As Kazakhstan officially starts the construction of its new nuclear plant, the region is overwhelmed with an extreme heat wave. The climate change is especially noticeable in the continental climate: in the land where summer temperature peak at 49 degrees Celcius is even the slightest upgrade dangerous. But the efforts to become climate neutral country prove to meet some complications. 

The temperatures in Kazakhstan – as anywhere in the world – are rising. The winter of 2024/2025 has been classified as ‘anomalously’ warm, as temperatures exceeded the norm by 2 to 6 degrees. Spring and summer have been way too hot as well: monthly reports show temperature records. Over the last 75 years, the average yearly temperature in Kazakhstan has risen by 6 degrees.

The efforts to counteract climate change, or at least to slow it down, are extremely relevant in this context. But the current starting point makes the green future look rather distant.

Fuel dependence in the background 

In 2023, Kazakhstan’s president Kassym-Jomart Tokayev signed the ambitious Strategy of the Republic of Kazakhstan on Achieving Carbon Neutrality by 2060. Nevertheless, in a country where the economy is deeply reliant on the fossil fuel industry, the shift toward renewable energy poses considerable difficulties.

Since Kazakhstan’s independence (now well over three decades ago), subsequent governments were betting on the extraction of fuel for continued economic growth, as well as securing investments through selling the exploration and recovery rights to fossil giants like British Petroleum, Exxon and Shell. Petroleum currently makes up 52,5% of Kazakhstan’s export, which earns the country up to 34,8 billion GBP annually. Whilst Russia is subjected to sanctions as a result of its war against Ukraine, western countries are looking for alternative suppliers. And Kazakhstan has proven to be an interesting partner in that regard – a fact reflected in the signing of new contracts, primarily for oil exports to Europe.

The fossil fuel industry remains far too profitable to scale back, let alone to significantly reduce oil production. Yet such a decline seems inevitable: if not driven by environmental imperatives, then by sheer necessity. Current forecasts suggest that known oil reserves could be exhausted within just 30 years at present production rates. While this projection may align with broader climate objectives, governments continue to pursue new exploration efforts in regions considered geologically promising.

The main problem: coal

Oil is only part of the problem. The energy sector in general is Kazakhstan’s number one source of greenhouse gas emissions. Although energy demand from industry accounts for just over a fifth of final energy consumption, more than a third is spent on the building sector. This is where coal processing comes in.

Kazakhstan possesses vast coal reserves, though extraction remains costly. The country’s largest deposits are relatively shallow but consist of exceptionally thick seams, making mining operations less efficient. In 2023, a tonne of coal could be purchased directly from mines for around 9,000 tenge – approximately £15.75 at the prevailing exchange rate – well below global market prices. For domestic consumers, transportation costs can nearly double that price, yet coal remains the most affordable source of energy production. However, its widespread use is responsible for more than half of Kazakhstan’s greenhouse gas emissions.

Most of Kazakhstan’s coal is consumed domestically, primarily to supply the country’s thermal power plants. Coal accounts for 99% of heat generation and more than half of total electricity production. However, many of these power stations are outdated and, in some cases, in disrepair. Most were built during the Soviet era and have long exceeded their intended operational lifespan.

Read more on Novastan: Kazakhstan stops investment agreement with ArcelorMittal after deadly explosion in Kostenko mine takes 46 lives

The government does not seem particularly willing to completely abandon coal. News outlet zakon.kz cites Kazakhstan’s Minister of Energy Yerlan Akkenzhenov: ‘We live on wealth. Coal-fired power generation is considered the cheapest option. In addition, the construction of combined heat and power plants also allows us to control the heat supply. As you know, all our cities are supplied by combined heat and power plants and a central heat supply. We must continue to pursue this approach […]’

As an alternative, the minister has proposed equipping the power plants with modern boilers that enable coal to be burned ‘without residue’. By 2035, ‘every combined heat and power plant will be gradually converted exactly to clean coal technology’.

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In a country with very cold winters, less than half of households are connected to a central heating network. In single-family detached homes, coal is frequently used as the main energy source for heating, which in turn contributes to the already high levels of smog produced by thermal power plants in big cities like Almaty. Taking into consideration the state of Kazakhstan’s housing stock, a considerable amount of energy gets wasted due to insufficient insulation or outdated heating systems. Ironically, even with the energy wasted, heating is still cheaper in the long term than investing in renovations.

Read more on Novastan: Breathing space: air quality and energy transition in Kazakhstan

Slow decarbonization in transport

A similar situation can be observed in the transport sector, the country’s second-largest energy consumer. The UN, in its roadmap for achieving the 7th sustainable development goal (‘Ensure access to affordable, reliable, sustainable and modern energy for all’), recommends that Kazakhstan decarbonize 15% of its passenger cars by 2050. Currently there are 6.17 million cars registered in the country, of which electric cars account for only 0.003%.

A quarter of a century is a long time – after all, 25 years ago, electric cars as we know them today did not even exist. However, the timeframe proposed by the UN seems optimistic for Kazakhstan: almost half of the cars in the country are at least 20 years old, and a significant proportion of these are cars would no longer pass vehicle safety tests, or would be banned from towns and cities for not meeting environmental standards. Although the government is planning to impose fines on car owners whose vehicles exceed emission standards, there are no plans to use the revenue to directly fund environmental initiatives. Many drivers only replace their cars when they are no longer roadworthy, and even then, they tend to turn to secondary and tertiary markets when looking for a replacement.

Switching to an electric car is not easy in Kazakhstan: all charging stations are located within the three largest cities – Astana, Almaty and Shymkent – and even there, their availability is limited. Due to the risk of fire, for example, it is prohibited to install charging stations in apartment parking areas. Electric car owners are hence dependent on public charging stations in large car parks and near shopping centres – which often do not supply green electricity.

According to internal research of a car manufacturer in the region, more than half of car owners do not consider electric cars as a purchase option when thinking about their next buy. After the boom in 2022/2023, when cheap electric cars were imported en masse from China, excitement has subsided. The urban population with above-average incomes who wanted and could afford an electric car, have already purchased it; for the rest these cars are just too expensive, far too impractical, far too unfamiliar. Car dealers are now focusing on hybrid models instead, which could serve as a transitional solution. Yet even these are no option for the majority of the population, given the current state of infrastructure in Kazakhstan.

Clean energy: only a fraction in the market

It is not that Kazakhstan produces no clean energy at all.

Hydroelectric power plants, however, play only a minor role in the country’s energy mix — for understandable reasons. Most of them were built in the same era as the aging thermal power plants. Moreover, water resources are steadily dwindling, raising doubts about whether there will be enough water to sustain hydroelectric production in the coming years.

Read more on Novastan: Kazakhstan: Residents suffer from lack of water

Despite Kazakhstan’s favorable geographic conditions, solar and wind energy remain surprisingly underused. As of 2024, the country operated just 59 wind farms and 46 solar parks — a modest number given its vast, sparsely populated steppes that are ideally suited for renewable energy generation. The southern regions enjoy between 2,200 and 3,000 hours of sunshine per year — two to three times more than the United Kingdom. Kazakhstan also has excellent wind potential: average wind speeds of 5–6 m/s are common across most of the country, reaching up to 8.27 m/s in certain areas. Experts estimate Kazakhstan’s total wind energy potential at around 920 billion kWh per year.

Yet, this immense potential remains largely untapped. The main reason is economic. At current price levels, the clean energy sector is unattractive to private investors. Equipment must be imported at high cost, while the electricity produced can be sold for no more than seven pence per kilowatt hour, VAT included. For most households, retail prices are roughly half that. As a result, revenues barely cover maintenance, and the payback period for new projects is so long that, by the time investors see a return, much of the infrastructure is already outdated and in need of further investment.

It has long been evident that energy prices in Kazakhstan will have to rise to finance sector modernization and accelerate the shift toward green energy. The controversial new nuclear power plant will not be profitable otherwise: experts estimate that the price of nuclear power will be 12.5 pence per kilowatt hour in the first 15 years. Ultimately, however, it is sustainable energy that must take the lead. Sergei Agafonov, chairman of the Kazakh Association of Energy Suppliers, envisions an optimal energy mix in which renewables provide at least half of the demand, while nuclear power accounts for roughly the global average – projected to reach 12% by 2040. ‘Yes, renewable energies will have to dominate our energy balance over all other types of energy generation. The main thing is that we carry out this change carefully [..]’, said Agafonov in an interview with Orda.kz.

New turning point

The strategy for achieving carbon neutrality in 2060 contains neither an implementation plan, nor success indicators, nor any sanctions for failing to achieve the set targets. In 2017, it was already announced at the EXPO in Astana that the share of renewables should increase to 30% by 2030. As things stand, the quota is only 6.2%. This still shows a 4% increase over the last seven years, but the growth estimate was clearly far too optimistic. Just four years after the EXPO, the target value has been halved.

A scenario in which Kazakhstan fails to meet its 2060 targets remains entirely plausible. The Climate Action Tracker has voiced similar concerns, rating the country’s climate policies as ‘insufficient,’ noting that ‘emissions will continue to rise until at least 2035 under current policies.‘ The lack of genuine political will to tackle the issue is perhaps best illustrated by President Kassym-Jomart Tokayev’s abrupt change of stance. Speaking at a forum of the National Council for Science and Technology on September 26, Tokayev underscored the continued importance of coal and made a striking remark about climate change:

‘frankly, everything that is happening looks like a large-scale fraud.’

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For over a year now, the billion-dollar fraud case surrounding former tech CEO Sam Bankman-Fried has been causing an uproar. In Kazakhstan, too, the case caused a stir – mostly because of the Bankman-Fried’s connections to local businessmen. The Kazakh government is planning to regulate the industry more strictly: from January 2024, new guidelines on trading in digital assets will apply.

Steep rises can be followed by equally dramatic falls, especially in the world of cryptocurrencies. The industry experienced such a fall in November 2022 when FTX, the world’s second-largest trading platform for such assets, collapsed within a few days, taking several billion US dollars of investments with it. At the beginning of November 2023, the American federal court in Manhattan found Bankman-Fried guilty of embezzling the assets invested by customers of its crypto exchange FTX.

The sudden collapse was caused by revelations of dishonest business practices by the company’s management, above all by the CEO and co-founder Sam Bankman-Fried, who was once hailed as a child prodigy. At his behest, the hedge fund Alameda Research, a sister company closely linked to FTX, which he also co-founded and managed, had invested more than one billion US dollars from FTX investments in Kazakhstan. In turn, this contributed to the financial imbalance of the company network.

The scandal also made waves in Kazakhstan, where Alameda Research and other companies have fueled a veritable crypto boom in recent years. In response, the government is planning to regulate the promotion of and trade in cryptocurrencies more strictly.

Bitcoin rush in Kazakhstan

For FTX, Bankman-Fried requires enormous “mines” – industrial electricity and server farms the size of factory halls. The best conditions for building such mines were found in Kazakhstan at the end of the 2010s, where cheap electricity and relaxed regulations attracted many such projects. In 2021, Kazakhstan was the second largest Bitcoin producer in the world, with up to seven per cent of national energy production flowing into data centres at the peak of the Bitcoin frenzy. This is also where Bankman-Fried made his momentous investment. He had Alameda Research invest in Genesis Digital Assets (GDA), a company that is registered in Cyprus but operates primarily in Kazakhstan.

This Kazakh connection was reconstructed by the online portal Kursiv.media. GDA was founded in 2017 by the Kazakh investors Rashit Mahat, who worked on the board of directors of the telecommunications company Kcell between 2019 and 2021, and his business partners Abdumalik Mirahmedov and Andrei Kim. They joined forces with two German crypto specialists, Marco Krohn and Marco Streng, to get the company up and running.

Bankman-Fried joined the board of GDA in 2021. The money from Alameda flowed into a total of three data centres operated by GDA in Kazakhstan, where computer halls powered by cheap electricity generated coins that were later to be traded on Bankman-Fried’s exchange FTX. At least, that was the plan. By the beginning of 2022, Alameda had invested 1.1 billion USD in GDA – by far the hedge fund’s largest investment.

The beginning of the end for FTX

However, when the crypto market collapsed worldwide at the beginning of 2022, the value of the mining companies also fell massively. A venture that had seemed lucrative enough to risk more than a billion dollars just a few months previously now looked far less attractive. When the industry service CoinDesk also reported in November 2022 that Alameda Research’s core capital consisted of FTT, FTX’s platform-owned cryptocurrency, the situation worsened.

The almost uncontrolled growth of the industry in Kazakhstan was coming to an end at this point anyway. After the mass protests in January 2022, which in part were fueled by high energy prices, cheap energy for Bitcoin mining was no longer an option. In July 2022, a tax on electricity for mining projects was imposed.

The aim is to gradually regulate the industry and integrate it with state actors such as the Astana International Finance Centre (AIFC), a prestige project of the Kazakh government. In line with the external image of the AIFC, the country continues to see itself as a promising location for the digital industry. Yet, in the future, crypto start-ups will need to comply with certain framework conditions. The laissez-faire attitude that once attracted Bankman-Fried to Kazakhstan seems to be over for good.

Moving the mines

The regulatory efforts from 2022 were, at least in part, fueled by the sudden collapse of FTX. Following the CoinDesk report, the FTX and Alameda Research financial construction was exposed and confidence in the actual liquidity of Bankman-Fried’s company evaporated in one fell swoop. As a result, the industry leader and FTX’s biggest competitor, Binance, dumped its FTTs, causing the currency’s value to plummet – and Alameda Research and FTX with it.

GDA has relocated its data centres from Kazakhstan to the USA, where the company intends to continue its operations. New projects in North America and Sweden are now advertised on the company’s website, and former board member Bankman-Fried has completely disappeared from the company’s public image.

President Tokayev, who had even met with Bankman-Fried and other entrepreneurs in the industry at the end of 2021, finally issued the most far-reaching package of measures to date on crypto mining in Kazakhstan on 6 February 2023. According to kursiv.kz, these will come into force in January 2024.

New regulations, new investors

From now on, mines will require a state license to operate and will only be allowed to purchase electricity from the Kazakh grid if there is a surplus of electricity. From 2024, at least 50 per cent of the coins produced in Kazakhstan must also be traded via platforms registered with the Astana International Finance Centre. This quota is to rise to 75 per cent by 2025. The AIFC is not only intended to provide an attractive marketplace for the finance and tech industry but is also working on closer integration of the cryptocurrency sector with state authorities, as reported by the Astana Times.

Although the initial gold rush mood in the country is over, it will not be the last we hear of cryptocurrencies in Kazakhstan. Binance, the major competitor of the collapsed FTX, continues to work closely with the Kazakh government and is optimistic about the country. The company is already as well connected as GDA once was. In October 2022, Zhaslan Madiyev, until then Vice Minister for Digital Development, moved into a management position at Binance Kazakhstan.

Binance was founded in China, but currently has no official headquarters. The company is now working on crypto products that are linked to existing national currencies. The CBDC Digital Tenge, a crypto counterpart to Kazakhstan’s national currency, was run as a pilot project until December 2022 and is being prepared for a broader market launch. The new currency should be available nationwide by 2025.

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A railway bridge crosses the river Vakhsh (Tajik: wild) in the city of Sarband in Tajikistan’s Khatlon region. The city was established in the 1950s for the workers of the nearby hydroelectric powerplant. Almost Tajikistan’s entire electricity production is situated in cascades of hydro power dams on the river Vakhsh.

Photography: the editorial team

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A cooperation protocol has been signed between Rosatom and Kyrgyzstan’s Ministry of Energy to build miniature nuclear reactors. However, such a project cannot quickly resolve the country’s energy crisis. This article was originally published on Novastan’s French website on 29 January 2022. First Uzbekistan, then Kazakhstan – now it is Kyrgyzstan’s turn to want to develop nuclear energy. On 20 January, a cooperation protocol was signed between Kyrgyz authorities and the Russian company Rosatom, as described by a press release from the company. The project aims to build at least one miniature nuclear plant in the country, without giving a specific date. Rosatom wants to introduce miniature reactors of the RITM-200N type to Kyrgyzstan. This type of reactor currently propels Russian icebreakers and has been used since 2016.  However, the Russian-based technology has not yet been adapted for use on land. Rosatom expects to build the first unit of its kind by 2028, according to Russian media Sputnik. This type of reactor is built by OKBM Afrikantov, a subsidiary of Rosatom.

A long project

In addition to this development, the memorandum “also involves assistance in developing the nuclear infrastructure of the Kyrgyz Republic and joint work aimed at improving the skills of scientific and technical personnel in various fields of peaceful nuclear energy use,” the same press release describes. Read more on Novastan: Central Asia and Russia: an ever-changing relationship However, the implementation of such a project may take a long time in Kyrgyzstan, unlike in Uzbekistan where a nuclear power plant project has already been launched. As relayed by the Russian news agency TASS, the press service of the Kyrgyz ministry affirmed that the project will only be accepted “after agreeing on an appraisal for environmental security, after the approval of a feasibility study, and after being accepted by all the governing organs of the Kyrgyz Republic.”

A delicate energy situation

If this project succeeds, Kyrgyzstan, a producer of uranium, will be able to use its own resources directly on site. The Kyrgyz desire to develop other energy sources comes at a time when the country is experiencing energy instability. According to Kyrgyz media Akchabar, Kyrgyzstan is nearly 90% dependent on hydroelectricity.  This makes the country vulnerable to global warming, which affects its water resources and therefore electricity. Read more on Novastan: A significant power shortage is expected for Kyrgyzstan in 2022 During the winter of 2021, the authorities feared an energy crisis, which has admittedly yet to arrive. The levels of the reservoir of the Toktogul dam could, however, be even lower in 2022, describes Radio Azattyk, the Kyrgyz branch of the American media Radio Free Europe. This dam alone is responsible for 30-50% of electricity production in Kyrgyzstan, according to Radio Azattyk and Kyrgyz media Kloop, respectively. Every year, Kyrgyzstan needs 15 billion kilowatt-hours (kWh). However, as the Kyrgyz Economic Minister Akylbek Japarov described it on 11 October, Kyrgyzstan has a structural electricity production deficit of 6 billion kWh each year, according to Radio Azattyk.

Training necessary for nuclear energy pivot

Some experts believe that the contribution of nuclear power – even a small amount – could make it possible to decrease part of this deficit. An analyst of the Russian investment bank VTB Capital, Vladimir Sklyar, estimates that up to 10% of Kyrgyz consumption could be fulfilled by nuclear power, as discussed in Russian media Kommersant. Observers say this will close a third of coal-fired power plants.

However, the country faces a shortage of skilled labour to operate a nuclear power plant. “We don’t have engineers and nuclear scientists to service this nuclear reactor. We need to train specialists. A person needs to learn, practice and work for at least 2-3 years in this field,” says Myrzatai Soultanaliev, senior researcher at the Kyrgyz Scientific and Technical Centre for Energy, who spoke to Russian media Sputnik. “It will take at least 10 years to train such specialists. At least 50 experienced people will be needed to service such small nuclear power plants,” he adds.

A debated choice

Furthermore, the option of nuclear energy seems to be the subject of debate within the Kyrgyz government itself. Deputy Energy Minister Raiymbek Mamyrov believes that “there is no need to build a nuclear power plant in Kyrgyzstan. When the regional resources are considered, there are water resources and opportunities for the construction of hydroelectric power stations,” he explains to Radio Azattyk. “I think these proposals come from the Russian side because it is necessary to advertise Rosatom’s products,” he adds. The Russian company was chosen to build the Uzbek nuclear reactor and is also expected to be chosen by the Kazakh government for its nuclear power plant project. “Currently we use only 8 to 10% of our regional resources and produce 15 billion kilowatts of electricity. Which means there is a potential to generate 135-140 billion kilowatt-hours,” former Deputy Prime Minister Aaly Karachev told Radio Azattyk. “In such conditions, we should not talk about the construction of a nuclear power plant, but rather pay attention to the construction of a hydroelectric power plant, which is more suited to our objectives. It’s cheaper and less harmful to the environment,” he said.  

Written by Paul Mougeot

Translated from French by Matthew Devereux

Edited by Mari Paine

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DECODING. Turkmenistan ranks fifth in methane emissions in the world, after Russia and the United States. This does not come as good news for Central Asia’s most secretive country – and is also out of all proportion for the country with such a small population.These emissions derive mostly from gas extraction, Turkmenistan’s primary source of wealth. The culture of secrecy and outdated infrastructure leave them to be observed through satellite. With COP26 in full swing, the Deputy Prime Minister of Turkmenistan has promised to reduce methane emissions, which are 28 times more polluting than CO2 emissions. Here is an explanation of this delicate Turkmenistan situation.This article was originally published on Novastan’s French website on 8 November 2021. The International Energy Agency’s report does not cast a positive light on Turkmenistan, the fifth-largest emitter of methane in the world. In its Methane Tracker, the IEA makes it clear that Turkmenistan emits more methane than China. As Glasgow hosts the COP26 until November 12, this is an unenviable position.

Ashgabat’s poor ranking was highlighted by the Bloomberg agency on 19 October. The article named Turkmenistan as the world’s third-highest methane emitter, right after Russia and the United States. Since then, this ranking was updated, although it was officially published in January 2021. Novastan requested a comment from the agency, but Bloomberg did not respond. Whether it be third or fifth, Turkmenistan emits slightly more methane than China (with its 1.4 billion people), despite having only 2.7 million inhabitants – or 6.2 million according to official statistics. Methane is especially harmful to the environment, as it fuels global warming 28 times faster than CO2.

Ageing gas infrastructure

To explain this phenomenon, one must turn to the gas industry. Turkmenistan possesses the fourth-largest reserves of blue gold in the world. It extracts next to 60 billion cubic meters per year, with China as its main buyer. As Turkmenistan’s main resource, gas is intensively exploited. The problem is that “most of the equipment is dilapidated, and leaks occur on a regular basis in the networks and deposits,” a reliable source states. “The government focuses on new developments, but companies lack skills”. Massive methane leaks from these infrastructures have been detected over the past few years. In 2019, 2020 and February 2021, companies specialized in satellite data analysis warned of these leaks. “What is certain is that these emissions do not stem from the ‘regular’ gas or oil production process. Methane leaks can be avoided”, says Antoine Halff, lead analyst at Kayrros, a French company that participated in revealing the problem.

General lack of transparency

“Generally speaking, large emissions can be caused by two things: either lax attitude towards industrial practices, bolstered by loose regulations, which means methane is intentionally released into the atmosphere during maintenance operations on pipelines, or equipment problems, such as poor or unsuitable infrastructure that leaks a lot of gas” Antoine Halff further explains. The second option probably applies to the Turkmen case. Read more: Troubled waters: Turkmenistan’s environmental policy Information from Turkmenistan is scarce, making it hard to say for sure. The authorities have never reacted to the leaks detected by Karryos or GHGSat, a Canadian firm also specializing in this sector. “It takes a lot of effort to determine the causes for Turkmenistan’s emissions, and whether they are intentional. Few public documents give information about the regulation of the hydrocarbon sector, and it is virtually impossible to know whether reports of incidents or leaks have been filed – at least, from a foreign perspective”, says Itziar Irakulis Loitxate, a scientist specializing in remote detection at the Polytechnic University of Valencia (Spain).

Satellites come to the rescue

In the face of this silence, satellite observation, among a few other things, can help determine the amount of methane emitted into atmosphere – and thereby make it possible for the IEA to rank countries. “The so-called ‘monitoring’ satellites make it possible to capture large emissions, which are occasional and therefore cannot be observed by sporadic checks”,  Antoine Halff says. “Furthermore, such observations are totally independent, do not require operators’ approval, and can better quantify large leaks than any other technology, especially ground-based sensors”. “On the other hand, it should be kept in mind that satellites can only see large emissions provided that the weather is not cloudy”, Itziar Irakulis Loitxate states. “Huge progress is being made in pushing the limits of emission detection. Several promising satellite missions are expected in the next few years, specializing in the precise detection of greenhouse gases”.

Turkmen authorities promise to reduce methane emissions

As it turns out, the Turkmen authorities have reacted to Bloomberg’s article. On November 4, Deputy Prime Minister – and President Gurbanguly Berdimuhamedov’s son – Serdar Berdimuhamedov said he was paying great attention to reducing methane emissions, the official press agency TDH says. Independent media Turkmen.news reports that he also flew to Glasgow in order to make sure his position was heard by the members of the COP26. Serdar Berdimuhamedov seems to get ready to follow his father’s steps, which makes it a loaded statement. “Once identified, large methane emissions can be avoided easily.  The technology already exists, and its costs are negligible, if not negative, considering the benefits”, Antoine Halff claims. “Turkmenistan will have to work on upgrading old facilities and improving the skills and the sense of responsibility of technicians”, a local source tells Novastan. According to Itziar Irakulis Loitxate, “Turkmenistan can drastically reduce its emissions, but in order for that to happen, money should be invested in maintenance and stricter control over infrastructure”. In her opinion, Turkmenistan has the means to do so – “only time will tell how fast [it will be implemented]”.  

Etienne Combier Editor-in-Chief of Novastan

Translated from French by Andreï Fedorovsky

Edited by Anna Wilhelmi

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On May 10, Total Eren’s project to install a large-scale solar plant in Uzbekistan received monetary support from three international institutions, including the European Investment Bank. The project announced in 2018 is now ready to launch.This article was originally published on Novastan’s French website on 17 May 2021. It is financing that should finalize the launch of Total’s solar plant in Uzbekistan. On May 10, the European Bank for Reconstruction and Development (EBRD) revealed that the Uzbek government had received €87,4 million (£72,3 million) aid to finance the construction of the French group’s plant. This financial aid will contribute to the construction of a 100-megawatt solar power plant near the city of Samarkand, in eastern Uzbekistan. The construction supervisor is Tutly Solar LLC, a group owned by Total Eren, itself a subsidiary of the French oil giant Total. Tutly published a technical report describing the numerous aspects and implications of this project.

Multiple aids

Three organizations participated in the financial assistance: the EBRD, the European Investment Bank (EIB) and Proparco, the subsidiary of the French Development Agency (AFD). The loan granted by the EIB amounts to €43,7 million (£36.2 million), whereas the two others have invested about €21,8 million each (£18,6 million). Once the plant is set up, the electricity will be sold to the national Uzbek power supplier under a 25-year purchase agreement. The country has high potential in the solar energy sector, which is growing fast in Central Asia.

300 jobs created

In a commentary to Novastan, Total Eren stated it had selected Uzbekistan for several reasons. Uzbekistan is the most populated country in Central Asia, and it benefits from high quality solar and wind resources, coupled with a notably stable and balanced economy. Read more: Agreement between Azerbaijan and Turkmenistan paves the way for Trans-Caspian Pipeline The group has also highlighted the fact that the Uzbek government is actively trying to expand the renewable energy market. With this in mind, they created a favourable economic environment for investments and have directly supported Total Eren’s project. All in all, Total Eren estimates that this project will create more than 300 new constructing jobs and 15 permanent positions. The solar plant could also be the first of many projects of this kind in the country.

A step towards the development of renewable energies

However, most of the benefits of the project obviously lie in energy production. On 4 May 2020, Uzbekistan has set up a reinforcement plan to meet the ever-growing needs in energy and the diversification of energy production. According to the EBRD, the construction of the solar plant should reduce the annual greenhouse gas emissions by 160 000 tonnes of CO2 and produce 270 GWh of electricity per year.

More broadly, the solar plant aims to “achieve carbon neutrality of the power sector by 2050, as well as to make sure this development is consistent with the commitments made under the Paris Agreement “, as explained by Nadita Parshad, Managing Director of the EBRD’s Sustainable Infrastructure Group. “Tutly is an investment in local economic development and the future of our planet“, says Teresa Czerwińska, EIB Vice-President responsible for operations in Uzbekistan, in her statement. The project is also in line with the 17 sustainable development goals set by the UN in 2015 for the year 2030. The list involves, among others, the use and accessibility of renewable energy, community sustainability and infrastructure innovations.

A long-standing project

The future solar power plant is one of the first renewable energy projects in the private sector in Uzbekistan. The solar plant initiative goes back to 5 October 2018, when Total Eren had first negotiations with the national electricity company, Uzbekenergo.  On 13 September 2019, the project became a reality, when the Uzbek national electric network signed the electricity sales contract. Finally, a decree was signed on 13 May 2020 by Uzbek president, Shavkat Mirziyoyev. Read more: Breathing space: air quality and energy transition in Kazakhstan Uzbekistan’s cooperation with foreign countries in the renewable energy sector is not unprecedented. On 8 June, the Uzbek Ministry of Investment and Foreign Trade announced that the UAE company Masdar will build a large-scale wind power plant. On the French side, ties with Uzbekistan in this area are pretty strong. On 25 May 2020, Uzbekistan announced it had signed a €55.8 million (£46.3 million) loan contract with AFD to support the hydropower sector. French companies are also playing a prominent role in the development of sustainable energy in Uzbekistan. In a report dated April 2020, the International Energy Agency mentioned Uzbekistan’s renewable energy potential. According to its figures, the country has a gross potential of 2.2 megatons of oil equivalent in wind power, 9.2 megatons in hydropower and 50 973 megatons in solar power.

Léonard Dillies Editor of Novastan

Translated from French by Eva Houdu

Edited by Anna Wilhelmi  

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The post Uzbekistan: Total Eren’s solar plant fully funded appeared first on Novastan English.

With low water levels in its main reservoir, Kyrgyzstan is struggling to keep up with the increasing demand for electricity this winter. Deputy Prime Minister Ravshan Sabirov warned this increase could lead to blackouts, though he ruled out rolling shutdowns.

Kyrgyzstan’s deputy prime minister warned of possible power cuts in the country this winter. As Kyrgyz media Kloop reports, in a speech in parliament on 16 December, Ravshan Sabirov pointed out an increase in electricity consumption this month, which could lead to automatic shutdowns.

“Substations are heavily overloaded as electricity consumption is growing,” Ravshan Sabirov said. “Demand is growing by 7 to 10 million kilowatt-hours every day. Automatic, not rolling, blackouts are possible.”

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On 29 December, Talaybek Baygaziyev, the head of the Kyrgyz Energy Settlement Centre, a company analysing electricity supply and consumption, also stressed the spike in electricity use, urging the population to “save electricity”.

Rolling blackouts happen when a supplier intentionally cuts electrical power to avoid a complete shutdown. As Kloop points out, such blackouts are associated with the former president Kurmanbek Bakiyev, toppled by a revolution in 2010. They often happened in 2008 and 2009 and contributed to popular discontent. 

A dry year

According to Ravshan Sabirov and Talaybek Baygaziev, the cause of the potential automatic shutdowns is the low water level in the Toktogul Reservoir, a large artificial lake in the east of the country.

The Toktogul Reservoir supplies the largest power plant in Kyrgyzstan, currently undergoing modernization. In 2019, the then-president Sooronbay Jeenbekov estimated it produced 40% of the country’s electricity.

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Talaybek Baygaziev links the lack of water in the reservoir to the weather. “This is due to the fact that the year was dry: the Toktogul Reservoir’s volume did not fill up sufficiently,” he explained in a press conference organised by the Russian media Sputnik. “If the amount of snow in the upper reaches of the rivers flowing into the Toktogul Reservoir is low, then the following year there may not be enough hydropower for the required amount of electricity.” This, he added, means that Kyrgyzstan will have even more difficulties with electricity supply next year.  

Imports fell through

As Kloop notes, Deputy Prime Minister Ravshan Sabirov had already warned of low levels at the Toktogul Reservoir earlier this year. On 5 November, he announced in parliament that Kyrgyzstan would import 500 million kilowatt-hours from Kazakhstan by the end of the year. This was to be part of an exchange, as Kyrgyzstan had sent electricity to Kazakhstan between June and August.

On 14 December, however, Joldoshbek Achikeyev, the director of the company running the country’s electricity power plants, explained in a press conference that Kazakhstan had not been able to export the planned amount, Kloop reports. “There is a supply, but much lower than the volume we had specified and planned for,” he said.

Electricity demand in Kyrgyzstan is highly seasonal, with demand spiking in winter. Consumption has also increased year on year: official figures show electricity use has risen by over 75% between 2009 and 2019, from 7,506 to 12,599.5 million kilowatt-hours.

Valentine Baldassari
Editor of Novastan English

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The post Kyrgyzstan struggling to meet electricity demand this winter appeared first on Novastan English.

ANALYSIS. Since early November, temperatures in Uzbekistan have been 2-5 degrees lower than average. Electricity consumption has increased by over 17%, reaching a new all-time high on 25 November according to the country’s ministry of energy, who cut off electricity for many consumers due to high demand. Similarly, according to the gas supplier Hududgazta’minot, quoted by the Uzbek media Podrobno.uz, gas consumption rose by over 50%. At the same time, the ministry of energy shut off gas for many businesses, including glasshouses producing fruits and vegetables. The disconnections led to important losses for many farmers, who had to turn to coal for their energy needs.

Some even called for Alisher Sultanov, the minister of energy, to resign. He replied that the circumstances were exceptional. In fact, Uzbekistan’s energy industry has been facing issue after issue for over 30 years, with little investment resulting in a largely loss-making system.

This article was originally published by Novastan France for its subscribers on 30 November. Novastan English has translated it exceptionally.

Since early November, Uzbek households have been feeling the cold. With temperatures 2-5 degrees colder than the seasonal average, gas consumption has exploded. On 22 November, the state-owned company in charge of gas supply, Hududgazta’minot, estimated gas use had gone from 46 to 70 million cubic metres in a few days. Demand soon overwhelmed Hududgazta’minot, currently understaffed, causing shutoffs.

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This was a blow for Uzbek agriculture. As Gazeta.uz reports, glasshouses in the Samarqand region lost the equivalent of $35,000 (£26,000) because of the gas shutoffs. In Qashqadaryo Region, south of Samarkand, lack of gas resulted in the death of over 5,000 chickens, according to the Russian news website Fergana. The ministry of energy responded, as quoted by Kun.uz, that such shutoffs were part of the seasonal restrictions mentioned in the contracts between farms and gas companies, as supplying households and critical facilities is a priority.           

Less gas, less electricity

The lack of natural gas pushed Uzbekistan’s population towards other means of heating their homes, notably coal or electricity. The subsequent spike in electricity consumption led in its turn to electricity outages. Some households have been left without any heating at all.

This pushed citizens to put pressure on the ministry of energy, with some urging the minister, Alisher Sultanov, to resign. “If everyone resigns, who will do the work?” he replied.

The deputy minister Sherzod Kho’jaev told Kun.uz that electricity production would increase to keep up with Uzbekistan’s growing demand. He also announced an increase in gas production, which has been declining for several years.

Soviet-era infrastucture

More generally, the advanced age of Uzbekistan’s energy infrastructure is a factor in its current troubles. Built during Soviet times, it was only maintained as needed, and never truly modernised. “The main issue is the inefficiency of the gas supply system,” explains Shukhrat Bobokhujaev, senior professor at the economy of oil and gas department of Gubkin University’s Tashkent branch.

In an interview with the Uzbek Youtube channel Alter Ego, Alisher Sultanov stated that this inaction was “forced, that is, no funds were allocated.” Avoiding criticisms about lack of action in the past four years (corresponding to when the current president Shavkat Mizoyev came to power), the minister said it was important not to panic but also promised to find “who is to blame”.

Alisher Sultanov also pointed out that the energy sector had become one of the country’s priorities during Shavkat Mirzoyeyev’s presidency, from December 2016, but that it would take time before results materialised. He used the example of an electric power station, which takes three years to build.

The minister added that reconstruction and modernisation were in progress and that the industry was starting to attract private capital, for him a “revolutionary idea”. “This industry was a “sacred cow”, which could not be entered with private money,” he told Alter Ego. “And today the construction of a huge private power plant in Uzbekistan begins. The Saudi Arabian company Aqua Power is already starting work on the site.”

Administrative woes

Another explanation for the sector’s current issues comes from its administrative structure. Uzbekistan’s gas production is managed by two entities, O’zbekneftgas, which extracts gas, and Hududgazta’minot, which supplies it to consumers and maintains the pipelines. Hududgazta’minot was created in July 2019 to ease the privatisation of O’ztransgas, the company formerly in charge of the pipelines. Today, O’ztransgas is only responsible for exporting gas. All these structures are under the control of the ministry of energy.  

Separating production from supply has made adjusting to emergency situations more difficult. Indeed, even Hududgazta’minot distributing an additional 26,000 gas cylinders was not enough to meet demand. “The problem of providing the population with natural gas is not due to insufficient production, but to an ineffective gas supply system, with large losses as well as disruptions of the gas pipeline system due to obsolete equipment,” Shukhrat Bobokhujaev explains.

The senator Kutbiddin Burkhonov also criticised the state of the country’s pipelines, pointing out that 48% of them had been in use for 25-30 years, sometimes even longer.

The customer is not always right  

In response, Hududgazta’minot chose to highlight illegal gas consumption. This is also the line chosen by the chairman of the company in charge of regional electrical networks Ulugbek Mustafoiev. In an article published by the state news agency Uza.uz, he contends that the sector’s problems are due to consumers not paying their electricity bills and not facing consequences, causing huge losses for electricity companies. In his view, the creation of an automatic system to check payments will help regulate electricity supply and prevent the sort of energy issues the country faced in November.

Alisher Sultanov expressed a similar point of view on the Alter Ego Youtube channel, blaming unpaid bills on “people who consider themselves businessmen”, not “common people, who do not use much gas.”

The situation remains delicate. The Uzbek authorities have already announced that electricity and gas prices will not increase in 2021, Gazeta.uz reports. For its part, the Russian producer Lukoil said on 27 November that it was nearly once again reaching its planned gas production level in Uzbekistan. Production had fallen by 40% due to the coronavirus pandemic and declining demand from China.

“To solve the accumulated problems, complex decisions such as completely replacing industry managers and updating human resources policies are necessary,” Shukhrat Bobokhujaev asserts. He also suggests “suspending funding for ineffective investment projects, revising how funding is given and attracting foreign specialists to this process” and “establishing appropriate controls on natural gas supply to residents and businesses”.

Etienne Combier
Co-founder of Novastan France

Translated by Valentine Baldassari

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The post Uzbekistan’s energy sector struggling as temperatures dip appeared first on Novastan English.