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Holding auctions allows to prevent tariffs growth for population – Ministry of Energy on development of renewable energy

by November 1, 2018 Politics

According to the Ministry of Energy, a new mechanism for auction bidding will determine the objective market price for electricity generated by renewable energy facilities, build a transparent selection process for potential investors and ensure investment in the sector aimed at developing the renewable generation sector in the country. In the spring and autumn 2018, international auctions of 1000 MW of installed capacities of renewable energy projects were held in Kazakhstan, with a breakdown by RES type: solar power plants, wind power stations, hydroelectric power plants and biomass power stations.

Attracting investment to the industry has led to a reduction in tariffs, in average: wind stations � by 12.2%, small hydro stations � by 12.12%, solar stations by 35.71%. At the same time, the maximum reduction in the auction price for wind generation was 23.3%, for solar generation � 48%, for small hydropower projects � 23.4%, Biopower stations � 1%, which is a very good result, Shkarupa noted.

For 2018, 113 Kazakh and foreign companies (China, Russia, Turkey, France, Bulgaria, Italy, the United Arab Emirates, the Netherlands) took part in the auction. Of these, 36 renewable energy projects with a total capacity of 857.93 MW won.

In general, the total volume of bids received from auction bidders amounted to 3,422 MW, i.e. demand volume exceeded supply volume by 3.4 times. The winners of the auction closed 85% of the capacity proposed for the auctions, the vice minister explained at a meeting of the Government.

According to the vice minister, the measures taken allow for restraining the growth of tariffs for the population.

We compare with the fixed price that was established before the introduction of auction bidding mechanisms. Compared with the fixed price, which was in 2018, this price is reduced, that is, potentially we do not allow the growth of tariffs for the population, said Shkarupa.

As noted by the vice minister of energy, the introduction of auction bidding mechanisms can be a serious reserve for not raising tariffs among the population.

For example, if we had the fixed price just above 34 tenge for the solar energy until 2018, then due to the auction bidding, this price dropped as much as possible in solar generation by 48%. The maximum reduction is not a fully implemented project, so we suggest focusing on average values, he noted.

At the same time, Shkarupa stressed that the power system of Kazakhstan is characterized by a larger share of basic power and a small share of highly maneuverable power, which contributes to the development of hydroelectric power plants and ensures the ability to control power in the whole power system. Also, the vice minister of energy noted the need to work out a separate issue on the construction of bioelectric power plants, which will work in the processing of solid waste, on garbage.

In this sector, we would like to create more incentives and priorities. We expect that on the basis of our landfills we will install bio-power stations that will provide opportunities to solve several issues at once. This is both waste management and the use of recycled materials in the production of cleaner and greener energy, he added.

It is worth noting that in Kazakhstan, the system of auction trading of renewable energy sources was first launched May 23, 2018.

Source: The Prime Minister of Kazakhstan