Electricity and coal market overview

Power industry is regulated by government agencies.

The authorized body represented by the Ministry of Energy of the Republic of Kazakhstan manages power industry on the basis of the Republic of Kazakhstan Law No. 588 dated July 9, 2004 “On Power Industry”.

The authorized body represented by the Ministry of Energy of the Republic of Kazakhstan manages renewable energy sources area on the basis of the Law of the Republic of Kazakhstan No. 165 dated July 4, 2009 “On Supporting the Use of Renewable Energy Sources”.

The state body represented by the Committee for Regulation of Natural Monopolies, Protection of Competition and Consumer Rights of the Ministry of National Economy of the Republic of Kazakhstan (hereinafter as the Committee) implements the state policy in the areas of natural monopolies, including on regulated services for electricity transmission, heat production, transmission, distribution and supply in line with the Republic of Kazakhstan Law dated December 27, 2018 No. 204-VI “On Natural Monopolies”.

The Ministry of Industry and Infrastructure Development of the Republic of Kazakhstan is the state agency that manages coal industry in accordance with the Republic of Kazakhstan Code No. 125-VI dated December 27, 2017 “On subsurface and subsurface use”.

Kazakhstan electricity market model

ELECTRICITY MARKET

Retail (up to 1 MW)

✔ Power transmission and energy supply organizations that supply electricity to retail customers

Wholesale (above 1 MW)

✔ Decentralized market: participants purchase and sell electricity on mutually agreed terms
✔ Centralized market operated by «Kazakhstan electricity and capacity market operator» JSC (KOREM)
✔ Balancing market for eliminating imbalances on a daily basis (functioning in a simulation mode)
✔ Market of system services including power transmission and capacity reservation

Capacity market model

LONG-TERM CONTRACTS

SHORT-TERM CONTRACTS (FOR 1 YEAR)

NEWLY COMMISSIONED EPO SUCCESSFUL BIDDER

EPO THAT SIGNED INVESTMENT AGREEMENTS

EPO (CHP) TO THE EXTENT OF TECHNOLOGICAL MINIMUM

OPERATING EPO

Tariff and term is based on the results of tender for construction of generating facilities

Individual tariff and term is set in investment agreement

According to ceiling tariff

Tariff is established in centralized auction

P R I O R I T Y
COMPETITIVE PROCEDURE
S I N G L E B U Y E R
S I N G L E B U Y E R
S I N G L E W E I G H E D AV E R A G E P R I C E
L A R G E - S C A L E C O N S U M E R S

T H E M A R K E T C O U N C I L

— involves in development of laws and regulation
— reviews investment agreements
— decisions serve as guidelines

Electricity balance of Kazakhstan

The installed capacity of Kazakhstan’s power plants in 2019 amounted to 22,936.6 MW, which is 1,034 MW more in comparison with the last year. The available capacity of the RK power plants made 19,329.7 MW, which is 434.8 MW more than last year, incl. an increase in the Northern zone – 193.2 MW, the Western zone – 149.6 MW, the southern zone – 92 MW.

Electricity was mainly produced at thermal power plants – 81 %, the share of hydropower plants accounted for 9 %, and the share of renewable energy sources was about 1.8 %.

The northern zone produced 77 % of electricity of the country’s overall production. Main coal deposits and water and energy resources are located in the northern zone. Excess electricity is transferred to the southern zone experiencing power shortages and is exported to the Russian Federation.

The southern zone is characterized by a shortage of electricity covered owing to supplies from the northern zone.

The western zone A significant share of electricity consumption is made by oil and gas companies with their own generating sources. There are no electrical connections of the West with the North and South of Kazakhstan through the territory of the country.

According to the data from System Operator, Kazakhstan’s power plants produced 106,030 mln. kWh of electricity in 2019, which is 0.7 % less than the 2018 figure. There was a reduction in production in the Northern zone of Kazakhstan’s UES.

Electricity generation at Kazakhstan HPP decreased by 358.1 mln. kWh (3.5 %) in comparison with the same period in 2018.

The operation mode of power plants was determined by the water balance and hydrological situation.

Electricity generation at TPP and GTPP of Kazakhstan decreased by 840 mln. kWh (1 %) and 144 mln. kWh (1.6 %), respectively.

Over the past three years, there has been an increase in Kazakhstan’s electricity consumption. Consumption in the northern zone of the republic increased by 2 %, in the southern zone by 3 %, and in the western zone by 0.2 %. During the reporting period Almaty shows the maximum increase in electricity consumption – by 374.2 mln. kWh (3 %) in comparison with the same period of 2018 million kWh (3 %), Zhambyl region – by 151.9 mln. kWh (4 %), Pavlodar region – by 94 mln. kWh (0,5 %), Karaganda region – by 671.8 mln. kWh (4 %), East Kazakhstan region – by 259.2 mln. kWh (3 %). An increase in electricity production is connected with the growth of TPP and GTPP output as well as the commissioning of new RE facilities.

Electricity indicators across the Republic of Kazakhstan, Mln. kWh

Indicators across the RK 2017 2018 Δ 2018/ 2017 2019 Δ 2019/ 2018
1 Electricity consumption 97 856,7 103 228,3 5 % 105 193,1 2 %
2 Electricity production, incl.: 102 383,6 106 797,1 4,3 % 106 029,8 0,9 %
TPP 82 424,8 86 795,1 5 % 85 955 0,9 %
GTPP 8372,6 9 119,3 9 % 8 975,6 0,9 %
HPP 11 157,9 10 343,0 0,9 % 9 984,9 0,9 %
WPP 338,5 400,5 18 % 701,9 75 %
SPP 89,8 137,9 54 % 409,4 197 %
Biogas plant 0 1,3 3 131 %
3 Net power flow «+» shortage, «-» excess incl.: –4 527 –3 568,8 0,8 % –836,7 0,2 %
Russia –4 528,2 –3 566 0,8 % 125,7 –0,04 %
Central Asia 1,2 –2,8 –133 % –962,4 –34 371 %

According to the data from the Republic of Kazakhstan Ministry of Energy, the volume of electricity production by facilities using renewable energy sources in Kazakhstan amounted to 2.4 bln. kWh in 2019 or an increase of 44,4 % as compared with 2018 figures.

At the year-end 2019, 90 RE facilities operate in Kazakhstan. Compared to 2018, electricity production by large hydropower plants decreases in 2019, while electricity production by small hydropower plants, wind and solar power plants and biogas plants has increased.

Export and import of the Republic of Kazakhstan electricity

Russia and UES of Central Asia have been export and import directions for the Republic of Kazakhstan electricity in 2019 (exports to the RF – 1,273.6 mln. kWh, imports from the RF – 1,407.1 mln. kWh). “KEGOC” JSC – 1,215.6 bln. kWh in order to balance electricity production and consumption.

During the reporting period 1,138.6 mln. kWh electricity was imported from the RF in order to balance power production and consumption. An increase in electricity imports of the Republic of Kazakhstan in comparison with 2018 was due to an increase in the volumes of balancing electricity from the Russian Federation.

Export and import of the Republic of Kazakhstan electricity, mln. kWh
Δ 2019/2018
Description 2017 2018 2019 mln.kWh %
Kazakhstan’s export 5 795,8 4 882,4 2 240,8 –2 641,6 –54,1 %
to Russia 5 788,1 4 876,3 1 273,6 –3 602,7 –73,9 %
“ESDPP-1” LLP 4 705,5 3 758,0 0,0 –3 758,0 –100,0 %
“SevKazEnergo” JSC 62,2 68,7 58,0 –10,7 –15,6 %
“KEL” LLP 0,0 0,0 0,05 0,05
“KEGOC” JSC (balancing market) 1 020,4 1 049,6 1 215,6 166,0 15,8 %
to UES of Central Asia 7,7 6,1 967,1 961,0 15 733,7 %
“ESDPP-1” LLP 0 0,0 963,4 963,4
“KEGOC” JSC for “NPS of Kyrgyzstan” OJSC 7,7 6,1 3,7 –2,4 –38,8 %
Kazakhstan’s import 1 268,9 1 313,6 1 695,7 382,1 29,1 %
from Russia 1 259,9 1 310,2 1 407,1 96,8 7,4 %
“INTER RAO” PJSC 283,3 291,7 268,4 –23,2 –8,0 %
“INTER RAO” PJSC (purchase agreement) (balancing market) 976,6 1 018,6 1 138,6 120,1 11,8 %
From UES of Central Asia 8,9 3,3 288,6 285,3 8 545,2 %
power flow «+» shortage, «-» excess –4 527,0 –3 568,8 –545,1 2 794,2 –78,3 %

Competitive environment in electricity market

The volume of electricity production by the largest energyproducing organizations, competitive organizations of “Samruk- Energy” JSC in 2019 amounted to 52.5 bln. kWh, which is 312 mln. kWh more compared to 2018 (52.2 bln. kWh).

The share of electricity generation by the largest competitors of “Samruk-Energy” JSC in the wholesale market in 2019

“Samruk-Energy” JSC
“ERG” LLP
“Kazakhmys Energy” LLP
“KUS” LLP
“CAEPCO” JSC
Others

Electricity production by Kazakhstan’s major producers, mln. kWh

Description 2017 2018 2019 Deviation Share in the RK, %
1 “Samruk-Energy” JSC 27 760,3 31 703 30 200,3 –1 502,8 28,5 %
2 ERG 19 264,6 19 573,9 18 545,0 –1 028,9 17,5 %
3 “CAEPCO” JSC 7 299,9 7 025,7 7 032,8 7,1 6,6 %
4 “Kazzinc” LLP 7 437,1 3 271,6 3 093,2 –178,4 2,9 %
5 “Kazakhmys Energy” LLP 6 756,3 6 437,0 7 443,6 1 006,6 7,0 %
6 “KUS” LLP 6 102,5 6 376,8 6 645,4 268,6 6,3 %
7 “Zhambyl SDPP” JSC 2 552,3 1 792,4 1 878,8 86,4 1,8 %

Electricity production across “Samruk-Energy” JSC group decreased by 4.7 % in 2019 compared to 2018. At the same time, the share of electricity production by the Company amounted to 28,5 % in the total production of Kazakhstan, this indicator of main competitors is – “Kazakhmys Energy” LLP – 7 %, KUS – 6,3 %, ERG- 17,5 %.