Kazakhstan is accelerating the growth of renewable energy sources (RE) to achieve carbon neutrality and diversify energy sources. In 2024, the share of RE in Kazakhstan amounted to 6.4% (7.58 billion kWh) of the total electricity generation. It is planned to commission 9 RE projects with a total capacity of 455.5 MW in 20251.
One of the obstacles to the effective and economical use of RE within the unified power system is the "intermittent" power supply of wind and solar energy, as the sun does not shine and the wind does not blow 24/7.
The most widely recognized solution to this issue is the introduction of energy storage systems (hereinafter – ESS),which aim to accumulate energy and release it during peak loads. As global practice shows, ESSs are successfully used in various areas such as grid stabilization and frequency regulation, peak shaving and load shifting, RE integration, backup power and resilience, microgrid support, and integration into electric vehicle charging infrastructure2. Currently, lithium-ion batteries are the most popular choice for battery ESS. They are characterised by high energy density, long service life, fast charging capability, and are used in residential, commercial, and utility-scale storage systems3.
The growth rate of ESS exceeded all expectations in 2024, with ESS installations totaling 205 GWh worldwide.4 According to BloombergNEF forecasts, the global battery ESS (BESS) market is expected to grow at an annual rate of 21% until 2030, underscoring increasing demand and commercial viability.5
A pilot project for the implementation of ESS is planned based on the signed agreement between JSC KEGOC, China Power International Development Limited, China Power International Holding Limited, and the Legal Entities Association "Kazakhstan Renewable Energy Association". This pilot project will allow for the study of practical characteristics and possibilities of using ESS under the conditions of the unified power system.6
Additionally, the construction of wind and solar power plants based on intergovernmental agreements is expected. These agreements include provisions for the implementation, development, construction, and operation of power plants with a minimum capacity energy storage system.7
Existing Regulation
According to the Concept for the Development of the Fuel and Energy Complex of the Republic of Kazakhstan for 2023–20298 (hereinafter – the Concept), it is planned to mitigate the negative impact of the growing RE capacity on the country's power system by introducing 11.7 gigawatts of storage-enabled electricity capacity by 2029.
The Concept also includes an Action Plan for its implementation. According to this plan, one of the measures includes the implementation of RE projects with a total capacity of 4,000 megawatts, including with ESS.
As of today, the main regulatory legal acts that currently, to some extent, govern relations related to the installation and operation of ESS in the RE sector are the following:
- The Law of the Republic of Kazakhstan "On Support for the Use of Renewable Energy Sources" dated July 4, 2009, No. 165-IV (hereinafter – the "RE Law");
- Order of the Minister of Energy of the Republic of Kazakhstan dated December 18, 2014, No. 210 "On the Approval of the Grid Code" (hereinafter – the "Grid Code"); and
- Order of the Minister of Energy of the Republic of Kazakhstan dated March 30, 2015, No. 247 "On the Approval of the Rules for the Technical Operation of Power Plants and Grids" (hereinafter – the "Technical Operation Rules").
Definition of ESS
The RE Law defines ESS as a "technical device with an automated control system, intended for the accumulation, storage, and delivery of electrical energy, as well as facilities and infrastructure technologically necessary for its operation in accordance with the legislation of the Republic of Kazakhstan."
The RE Law also includes ESS in the definition of auction-based selection, i.e., the selection of new RE facility construction projects may, in some cases, consider whether these RE facilities are equipped with ESS. However, the definition of "auction-based selection" does not imply that all RE projects participating in the auctions must be equipped with ESS. It is important to note that the RE Law does not establish a mandatory requirement for RE facilities to be equipped with energy storage systems, whether these are auction-based RE projects or other types of RE projects.
Operation and Management of ESS
Amendments introduced to the Grid Code and the Technical Operation Rules regulate technical aspects of ESS operation, including: the development of ESS-related terminology, objectives, requirements for integrated ESS testing, management via automated control systems, maintaining a certain charge level to avoid degradation of ESS performance, availability requirements, frequency and power flow regulation requirements, and more.
The Grid Code was also supplemented with provisions according to which, during the development and approval of the power delivery scheme of a power plant, the selection of the following types of ESS must be determined:
- Mechanical;
- Electrochemical;
- Chemical;
- Electrical;
- Thermal.
When developing scheme of power distribution, the project developer must follow the requirements of the Technical Operation Rules, which define the procedure for the technical operation of power plants and grids, including RE power plants.
What to Expect from Future ESS Regulation
According to the draft Law of the Republic of Kazakhstan "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on the Development of Alternative Energy Sources" (hereinafter - the "Draft Law"), it is planned to introduce changes and additions to a number of regulatory legal acts to improve legislation in the field of ESS.
Functioning of ESS in the Power System
The Draft Law proposes the introduction of the concept of an
energy storage system operator to clearly define a
specialised market participant responsible for the management,
operation, and integration of storage facilities into the energy
distribution system.
The concept of the electricity capacity market
will be expanded to include entities represented by ESS
operators who are ready to accumulate and discharge
electricity, which will enable return on investments in the ESS
sector. Furthermore, according to the amendments, the ESS operator
will provide the single buyer with a service for the availability
of ESS capacity, thereby ensuring the ESS's readiness to bear
the load.
Additionally, under the Draft Law, participants in the production, storage, transmission, and consumption of electricity will bear mutual obligations for financial settlements in the balancing electricity market between contracted and actual electricity production-consumption volumes, based on calculations of balancing electricity volumes provided by the system operator as a result of physical settlement of electricity imbalances. Thus, ESS will be integrated into the balancing electricity market.
Types of ESS
The terminology of the RE Law will be supplemented with the following types of ESS, which will help reduce grid loads, promote the expansion of distributed generation, and ensure reliable energy supply to various categories of consumers:
- Household energy storage system - an ESS intended for household use;
- Battery energy storage system - an ESS based on battery technology;
- Behind-the-meter energy storage system - an ESS installed in residential, commercial, or industrial facilities, located behind the connection point (beyond the electricity meter) on the consumer side, providing full or partial self-consumption of electricity through storage, retention, and discharge of electric energy.
Support Measures
Guaranteed Offtake
The amendments provide for the guaranteed purchase by the single buyer of the service for the availability of energy storage system capacity, which will enable ESS to integrate into the electricity capacity market and ensure long-term financial support. It is planned to approve a tariff for the service of availability of ESS capacity for a term of 15 (fifteen) years. The maximum tariff (price) for the availability service will include the return of capital costs and interest on corresponding loans attracted for the project, a profitability rate on invested capital (subject to annual indexation), based on the inflation rate determined by the authorised state statistics body, or annual indexation considering the exchange rate change of the national currency against foreign currencies, as determined by the National Bank of the Republic of Kazakhstan, and operational expenses.
Access to Power Grids
According to the Draft Law, a transmission organisation will not have the right to refuse connection of ESS entities to electric networks for the purpose of energy storage and subsequent delivery. Thus, non-discriminatory and transparent access of ESS to electric networks will be ensured.
Ceiling Tariff for Balancing Electricity
Entities using ESS under the control of an automatic frequency and power flow control system will have the same rights to sell all their negative imbalances to the balancing market settlement center at the ceiling tariff for balancing electricity. This cap tariff will remain unchanged for 5 years, starting from March 1, 2025. The establishment of a non-decreasing cap tariff for balancing electricity will help ensure investment returns.
The Draft Law also stipulates that all positive imbalances caused by the operation of automatic frequency and power flow control systems shall be covered by ESS entities by purchasing balancing electricity from the balancing market settlement center at a price of 0.01 tenge/kWh the same price applicable to other balancing market entities.
ESS Auctions
The Draft Law proposes the introduction of a competitive selection mechanism for investors in ESS projects through the organisation and conduct of auction bidding.
It is envisaged that the authorised body will determine the volumes of regulation-capable electricity capacity created or to be created by ESS operators, as part of the plan for the placement of generation facilities with flexible generation regimes. For the implementation of such a plan, auction bidding will be conducted.
The auctions for selecting ESS projects will be organised and conducted by the auction organiser in an electronic system based on a bidding process aimed at selecting ESS projects and determining their individual tariffs for the availability service of energy storage system capacity.
The organisation and conduct of auctions for the selection of ESS projects will proceed as follows:
- Determination of the cap tariff for the availability service of ESS;
- Submission by the applicant of copies of the founding documents and documents confirming the availability of financial resources;
- Verification by the commission, formed by the authorised body, of the documents submitted by the applicant for compliance with the ESS auction bidding requirements and decision on further admission for registration in the electronic system of the auction organiser;
- After the commission's verification, the authorised body sends information and the list of applicants admitted to registration to the auction organiser;
- The authorised body, no later than six months before the proposed auction date, develops and publishes the schedule of ESS project selection auctions on its official website.
After the results are finalised, the single buyer enters into a
service purchase agreement for the availability of energy storage
system capacity with the auction winner for a period of ten years
from the date of its first certification, at the individual tariff
determined by the results of the ESS project auction.
Regulation Within the Framework of Intergovernmental Agreements
To implement the ESS Deployment Action Plan under the Concept, it is planned to construct large-scale RE projects based on intergovernmental agreements (hereinafter – IGAs). For example, ESS installations are envisaged by the following IGAs:
- Agreement between the Government of the Republic of Kazakhstan and the Government of the United Arab Emirates on the implementation of a wind power plant project9;
- Agreement between the Government of the Republic of Kazakhstan and the Government of the Kingdom of Saudi Arabia on the implementation of a wind power plant project10;
- Special Agreement between the Government of the Republic of Kazakhstan and the Government of the French Republic on cooperation in combating global warming11.
The above IGAs also define indicative prices for the sale of
electricity taking into account ESS. At the same time, the
principle for calculating the ESS tariff (price) is determined
using different approaches.
According to the IGA with the Government of the French Republic, electricity will be sold at an indicative price that includes the ESS tariff. A similar approach is adopted under the IGA with the Government of the United Arab Emirates, where a single tariff per project is defined. Thus, under these IGAs, the ESS tariff is included in the overall electricity sale price.
However, the IGA with the Government of the Kingdom of Saudi Arabia provides for a different approach, under which the single buyer will pay the seller separately for the electricity and separately for the ESS.
Taking into account the provisions of the Law "On Legal Acts"12, all such provisions of the IGAs regarding the possibility of concluding power purchase agreements by the single buyer outside of auctions and tariff formation models for electricity and ESS that allow cost recovery for ESS prevail over the current national legislation of the Republic of Kazakhstan.
Recommendations
Investment Preferences
Currently, ESS is not included in the list of priority activities for the implementation of investment projects13 approved by the Government of the Republic of Kazakhstan. Adding ESS to this list would make the ESS sector more attractive for investment due to the availability of various support measures, such as exemption from customs duties, government in-kind grants, and tax preferences in the form of relief from corporate income tax, land tax, and property tax.
Increasing Local Content
It is recommended to establish tariffs on fully imported lithium-ion battery modules, components, racks, and semi-assembled BESS units in order to stimulate local assembly and job creation. With higher tariffs on finished BESS products, domestic assembly and production will become more competitive.
Public-Private Partnership (PPP)
Utilizing the potential of PPP is seen as one of the ways to
achieve public benefit for the government partner by gaining
international experience in financing, developing, and
managing/operating ESS projects from the private partner. A more
balanced risk distribution between the partners will positively
impact the interests of both sides.
The World Bank's Guide on Implementing Battery Energy Storage
Systems through PPPs identifies four types of agreements:
- Tolling agreement, where the buyer pays for access to the capacity provided by the ESS project and is also responsible for supplying and paying for the energy used to charge the ESS;
- Capacity agreement, in which the buyer pays for capacity or availability. The agreement specifies what the purchase of capacity entitles the buyer to - e.g., whether it is limited to the provision of specific services;
- Capacity plus energy agreement, where the buyer pays for both capacity and energy. This may be reasonable if the project is responsible for purchasing the charging energy. In this case, round-trip energy losses effectively become variable costs passed on to the offtaker through the energy charge;
- Hybrid PPA, which is an extended PPA for RE involving a hybrid project that combines a VRE14 generator with a BESS installation. Such a PPA may pay for energy generation behind the meter (as in a typical standalone VRE project) but may impose conditions such as ramp rate limits or restricted dispatchability during certain periods.15
For the successful implementation of PPP projects in the ESS field, it is important to conduct proper feasibility studies, select appropriate technologies, and develop a balanced project management system for both partners.
National Standards
In terms of technical regulation, it is recommended to develop national ESS standards in accordance with international standards such as those from the IEC (International Electrotechnical Commission) and ICC (International Code Council). These national standards should regulate issues related to ESS installation parameters and testing methods; planning, installation, and evaluation of electricity storage efficiency; guidelines on environmental and safe use of ESS, including fire safety, and other aspects.
Conclusion
ESS is becoming an important element of the energy system in Kazakhstan and other Central Asian countries, aligning with the region's broader goals of developing clean energy and ensuring future energy security.
For example, in 2024, Uzbekistan successfully completed the installation of a battery energy storage system (BESS) for Energy China's 150 MW/300 MWh project in the Fergana region16. ACWA Power, together with the authorities of Uzbekistan, is planning to build large-scale RE projects with a total capacity of over 1 GW, including ESS, in the Tashkent, Samarkand, and Bukhara regions, with a presumed total capacity of over 1 GW17.
Accelerating the adoption of a progressive legal framework and government support measures will make Kazakhstan more competitive and attractive for investors in the ESS sector.
Footnotes
1 Kazakhstan continues its course towards green energy: new RES capacity to be commissioned in 2025, https://www.gov.kz/memleket/entities/energo/press/news/details/946347?lang=ru
2 Battery Energy Storage Surges as Global Leaders Emerge, https://transformers-magazine.com/tm-news/battery-energy-storage-surges-as-global-leaders-emerge/
3 Zhaoyang Dong, Yuechuan Tao, Shuying Lai, Tianjin Wang and Zhijun Zhang, Powering Future Advancements and Applications of Battery Energy Storage Systems Across Different Scales, https://www.mdpi.com/3042-4011/2/1/1
4 Iola Hughes, Global Bess deployment soared 53% in 2024, https://www.energy-storage.news/global-bess-deployments-soared-53-in-2024/
5 Nelson Nsitem, Global Energy Storage Markets Biggest Jump Yet, https://about.bnef.com/blog/global-energy-storage-market-records-biggest-jump-yet/
6 KEGOC signed an Agreement on the implementation of the Pilot Project on introduction of the electricity storage system in the UES of the Republic of Kazakhstan https://www.kegoc.kz/ru/press-center/press-releases/162535/
7 Ministry of Energy: Eight new RE facilities will be commissioned in Kazakhstan by the end of the year, https://qazaqgreen.com/news/kazakhstan/2468/
8 Resolution of the Government of the Republic of Kazakhstan dated 28 June 2014 No. 724 ''On Approval of the Concept of Development of the Fuel and Energy Complex of the Republic of Kazakhstan for 2023 - 2029''
9 Resolution of the Government of the Republic of Kazakhstan dated 23 November 2023 № 1030 ''On signing the Agreement between the Government of the Republic of Kazakhstan and the Government of the United Arab Emirates on the implementation of the wind power plant project''
10 Resolution of the Government of the Republic of Kazakhstan dated 23 November 2023 No. 1029 ''On signing the Agreement between the Government of the Republic of Kazakhstan and the Government of the Kingdom of Saudi Arabia on the implementation of a wind farm project''
11 Law of the Republic of Kazakhstan No. 57-VIII of 2 February 2024 on the Special Agreement between the Government of the Republic of Kazakhstan and the Government of the French Republic on the implementation of cooperation in the field of combating global warming
12 Paragraph 2, Article 6 of the Law of the Republic of Kazakhstan 'On Legal Acts' dated 6 April 2016 No. 480-V ZRK
13 Resolution of the Government of the Republic of Kazakhstan dated 14 January 2016 No. 13 'On some issues of implementation of state support for investments
14 VRE – variable renewable energy
15 World Bank Guidelines for the Implementation of Battery Energy Storage Systems http://documents1.worldbank.org/curated/en/099536501202316060/pdf/IDU0edcfc32c0825f040f509c0b0bbf49294e569.pdf
16 The first energy storage system has been installed
for a storage power plant in the Fergana region,
https://podrobno.uz/cat/obchestvo/ustanovlena-pervaya-sistema-khraneniya-energii-dlya-nakopitelnoy-elektrostantsii-v-ferganskoy-oblast/
17 ACWA Power will build two more solar power plants
and three more energy storage systems in
Uzbekistan,
https://www.gazeta.uz/ru/2023/03/06/acwa-power/
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.
