China develops green energy in Kazakhstan: What it means for consumers

China plans to construct four renewable energy facilities in Kazakhstan, with electricity set to be sold at prices ranging from 21.68 to 28.72 tenge or 4.25 to 5.63 cents per kilowatt-hour (kWh) at the current exchange rate set by the National Bank of Kazakhstan.

«The agreement involves the construction of three wind power plants (1.5 gigawatts, GW) and one solar power plant (0.3 GW), with a total combined capacity of 1.8 GW in the Karaganda, Turkestan and Pavlodar regions,» stated Prime Minister Olzhas Bektenov in a background note accompanying the draft law on ratifying the agreement between the governments of Kazakhstan and China for the implementation of renewable energy projects, recently released for public comments.

The projects are expected to create up to 100 permanent and 1,500 temporary jobs, attract approximately $2 billion in investments and generate an additional 5.7 billion kWh of green energy. According to the prime minister, these initiatives will drive the ongoing development of Kazakhstan’s renewable energy sector and support the country’s energy transition goals, including achieving a 15% share of renewable energy in the national energy mix by 2030 and reducing annual carbon dioxide (CO2) emissions.

One of the key projects includes a 500-megawatt (MW) wind power plant in the Pavlodar region, to be built by China Power International Holding Limited and Samruk-Energy, Kazakhstan’s state-owned energy company. Under the agreement, electricity will be sold at a fixed rate of 4.25 cents per kWh for 25 years, with the investor required to establish a 150-MW electricity storage system. Additionally, the Chinese company will develop another 500-MW wind power plant at the same tariff rate of 4.25 cents per kWh, though its location has not yet been specified. This project will also include a 150-MW electricity storage system.

Another Chinese company, China Energy Overseas Investment Co. Ltd., is set to construct a 300-MW solar power plant in the Sauran district of the Turkestan region in partnership with Samruk-Energo. The electricity will be sold at a rate of 5.63 cents per kWh, with an electricity storage system capacity of 180 MW. Additionally, the same partners will build a 500-MW wind power plant in the Karaganda region, featuring a 150-MW storage system, at a rate of 4.24 cents per kWh.

The Settlement and Financial Center for Support of Renewable Energy Sources (FCS), which operates under the Ministry of Energy, will act as the electricity purchaser. Before the agreement takes effect, the FCS and the developer will finalize the terms of the electricity purchase agreement. Approved electricity rates for large renewable energy projects must be denominated in foreign currency, though all payments will be made in tenge at the exchange rate on the payment date.

Developers will have unrestricted rights to exchange currency, as well as to receive dividends and income from these projects in foreign currency. Kazakhstan’s authorities will assist developers in obtaining necessary permits and approvals by facilitating applications to the relevant local agencies. Developers will also be granted land use rights for the required plots without undergoing a bidding (auction) process.

Furthermore, Kazakhstan has committed to taking necessary measures to minimize the impact of efforts to address accidents in the country’s unified electric power system, which could otherwise result in the disconnection of these Chinese renewable energy projects from the grid.

The rate for Masdar, the UAE’s renewable energy company, to operate its 1-GW wind power plant (WPP) in the Zhambyl region has been set at 4.49 cents per kWh for the entire 25-year duration of the project. For another 1-GW WPP in the Zhambyl region, involving partners Total Eren (France, 60% stake), KazMunayGas (20%) and Samruk-Kazyna (20%), the electricity rate has been set at 3.99 cents per kWh. Meanwhile, ACWA Power (Saudi Arabia) and Samruk-Kazyna, or its wholly-owned subsidiary, have agreed to establish a joint venture. This venture will sell all electricity generated by the 1-GW wind farm, to be constructed in the Dzungarian Gate area, at a rate of 2.81 cents per kWh.