The Kazakhstan renewables market has been gaining momentum throughout the previous few years. Causes for such growth embrace (1) authorities assist (together with periodic amendments to business legal guidelines and laws to handle renewables market considerations/issues), (2) social obligations of power-producing corporations that use standard vitality sources, and (3) traders’ curiosity in renewables.
As of immediately, there are 117 renewable energy crops working in Kazakhstan, amongst which the best share belongs to photo voltaic and wind energy crops. The federal government’s formidable goal is to extend the renewables share within the energy provide market in Kazakhstan to 10% in 2030 and 50% in 2050.
Earlier than going into particular points traders face within the Kazakhstan renewables sector, listed below are key regulatory phrases that apply to any renewables mission in Kazakhstan:
- Renewable initiatives and personal traders are chosen through a aggressive public sale the place the bottom bidding energy sale value wins.
- The federal government ensures the acquisition of energy from a renewable energy plant on the idea of an influence buy settlement (PPA) executed with a single purchaser—a subsidiary of a nationwide operator of a unified energy system in Kazakhstan—the Monetary and Settlement Middle (FSC).
- A PPA is entered into on the idea of a template settlement. Deviations from this template are typically disallowed. Amongst different issues, the PPA units the utmost combination capability of the producing tools of the ability plant.
Regardless of many of the legal guidelines and laws in regards to the renewables sector being pretty easy, traders face a bunch of sensible points, because the evolving authorized framework is being examined and nonetheless must be adjusted (improved) to fulfill the market realities.
We’ve been engaged to unravel the sensible authorized challenge arising from the disconnect between the legislation and follow. A global vitality main sought our recommendation in reference to the deviation of the particular capability of the equipped and put in producing tools from the utmost energy technology capability set by its PPA.
Noteworthy is the problem in regards to the wind energy plant, the development and completion of which has already been acknowledged as compliant with relevant documentation (together with design documentation), and the deviation was not important. The shopper was requested by the nationwide grid operator and the FSC to deliver the precise capability beneath the edge set beneath the PPA. This meant that the shopper needed to successfully idle one among a number of producing models. Clearly, maintaining one producing unit nonoperational offered a significant problem, each commercially and technically.
Given the significance of the technical facet (i.e., equipment-generating capability) of the matter in query, the shopper supplied us with enter from technical specialists and the producer of the producing tools. From a technical perspective, the producing capability of apparatus and, consequently, the ability plant as a complete, might be adjusted downward by personalized tools alignment, i.e., by limiting the precise capability of every producing unit beneath any working circumstances through software program. This has been confirmed by the opinion of the technical specialists and the producer of the tools. Thus, the deviation turns into a moot level in follow; whereas the truth is every producing unit and the ability plant could not produce energy past the restrict, the nominal permitted technology capability set out within the technical documentation formally stays.
Our authorized evaluation revealed that there’s a clear disconnect between the formal inflexible authorized necessities and the accessible technical options, i.e., the shortage of a correct regulatory mechanism permitting the shopper to regulate the precise capability to the capability restrict set beneath the PPA, even the place a deviation is immaterial. To be able to present a business-oriented answer and mitigate the dangers related to a late commissioning of the ability plant, we proposed the next short-term and long-term workarounds.
A brief-term answer could be to enter right into a memorandum of understanding with the competent authorities and entities involved (together with the FSC), which might acknowledge the de facto scenario and understandings reached by the events and thus obtain a short lived “no motion” secure harbor. The drawback of this strategy is that it technically doesn’t absolutely adjust to the inflexible legislation, which is why it will probably solely be seen as a short lived workaround till a extra strong and correct answer is put in place.
A extra strong and holistic (however longer to implement) answer is to provoke and introduce amendments to the relevant legal guidelines and laws that might expressly present for the adjustment of the particular capability of producing tools as a correct and acceptable mechanism with the intention to guarantee compliance with PPA phrases.
In September 2020 a brand new clause was launched into the Guidelines on Centralized Buy and Sale by FSC of Energy produced by Renewable Energy Vegetation (Guidelines) that reads as follows:
In case precise combination capability of the producing tools of a wind energy plant exceeds the capability set beneath the PPA, the applicant limits capability of a producing unit (or a number of models) with the intention to adjust to the combination capability set beneath the PPA. The applicant should additionally submit knowledge on hourly technology of energy by producing models which have been subjected to limitation.
Together with that, it’s prohibited to exceed the combination capability of the producing tools of wind energy plant set beneath the PPA by greater than 10%.
Apparently, the amended Guidelines are way more versatile now. Nonetheless, the important thing takeaway for traders is to all the time consider (1) the restrictions and limitations supplied for beneath the relevant renewables legislation, (2) a formalistic strategy of state authorities which are usually unwilling to suppose “outdoors the field,” and (3) adversarial results of controversial (borderline) options and to hunt amendments into the authorized framework, particularly now whereas the Kazakhstan authorities is open to constructive dialogue and wanting to accommodate traders’ cheap considerations.
 Since 2019 this capability has been outlined as the combination nominal capability of the producing tools as set out within the technical passport(s) of the tools. Nonetheless, within the case mentioned herein, the PPA was executed in 2017, i.e., earlier than the definition had been launched.
 Such dangers embrace, amongst different issues, termination of the PPA.
 An individual making use of for entry into the PPA with the FSC.