The Kazakhstan renewable energy market is expected to register a CAGR of around 3% during the forecast period, 2020 - 2025. The primary driver of the market includes government initiatives to increase the share of renewable energy in the power generation mix, which is expected to drive the market studied. However, the absence of a uniform feed-in tariff mechanism for renewable energy and higher financial cost associated with the installation of renewable power plants are expected to hinder the market growth during the forecast period.
- Hydropower is one of the significant segments in Kazakhstan's renewable energy market. During 2018, the segment had the highest installed capacity as compared to other renewable technologies.
- During 2013, Kazakhstan adopted the “National Concept for Transition to a Green Economy up to 2050” outlining the principles of the Green Economy as a future development path. The objective was to bring the share of new renewable energy in electricity generation from zero to 3% by 2020 and then to raise it further to 30% by 2030 and 50% by 2050. Moreover, the country has a plan of reducing its carbon emissions by around 15-25% by 2030, compared with its 1990 level. Thus, an increase in renewable share in electricity generation and reduction in carbon emission is expected to create an opportunity for the market to grow in the near future.
- With upcoming investment for wind energy and target to achieve one gigawatt (GW) by 2021 and 5 GW by 2030, the wind energy in Kazakhstan is expected to drive the market studied during the forecast period.
Key Market Trends
Hydropower as a Significant Segment
- Hydropower is a reliable, cost-effective, and sustainable natural energy source that requires the kinetic energy of the flowing water to generate electricity. It is one of the cleanest forms of energy source, which has dominated Kazakhstan’s renewable energy market in 2018, with an installed capacity of around 2.7 gigawatts as of 2018.
- During 2018, Kazakhstan added seven megawatts of hydropower to its renewable energy and is expected to grow further with nearly 61.5 megawatts (MW), owing to the hydropower projects awarded during 2018.
- The 61.5 MW hydropower projects have been awarded to three different companies, which is expected to build hydro projects with a capacity of around 13.8 MW, 21.6 MW, and 26 MW respectively.
- The hydropower projects were awarded as a part of a series of auctions taking place during October 2018, as the government plans to contract 1 GW of renewable power in 2108. The targeted capacity was approximately 290 MW of solar, 620 MW of wind, 75 MW of hydropower, and 15 MW of biopower.
Wind Energy to Drive the Market
• Kazakhstan’s power sector relies heavily on fossil fuel, with 75% of the power plants are powered by locally sourced coal. Rapid economic growth has been leading to a demand in electricity, but the country has some constraint with its aging generation and transmission infrastructure dating to the Soviet-era. Converting the source of electricity generation from coal to renewable is expected to reduce the carbon emission and is expected to meet it raising demand.
• Kazakhstan has enormous renewable energy potential, particularly from wind and hydropower plants. During 2018, the country had an installed capacity of around 122 megawatts, which is expected to get increased to 1 gigawatt by 2021. The increase in wind capacity is expected to have an investment of around USD 276 million.
• In December 2019, the Asian Infrastructure Investment Bank (AIIB) announced the approval of USD 46.7 million loans for the construction and operation of a 100-megawatt (MW) wind power plant in southern Kazakhstan, which, when completed is expected to be the largest wind power plant in Central Asia. The project is estimated to generate nearly 319-gigawatt hours of electricity. Thus, the project, along with the target of increasing renewable share in its energy mix, is expected to drive the market during the forecast period.
Kazakhstan's renewable energy market is consolidated. Some of the key players in the market studied include Samruk-Energy JSC, Eni SpA, General Electric Company, Total Eren SA, Andritz AG, KazHydro Operating LLP, and CATEK Green Energy LLP, among others.
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