Perspectives of investments into the energy sector of the Republic of Kazakhstan
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The objective of KazEnergy Association is creating favorable conditions to ensure balanced growth and development of energy and oil & gas sector. KazEnergy, being as informal link between oil & gas and energy (power supply) companies working in the Republic of Kazakhstan would like to share a few thoughts on the perspectives of foreign and domestic investments into the power generating industry not going into details about the statistical data on total investments into the oil & gas and energy sector as it’s believed to be the task of the relevant state authorities and development institutions.
Moreover, after organizing IPO (initial public offering) there is no need to speak about the perspectives of investment into the oil & gas sector. Cooperating with professionals who are applying modern methods in projects implementation as well as taking into account the practical experience of the veterans of the energy sector of the Republic of Kazakhstan, we came to the conclusion that there are a number of opportunities and initiatives to attract long-term foreign and domestic investment into the power generating industry. We will give you certain examples with reference to the experience, knowledge and recommendation of the Kazakhstani specialists stating that under annual GDP growth of 8-9% the average annual growth of power consumption amounts to 5-6%. Nowadays the total capacity of power generating stations in Kazakhstan amounts only to 14,410 MW. The issue of placing large-scale power generating stations in highly deficit zones, such as South and West Kazakhstan needs to be considered in nearest future. The structure of generating capacities is also need to be changed by increasing maneuver (peak-loaded) capacities of hydroelectric power stations (HPS) from 12% to 20% of the total set capacity of power generating stations. Without taking urgent measures of upgrading the existing facilities of power generating stations, the ultimate amount of power generation in 2008 will not exceed 72-73 billion KW per annum. At the same time the energy consumption in 2008 is forecasted at the level of 74 billion KW. So far, the electricity deficit in the year 2008 will exceed 1 billion KW that may impact negatively on GDP growth of the Republic of Kazakhstan and further impede the implementation of the President’s task to increase GDP growth threefold by year 2015. As Prime Minister the Republic of Kazakhstan stated at the expanded government session in Astana: «The growing economy is demanding more electricity; and according to the estimations, there is a real threat of the power deficit at the amount of 4 billion KW in 2009. Furthermore, the whole infrastructure depreciated for more than 70%». The major actual problems in electricity transmitting and distribution network are rehabilitation of regional power supply network due to the depreciation over 65% and continuation of upgrading the National Power Grid. As witnessed in the southern part of Kazakhstan during winter 2006-2007 the power supply deficit amounted near 800 MW, including the Almaty region, where the deficit was near 400 MW. In order to cover growing deficit in the southern area of Kazakhstan it is necessary to begin the first stage of construction Moinak HPS with capacity of 300 MW, Kerbulak HPS with capacity of 50 MW HPP, implement the expansion project of Almaty Central Heating and Power Station-2 with capacity of 360 MW, where the construction of new Heat Power Station on the territory of South Kazakhstan is needed. Taking into account all the above stated data on power supply deficit issue and historical background in the power generation sector, it is necessary to point out that the sector is being in a critical demand for not long future but this or next year investments into the long-term projects since the implementation of any project implies assessment, planning, engineering and other time-consuming procedures. There is hope that all understand that the implementation of any power generating project are the investments for the benefit of the real consumer – the citizens of the Republic of Kazakhstan and each single tenge invested into the power generating sector helps to solve social problems. With reference to the power supply problems it is necessary to draw attention to the advantages of geopolitical location of Kazakhstan and suggesting commercializing power generating facilities. We believe that China root is can be considered as one of the main ways to cope with the problems and the next step to develop power generating sector. Due to the growing power supply deficit on the border of eastern and southern regions of Kazakhstan where international energy transport channels such as oil pipeline, gas pipeline and railway will be passing, the present day situation gives rise to pressing necessity for implementation of the existing concept of power exporting opportunities to China based on a combined usage of power generating facilities ensuring reduction of heat gas emissions (the global warming environmental issue was widely discussed on economic forum in Davos). The concept was developed by the Kazakhstani scientists and it is based on the fact that the border-line territory of the country has inexhaustible renewable energy sources that can be obtained from mountain rivers and wind corridors. For instance the production capacity of wind energy in the Djungar Gate (the intermountain pass-way to China) where the above stated energy exporting transport routes will be passing, is more than enough to meet power exporting demands to China. Moreover energy export resources will be located near potential consumers in China since eastern part of the Djungarian Gate is located in China. It is possible to build a number of hydroelectric power stations (HPS) with the total capacity up to 4000 MW on the mountain rivers of Almaty and East Kazakhstan region, as well as wind power stations (wind mills) with the total capacity up to 6000 MW. Furthermore HPS and wind mills will successfully complement each other depending on the seasons. In warm seasons HPS production capacity increases (see violet line) and in cold seasons production of wind energy grows (see blue line). (Red line on the given scheme means summarized production capacity.) Technically the two types of power supply resources can meet the scheduled demand of inter-state supply with environmentally friendly electricity.
Diagram 1. Production capacity of hydroelectric power stations and wind energy stations.
The combined production capacity of wind mills and HPSs of up to 10 000 MW can potentially generate about 35 billion KW/h which is more than two thirds of required amount of electricity under the same delivery terms. The creation of the HPS and wind mills complex will cost approximately 14 billion USD. The idea is that the electricity export project will be on-going and will enable to export electricity to China even under earlier terms. The advantages of the project: - The project can be carried out by local construction companies and specialists, who will get an opportunity to strengthen their hydro technical and wind energy sector potential; - 110-220-500 kV power transmission lines (PTL) in the eastern Kazakhstan on the border-line with China will help to develop National Power Grid, which is truly necessary due to the fact that nowadays the power transmitting connection between Almaty and East Kazakhstan regions do not exist; - National Power Grid will obtain additional North-South PTL at cost less then 1 billion US dollars. The connection will maintain its functional as well as operational flexibility and safety of the whole Power Grid. In order to maintain export of power supply from South Kazakhstan heat power stations to China we can construct PTL of 500kV on the north coast of Balhash lake. To avoid non-synchronism of power frequency between Kazakhstan and China Power Grids timely power transmitting deliveries the direct current insertion module is preferably to construct on the border between Kazakhstan and China (suggesting using practical experience of Russia and Finland that had built such insertion module 40 years ago). At the same time the nominal voltage will be lower in comparison with the long way Ekibastuz transit PTL and will significantly reduce its cost. The direct current PTL will consist of several short (about 10km) parallel lines on the border-line with the neighbor country. The development of power export opportunities to China would promote not only to develop National Power Grid of Kazakhstan, but will also solve the problem of stable power supply with renewable energy sources, and so far, Kazakhstan will also be able to contribute to solving global environmental pollution issues. As far as geopolitical location of Kazakhstan is concerned and its increasing positioning in addressing global environmental as well as energy security problems the Association would like to submit for consideration the attractive long-term profitable investment options such as development of alternative energy resources by creating venture enterprises. For example, investing into the rapidly growing photovoltaic electricity systems market could be considered as one of such long term projects which are very perspective in the context of evolution of the global energy scenarios. Availability of vast mineral resources, potential of scientific and engineering specialists, number of technological methodologies shall be the key foundation for creation of silicon industry in Kazakhstan that could trigger the development of photo galvanic, instrument making, electrical engineering, chemical and other industries. Following activities needs to be carried out for the development of solar energy industry in Kazakhstan: - Building the strong scientific research base to stimulate the development of solar energy scientific researches at the level of laboratory tests and small-scale pilot production. - Setting up experimental & industrial production of solar elements and modules including the patented scientific–research innovations. Organizing experimental & industrial production of silicon solar elements and modules is very important. For establishing experimental & industrial production of silicon solar elements and modules a technical assignment on projecting high-tech enterprises producing monocrystalline or coarse-grained silicon, silicon sublayers and solar batteries is envisaged in IT Park (Alatau village, Almaty). The experimental & industrial line on production of the silicon solar elements and modules in IT Park (Almaty, Atyrau) will consist of the following key components: - Directed crystallization equipment, - Equipment for cutting bars on plates, - Equipment for chemical purification and polishing plates, - Photo elements production, assembling into batteries, - Control equipment, - Infrastructure (premises, power and water supply, and etc.) At present moment the Ministry of Education and Science, the Ministry of Agriculture, the Ministry of Industry & Trade and the Ministry of Environmental Protection are preparing a program on development of renewable energy in the Republic of Kazakhstan for years 2007-2009 aimed at creating innovative infrastructure for scientific research and technology development that will result in production of competitive scientific-technical products, new experimental scientific production units and mechanisms of transfer of new technologies to the industrial production units that could supply 10% of total power generating demands of Kazakhstan by 2015. The program implementation will be partially subsidized, however without attracting domestic and foreign investment it may slow down, since such important mission requires participation of all significant market players. Investing into the innovative power generating projects will improve the image of the Republic of Kazakhstan before the global community who is already today facing the issues of global warming and environmental pollution. В статье предоставлен анализ текущей ситуации в энерговырабатывающей сфере Казахстана, в частности дана оценка проблемы недостатка электроэнергии и предложены необходимые пути ее решения. Главный тезис: инвестирование в инновационные и перспективные проекты по выработке энергии, безусловно, будет содействовать улучшению имиджа Республики Казахстан в международном сообществе, в том числе с экологической точки зрения, а также позволит обеспечить стабильный экономический рост и дополнительные прибыли от экспорта электроэнергии в соседние страны, и, прежде всего, в Китай.