President Kassym-Jomart Tokayev held a videoconference meeting on the development of the electric power industry. Minister of Energy Nurlan Nogayev, Minister of Industry and Infrastructure Development Beibut Atamkulov, Minister of Ecology, Geology and Natural Resources Magzum Mirzagaliyev, CEO of “National Welfare Fund “Samruk-Kazyna” JSC Almasadam Satkaliyev, Chairman of the Board of Directors of the Kazakhstan Solar Energy Association Nurlan Kapenov, General Director of “Total Energies Kazakhstan” Ahlem Friga-Noy delivered presentations at the meeting.
Opening the meeting, the President highlighted the special importance of the development of electric power industry. Nowadays, the energy industry plays a key role in Kazakhstan’s economy.
“Ensuring energy security is one of the main tasks. The rate of energy consumption in Kazakhstan is growing from year to year. However, the new energy sources that are being launched do not match the growth rate. In fact, the country’s development directly depends on the stability of the energy sector,” Kassym-Jomart Tokayev said.
In his speech, President Tokayev paid special attention to the efficient use and saving of energy.
“Kazakhstan is one of the most energy-intensive countries in the world. Kazakhstan’s economy is 3 times more energy-intensive compared to the OECD countries. Despite the fact that in the structure of our GDP, the main share is occupied by the service sector. This suggests that the fixed assets and equipment at industrial enterprises do not meet the modern standards of OECD and other advanced countries. Often there is an imitation, but not a real modernization of the fixed assets of our industry,” the Head of State noted.
Kassym-Jomart Tokayev believes that the fairness and accessibility of tariffs is an important economic and social issue. In order to mitigate the negative impact of the pandemic, all tariffs were frozen until the end of the 1st quarter of 2021. Meanwhile, it is not possible to keep the tariffs at the same level constantly. Tariffs should cover reasonable costs and give the industry the opportunity to develop.
“It is no secret that any increase in tariffs is usually shifted first to business and budget organizations. In some areas, the difference reaches up to 400 %! This not only distorts the market, but also does not create incentives for lean energy consumption. The tasks of energy efficiency and energy intensity reduction are not being fulfilled. Why use more expensive energy-efficient materials and equipment, if electricity can be simply , “burned”. Moreover, the main principle – the targeting of social assistance is not being observed. As a result of this dilution, the really needy categories of citizens do not receive benefits in the right amount,” the President said.
Noting the importance of modernizing and launching new generating capacities, the Head of State highlighted the project of converting Almaty’s CHP-2 to gas.
“This issue is of strategic importance. Almaty’s ecology, and of course, the improvement of the quality of life of citizens depends on addressing of this problem. Therefore, I instruct the Government, the Samruk-Kazyna, together with the city’s Akimat, to finally decide on the project for the modernization of CHP-2 and proceed to implement it as soon as possible. The delay is absolutely unacceptable,” Kassym-Jomart Tokayev said.
According to him, there is a steady trend around the world, which is the decarbonization of the industry and the economy. In the EU countries, it is planned to reduce greenhouse gas emissions by 55% by 2030. From 2023, the EU will introduce a carbon tax, which can significantly hinder the export of Kazakh products. Taking into account the new realities, technical regulations, standards and requirements for goods will be changing.
“It is important to understand that at this stage of world development, the status, reputation, and the international capabilities of any country will be largely determined by the contribution to the decarbonization of the world economy. In particular, this will be one of the criteria determining the possibility of Kazakhstan’s admission to the OECD,” the Head of State noted.
By the Presidential instruction, the Low-Carbon Development Concept until 2050 is being developed. The Government is also working on a National project for the development of the electric power industry, and the country's energy balance until 2035 is being prepared.
“The main generating capacities in Kazakhstan, including thermal power plants, have been in operation for 40 years or more. According to experts, their total wear is more than 50%. This leads to an increase in technological disruptions at power plants. In 2019, there have been 4010 violations, while in 2020 – 4458, so thus an increase is 11%. There is a need for a large-scale technical audit of energy sources. We must clearly understand where and when the launch or disposal of power facilities, their repair and modernization will take place,” President Tokayev said.
Kazakhstan has taken a steady course towards the development of renewable and alternative energy sources. Kazakhstan managed to achieve a qualitative increase in renewable energy sources (RES) in the structure of the total energy balance by 3%.
“Earlier, we had set a goal to bring this figure up to 10% by 2030. Taking into account the new realities and the current positive dynamics, I set a task to increase the share of RES in electricity generation up to 15% by 2030,” the Head of State instructed.
President Tokayev believes that Kazakhstan, being a large energy country, should maintain its leading position in the new energy sector in the future.
“The share of local content in renewable energy projects is still extremely small. It is necessary to learn not only to build new sparkling stations, but also to develop local production, science and technology, to raise qualified domestic personnel. Otherwise, it turns out that the whole country invests in foreign goods and technologies, paying for it through tariffs. I instruct the Government to carefully study and apply the best international practices of localization in renewable energy and the energy as a whole,” he said.
Kassym-Jomart Tokayev noted the need to stimulate the use of renewable energy sources among the population and proposed to implement pilot projects for the operation of solar panels and micro-power plants as part of the development of “smart” cities.
“I am a firm supporter of the clean energy, and green technologies as a whole. I support the construction of power plants using renewable energy sources,” President Tokayev said.
The Head of State agreed with the experts’ opinion who believe that it is too early and wrong to finally writing off nuclear energy.
The entire developed world relies on nuclear power. Phobias are out of place here. However, it is necessary to carry out persistent explanatory activities among the people. We will not be rushing with the nuclear power plants construction, but we should not be late with this matter,” the President stressed.
In his speech, President Tokayev also noted the need to bring order in the activities of electric grid companies. The Government and regional akimats were instructed to take a set of measures to gradually reducing the level of physical wear and tear of the power grid. In addition, the staff issues is becoming critical.
“There are lack of electricians, repairmen of high-voltage lines, and other specialists of working professions. This is despite the fact that Kazakhstan has 24 universities that train personnel for the energy industry. The average age of the engineering and technical staff is about 50 years. This situation is also complicated by the insufficient level of average wages. As a result, the turnover of personnel for 2015-2020 have increased from 4% to 15%. This issue must be resolved promptly, otherwise we may face a “staffing shortage” in the near future. I instruct the Government to implement measures to form the professional human resources potential of the industry and a competitive level of remuneration,” Kassym-Jomart Tokayev said.
The Head of State stressed on the importance to attract international investors to the development of the energy industry. By his instructions, negotiations are underway with investors from the United Arab Emirates, France and other European countries.
The supply stability and the tariffs availability are the key components of national competitiveness. Therefore, it is important that the electricity price be based on its fair market value. Nowadays, the wholesale electricity market is dominated by only three companies, occupying 70% of the market. That is not quite right. Wholesale electricity sales under bilateral contracts create barriers for new sales companies and hinder the development of competition in the retail electricity market. This is a direct path to inflated prices for final consumers,” the President said.
The Ministry of Energy, together with the Agency for Protection and Development of Competition, has been instructed to thoroughly study this issue. In addition, the Government will have to ensure the restart of the system of trading quotas for greenhouse gas emissions.
“New technologies of energy generation and storage are being developed and tested in the world. Given the leaps and bounds of technological progress, they may soon become a reality. In particular, we are talking about a possible breakthrough in the development of hydrogen energy. We must be prepared for such a scenario. It is necessary to have a pool of specialists who are able to work with such technologies. I propose to create a New Energy Competence Center, in which the experience of using high-tech innovations in the energy sector will be accumulated in an experimental mode,” Kassym-Jomart Tokayev suggested.
In his opinion, the growth of the population and the economy will inevitably require the introduction of new capacities. However, the possibilities are not limitless, so reducing the energy intensity of the economy is the most important task. Its solution will have the immediate effect on the competitiveness of our products and entire industries. President Tokayev instructed the Government to keep this issue under control.