In this article, we discuss the introduction of a Balancing Electricity Market (BEM) in the Republic of Kazakhstan to address the risks related to energy security and price diversification in different regions of the country. Prior to the BEM, the electricity purchase mechanism involved the sale of actual volumes of electricity produced by electricity-generating organisations. However, the lack of financial responsibility for imbalances (deviations of actual electricity production consumption from planned values) led to increased risks.

To regulate and solve these issues, the BEM was implemented, and the model of the Single Purchaser in the electricity market, represented by the Settlement and Financial Centre for Support of Renewable Energy Sources LLP (FSC), was adopted. The main principle of the BEM operation is the purchase of planned volumes of electricity by FSC according to the applications recorded in the database of Joint Stock Company Kazakhstan Electricity Grid Operating Company JSC (KEGOC).

Four new contracts were developed to facilitate the transition to the BEM system:
  1. Adhesion Contract

    This contract is between a private entity, a participant in the BEM, and an electricity operator represented by KOREM JSC (Settlement Centre of the BEM). The Settlement Centre is responsible for calculating, determining, and distributing the financial obligations of the BEM participant arising from their activities in the BEM. The BEM participant agrees to pay these obligations according to the terms and conditions of the contract.

  2. Balancing Power and Negative Imbalance Sale and Purchase Agreement

    This contract is between FSC and a BEM participant. Under this agreement, FSC sells or purchases balancing electricity and negative imbalances to/from the BEM participant based on the terms of the contract, the legislation of the Republic of Kazakhstan in the electric power industry, and the Rules of BEM operation approved by the Order of the Minister of Energy. The BEM participant agrees to pay for balancing power and negative imbalances as per the contract and the relevant regulations.

  3. Supplemental Agreement No. 1 to the Balancing Power and Negative Imbalance Sale and Purchase Agreement

    This supplemental agreement transfers all rights and obligations of the BEM participant under the Balancing Power and Negative Imbalance Sale and Purchase Agreement to FSC.

  4. Agreement for Transfer of Responsibility for Purchase and Sale of Balancing Power and Negative Imbalance to the Balance Provider on the BEM

    This agreement is specifically for generating organizations using renewable energy sources. It requires them to have a long-term capacity purchase agreement with FSC and be included in the list of subjects of the wholesale capacity market formed by KEGOC. Additionally, these generating organizations must conclude a liability transfer agreement with FSC. This agreement makes FSC assume the financial settlement obligations for imbalances that arise for the subject as a result of selling and purchasing balancing power and negative imbalances according to the agreed-upon terms.

These contracts and the BEM aim to improve the stability and efficiency of the electricity market in Kazakhstan, encouraging optimal planning and balancing of electricity production and consumption to ensure energy security and reduce price disparities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.