching all this? That is, you need to understand that all these improvements will definitely lead to an increase in the tariff.

- In your opinion, which of the renewable energy sectors are economically feasible to introduce? In your opinion, what specialists are needed now for the renewable energy sector to develop actively? What happens if you accept the ideal investment conditions and state support?

- First of all, RES is progressively developing. On the technical side, it is believed that solar panels lead to new imbalances. KEGOG adheres to the fact that wind energy needs to be developed more actively than solar. Because it can balance itself and, secondly, our solar energy is more developed than wind energy.

From the technical point of view, solar energy is much easier, since wind energy is unstable, making forecasts in it is more difficult. It is almost impossible to predict what the wind speed will be in a couple of hours. I believe that in Kazakhstan, both the sun and the wind should be developed equally from renewable energy sources. There is potential for hydroelectric power plants, but investors are not so active here - these are the most complex technologies. If we talk about biogas, then we have isolated cases of use. You need to understand that biogas needs to receive waste from animal husbandry and agriculture, that is, this source of energy depends on human activities.

As for specialists, we have an acute shortage of personnel in Kazakhstan. There are no renewable energy engineering majors. We would like the institutes to graduate renewable energy engineers today. Of course, it would be good if they train professionals in narrow specialties. For example, we need solar energy engineers. Students who came to us from abroad are not fully adapted to our energy system, and moreover, they have no experience, since the energy system of each country is unique, especially in our country - in the post-Soviet space. Therefore, it would be good if engineers for green energy, for alternative energy sources, who can already undergo practical training at operating wind, solar, and hydroelectric power plants in our country, were already graduating. We are open to cooperation with universities. For example, our company cooperates with the Kazakh-German University and KazNTu named after Satpayev.

I would also like to note that more dispatching service needs to be developed. We need good meteorologists to get reliable forecasts.

- Remember, please, the last two people you hired and didn't hire? Why? What qualities are important to you, as an employer by whom do you assess that this employee is attractive to you?

- Firstly, knowledge of English is important for us, as foreign investors work with us. But this is not a necessary factor. We take on those employees who are ready to learn further and practice. That is, we tell a person to be ready to work in production, ready to see how the station is being built and how this station will work. And those who agree to work in the steppe at the facility for 6 months are hired in the office. The second quality is to work at a fast pace.

- And the last question: in what area of ​​the energy sector of the Republic of Kazakhstan would you invest money if you had it in unlimited quantities?

- Difficult question. In this situation, I would never invest in renewable energy, since the risks are high.

Right now, in the energy sector, it has developed so that all business projects are unprofitable, and tariffs are regulated. If you choose from this sector, then you need the production of local electrical equipment. But again, realizing the small capacity of our domestic market, this should be an export-oriented production. That is, I do not see any particular prospects. Therefore, if there is such an item as "nowhere", then I choose this item.