PV Analysis of the Belt and Road Initiative

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PV Demand Analysis of the Belt and Road Initiative: Kazakhstan of Central Asia

Kazakhstan Country Profile

Kazakhstan has an estimated population of 18 million. The annual GDP growth rate stood at around 4.1% in 2017, a 3% rise compared to 2016, showing signs of economic recovery. Fitch, a global credit rating agency, assigned Kazakhstan a credit rating of BBB on March 2019, indicating a stable future outlook.

Solar radiation varies from region to region. It ranges from 1,300-1,800/kWh per square meter in central and southern Kazakhstan and 1,000-1,500/kWh per square meter in western and northern Kazakhstan.

Renewable energy development in Kazakhstan

The government of Kazakhstan initiated the Green Economy Plan in 2012, which targets 3% and 10% of electricity generated from renewable energies by 2020 and 2030, respectively.

To achieve the goal, the Ministry of Energy of the Republic of Kazakhstan announced bill No.478 in November 2016, stipulating that the cumulative installation of renewable energy should achieve 1,700MWby 2020, including 933MW of wind power, 467MW of solar PV, and 300MW of hydro and bio energy.

Coal has been the primary source of electricity generation in Kazakhstan. As the Kazakh government has been pushing for green energy development to achieve its goal set for 2020, the nation has sourced 1.27% of electricity from renewables by the end of 2018, a 0.19% rise compared to 2017.

Kazakhstan Installation and Electricity Generation by Source

Kazakhstan’s PV policy and development

1. FIT

Kazakhstan’s FIT for solar PV projects is KZT 34.61/kWh. To promote local PV industry development, projects using modules manufactured with local raw materials are eligible for a FIT of KZT 70.00/kWh.

2. PPA Auction

In mid-2018, a 1GW project was put out to tender for the first time. The result of the first round of auction was announced in October 2018 and 170MW of solar PV was awarded. The result is listed in the table below:

Kazakhstan First Aution

Winning bidders have to sign a 15-year PPA with JSC KOREM, Kazakhstan Operator of Electric Power and Electric Energy. Projects are expected to connect to the grid between 2019 and 2020.

Unfortunately, Kazakhstan’s solar plans didn’t go smoothly. At first, the government attempted to promote renewable energy development through FIT calculating based on Kazakhstani tenge. However, following a transition to a floating exchange rate regime in 2015, oil prices plunge, and rising tensions between its neighboring countries Russia and Ukraine, the national currency has depreciated significantly. That made foreign companies less willing to invest in the local renewable energy and thus hindering the PV development. The policy failure resulted in a cumulative PV installation of only 58.8MW in 2017.

In recent years, global financial institutions such as EBRD, CTF, and ADB have started  financing Kazakhstan’s solar PV projects to support the country’s PV development.  Driven by the demand, the nation’s cumulative PV installation has increased to 209MW last year, with 150MW of which newly installed, which marked the highest installation in Kazakhstan to date. .

Kazakhstan Cumulative installation

Source: Ministry of Energy of the Republic of Kazakhstan

Kazakhstan-China trade: module imports and exports

According to PV InfoLink’s China customs database, China’s module shipment to Kazakhstan was 13MW and 195MW in 2017 and 2018, respectively, showing a substantial increase in module demand compared to 2017. The reason behind the growth might be the projects financed by international financial institutions.

Chinese module shipment to Kazakhstan stood at 91MW in the first quarter of 2019. Some of these modules may be used in projects selected in auction last October and the projects financed by financial institutions.

Module demand is likely to keep rising thanks to solar auctions and funded projects.

Kazakhstan China Module Export Shipment

Conclusion

With loans offered by foreign banks, Kazakhstan’s growing solar demand was reflected in the volume of newly-added installation in 2018. Last October, the nation held its first round of auction for utility-scale projects and 170MW of solar PV was awarded. Demand from those projects is expected to emerge this year.

China’s module shipment to Kazakhstan touched 91MW in the first quarter of 2019, nearly half of the total shipment to the nation in 2018. Some of these modules may be used in the170MW contracts awarded in auction.

Looking ahead to the future, whether the PV industry can continue to grow without the financial help from foreign financial institutions is a major challenge facing Kazakhstan. The future development is difficult to predict at this point; however, the PV industry will continue growing if the government could reduce the cost and move toward grid-parity regime. 

*PV InfoLink will hold a seminar titled “2H19 PV Market Trends and Outlook” in Shanghai on June 3. Welcome to join us for more market insights and technology trends.

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