The road ahead for Kazakhstan’s power sector: modernising through renewables

With its potential for the development of cheap wind and solar energy, Kazakhstan is well placed to increase the share of variable renewable power generation from five percent today to 20 percent by 2030, helping it to get on track to meet its 2060 carbon neutrality target.

This ramp-up of renewable energy deployment is feasible while minimising power system costs, ensuring security of supply, and phasing down coal-fired generation, according to a new study by Agora Energiewende.

The study models four different scenarios for 2030: one for business-as-usual centred on the government’s current target of increasing the share of renewables to 15 percent target, and three that are more ambitious, assuming higher shares of variable renewables (up to 20 percent) and a phase-down of coal generation from 67 to 45 percent by 2030.

The model assumes that a decline in coal power generation will be offset by the rise in renewables – specifically solar PV and wind, where the levelised cost is estimated to be about half of that for new-build coal-fired generation. All scenarios envision a significant increase in electricity production and consumption by 2030, due to demographic growth and a continued expansion of energy-intensive industries.

Key measures to successfully transform Kazakhstan’s energy system identified by the Agora study are expanding and reinforcing the grid, increasing energy efficiency, and developing a plan to move away from coal. The ramp-up of the share of renewables in the power mix is also critical to sustainably electrify heat, industrial applications, and transport. In some hard-to-abate sectors such as aviation, shipping, and cement, Kazakhstan will need to transition towards renewable hydrogen and other power-to-X fuels.

Significant potential for transformation despite challenges

Kazakhstan’s economy is one of the least energy-efficient in the world; the energy intensity of its GDP is about 50 percent higher than the global average. The country is planning to build over 4 GW of new coal power plants, and oil is one of the main sectors of the economy. Its energy infrastructure is also in need of modernisation.

At the same time, over the past 30 years, Kazakhstan’s power market evolved from a vertically integrated monopoly to a partially liberalised, multi-market system. During the last decade, the country has seen increasing penetration of renewables. Thus, Kazakhstan has the potential to set a positive example for other countries in the region.

Concerted and immediate efforts to expand and reinforce the grid as well as increase energy efficiency would allow the country to not only select the most cost-effective generation sources but also to fulfil its 2030 climate target set to reduce emissions by 15% below 1990 levels, an important milestone on its path to net-zero.

The study shows a feasible transition pathway from coal to renewables that would allow Kazakhstan to create opportunities for electrification and energy efficiency gains across sectors like heating, transport, and industry, thus reaping the benefits for the wider economy of a clean energy transition.

The study “Modernising Kazakhstan’s coal-dependent power sector through renewables: challenges, solutions and scenarios up to 2030 and beyond” was produced in collaboration with OET, ECOJER and Qazaq Green. The 59-page study models four analytical scenarios for the renewables landscape in Kazakhstan in the lead-up to 2030. The publication is available for free download below.