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Q1: What are the main challenges that limit investment in, and development of, renewable energy projects?
Kazakhstan's Model Power Purchase Agreement (PPA) for renewable energy projects presents several bankability challenges that may deter investors and lenders. One of the key issues is the absence of a change of law clause, leaving developers without protection or reimbursement if legal or regulatory changes negatively impact project economics. Additionally, the force majeure provisions are vague, creating uncertainty in unforeseen circumstances. While the law mandates the single buyer to purchase electricity from RES producers, transmission companies are not obligated to accept or deliver the full output, undermining the take-or-pay principle. Moreover, the PPA lacks clear risk allocation for curtailment and grid downtime, exposing developers to revenue losses without compensation.
The Model PPA provides limited protection for investors, as it is not subject to negotiation or revision to reflect investor-specific risks. Notably, it lacks provisions addressing early termination due to the offtaker's default and does not ensure payment of termination compensation, leaving investors exposed to significant risk.
There are also challenges regarding the return on investment in energy storage projects. The auction framework presumes that project developers will recoup their investments through the applicable renewable energy tariffs, with the ceiling rates currently set at 34.61 tenge/kWh for SPPs and 22.68 tenge/kWh for WPPs. These tariffs do not include the costs of installing ESS, which makes such projects economically unviable for investors.
Q2: How are large utility-scale renewable power projects typically tendered?
Kazakhstan implements various types of renewable energy projects through mechanisms such as auctions, direct agreements, corporate PPAs among group companies, and Intergovernmental Agreements (IGAs). Most projects are auction-based and generally moderate in scale, typically ranging from 20 MW to 50 MW, occasionally reaching up to 100 MW. Notably, the only recent large-scale project, a 1 gigawatt (GW) wind power plant with ESS, is currently being implemented, with the winner having been selected through the auction framework.
Recent practice indicates that GW-scale renewable energy projects in Kazakhstan are primarily implemented through IGAs. These agreements, signed on a case-by-case basis with the government, serve as an alternative mechanism for developing large utility-scale projects. IGAs can take precedence over certain national legal provisions and offer investors customised legal, regulatory, and fiscal conditions. These may include exemptions from standard requirements, stabilisation clauses, customs and tax incentives, guaranteed tariffs, and assured access to land and infrastructure. To date, Kazakhstan has signed and ratified IGAs for GW-scale renewable projects equipped with ESS with France and the UAE. Meanwhile, IGAs with China and the Kingdom of Saudi Arabia remain at various stages of negotiation and legislative approval and have not been yet ratified.
Q3: To what extent is your jurisdiction's energy demand met through domestic renewable power generation?
As set out in the Concept for the Development of the Electric Power Industry of the Republic of Kazakhstan for 2023–2029, Kazakhstan aims to increase the share of electricity generated from RES to 12.5% of total electricity production by 2029. The annual targets are as follows:
- 2023 – 5%.
- 2024 – 5.5%.
- 2025 – 6%.
- 2026 – 7%.
- 2027 – 8%.
- 2028 – 10%.
These figures reflect the government's strategic commitment to gradually expanding domestic renewable energy generation to meet the growing energy demand. According to the Ministry of Energy, by the end of June 2025, electricity generated from RES facilities accounted for 6.81% of the total energy production of Kazakhstan.
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