Kazakhstan is a vast but sparsely populated country rich in natural resources, located in the centre of the Eurasian landmass. In recent years, it has embarked on building a green economy, taking the lead among its Central Asian neighbours. The country has set itself an ambitious target: by 2030, emissions are supposed to be reduced by between 15 and 25 per cent, compared with the 1990 level.

Kazakhstan teams up with the EBRD – the Sustainable Energy Action Plan

The EBRD has supported Kazakhstan green economy drive for many years. The Bank’s involvement in the country’s renewable energy market began in 2008, when the government of Kazakhstan and the EBRD signed a Sustainable Energy Action Plan. This plan outlined a range of joint actions, comprising investments and technical assistance. Among the proposed investments, renewable energy projects were identified as priority. The proposed technical assistance focused on regulatory support for renewable energy. From 2008, the EBRD actively supported the government of Kazakhstan in developing its Renewable Energy law.

Teaming up with the Clean Technology Fund (CTF)

In 2009, the government of Kazakhstan prepared its investment plan for the CTF, one of four programs under the Climate Investment Funds. The EBRD led a joint mission of multilateral development banks to assist in the development of the plan. This provided the opportunity to highlight the power sector’s challenges and the potential of using renewable energy sources on a wide scale. Recognising the domestic political will to increase renewable energy production, the CTF approved the government’s request to nominate renewable energy as a priority investment area for the fund’s activities in Kazakhstan. The CTF allocated US$116 million to support the creation of a renewable energy market.

Between 2010 and 2015, the CTF provided a total of €1 million to support the EBRD’s and the Kazakh government’s work on creating a favourable environment for renewable energy by analysing existing barriers, identifying incentive mechanisms and drafting primary and secondary legislation.

Investing in Kazakhstan’s renewable energy production

In 2014, the EBRD approved the first large scale wind power project in Kazakhstan, a KZT 14 billion (€59.2 million) loan to Wind Power Yereymentau. The CTF supported this project with €18 of concessional finance. The funds are used for the construction, the connection to the power transmission grid, commissioning and the launch of a greenfield 50 MW wind power plant, located in Yereymentau, approximately 130 km north-east of Astana in central Kazakhstan. As the new renewable energy law came into force in 2013, the project became a beneficiary of the new feed-in tariff system that set tariffs for each type of renewable energy.

In 2015, the Bank signed its second renewables project in the country, a €80 million solar power plant project co-financed with €15 million by the CTF. The 50 MW greenfield Burnoye solar power plant is the first largescale (above 5 MW) solar plant in Kazakhstan, and is expected to generate over 67 GWh per year, offsetting carbon emissions of about 60,000 tonnes of CO2 annually.

At the end of 2016, the EBRD announced a new financing framework dedicated to the development of renewables in Kazakhstan. The Bank’s board approved financing of close to half a billion Euro in total, once donor co-finance and project sponsor contributions are included. Over the next five years, the framework will fund projects in wind and solar power, small hydro plants and biogas. The EBRD expects that of its contribution, €160 million will be used for construction of new generating capacity. €40m is allocated for electricity grid modernization, which is necessary to integrate these renewable projects into the national transmission system. Co-financing has already been allocated from the CTF, and EBRD will fundraise for support from other donors in early 2017, with the full support of the Kazakh government.

For further information about the EBRD’s engagement in renewables in Kazakhstan refer to the publication ‘Renewable Energy in Kazakhstan‘.