OREANDA-NEWS. On 05 May 2009 was announced, that on April, 20 of 2009 in Astana V Republican Meeting of Power Engineers of Kazakhstan on the subject: “Effective power industry – the base of sustainable development of Kazakhstan economy” took place.

The participants of meeting in their statements expressed concern over a state of the energy producing companies.

Practice of more than ten years work of heat-power industry in the market environment revealed that during this period there were no full value modernization and reconstruction of power equipment, the new power capacities were not introduced, many specialized repair and constriction-installation enterprises were disintegrated and lost qualification, a system preparation of engineering and regular labor force for power industry is missing, a scientific potential remains unclaimed. The following factors confirm abovementioned:

a key problem of all active stations is a moral and physical depreciation of capital fund (50-80 %);

an important component of power industry is the regional power networks which fully exhausted a depreciable life and not only out of date and also depreciated (over 65%). Further maintain of the power networks in a proper working order at the expense of capital repair becomes problematical and practically impossible;

the unsatisfactory rates of reconstruction of power stations, distribution power and heat networks lead to catastrophic retirement of generating capacities (to the beginning of year at installed capacity of 18992.7 MW, an available capacity makes  14558 MW, i.e. capacity losses – 4435 MW or 23% of full installed capacity);

industrial and personnel potential of industrial-technological infrastructure of power industry are greatly lost;

the guidelines of energy preparedness, power independence and life support of the state are broken.

Existing power industry is in very unsatisfactory technical state. Balanced and synchronized operation of formerly high organized, consolidated, sufficiently effective and developing industry was lost.

The participants of meeting noted, one of the reasons of such state of things is that the tariffs of preceding ten years have been kept by the government and the power industry worked at full stretch. The operational capacities rapidly use resource and demands replacement. Together with loss of position by the questions of reliable and stable energy supply there is planned a deficiency of capacity and electric energy.

It is obviously that for a long time one ministry of such major branches like power industry and mineral resources didn’t provide an effective management.

Present time a deficiency of generating capacities in Kazakhstan is not a potential threat but a reality. The branch works without necessary reserve. Thereafter, the existing capacities already can not provide covering of perspective power loads – a construction of new power stations and a modernization of the existing power stations is necessary.

Retirement of generating equipment, exceeding of normative operating period of electricity transmission line, unsatisfactory technical condition of equipment – is an objective reality of today’s Kazakhstan power industry.

In spite of a power industry is one of more reformed branch of economy, today there is a crisis situation.

Low cost of electric energy (one of the lowest in the world) allowed supporting domestic industry during the period of economic development, to decide a set of social questions. Now power industry of Kazakhstan needs support.

With a view to ensuring growth of power consumption, energy preparedness and reliability of UPS Kazakhstan operation, RK Government approved “Plan of measures on development of power industry of RK for 2007-2015”.

Plan of measures is a complex document, providing:

Working out of forecasting electric energy balance for 2007-2015.

Preparation of list of power industry units subject to reconstruction, modernization and extension, also construction of new power units.

Increase of investment attraction in the industry.

Working out of forecasting price level for production, transportation and supply of electric energy.

Promotion of energy saving technologies and resources conservation.

Development and involving the renewable energy sources in the power balance of state.

Creation of foundation and determination of the base lines of nuclear power industry development.

     In accordance with the plan worked out in the period to 2015 it is proposed to put the new generating capacities with total capacity 8164 MW into operation, including due to construction of new – 5456 MW and extension of existing power stations – 2708 MW, also realization of the projects on development of NPG RK and rehabilitation of the power networks of RPC.

Among the projects on development of power industry of Kazakhstan, including in a plan of measures, the Government determined a list of the breakthrough projects including the projects on generation development:

Construction of Balkhashskaya TES with capacity of 2640 MW.

Extension of Ekibastuzskaya GRES-2               - 1050 MW.

Construction of Moinakskaya GES                    - 300 MW.

Construction of Kerbulakskaya GES                  - 50 MW.

According to the plan of measures, it is provided putting into operation of the following new power stations:

Karagandinskaya TETs-4 with capacity of 360 MW;

TETs-3 in Astana – 240 MW;

Bulakskaya GES on the Irtysh River - 68 MW.

Besides, it is planned to extent the active power stations by putting of new generating capacities 2708 MW, including:

TETs-2 Astana – 240 MW;

Almatinskaya TETs-2 – 240 MW.

It is important to note about currently realization by “KEGOC” JSC of project on Kazakhstan NPG development – construction of second 500kV OHTL of North-South transit, which will allow to meet deficit of electric energy and power in the south region of the state, will increase a transit potential of Kazakhstan NPG. Project completion – 2009.

In the sort term it is planned to realize another three projects on Kazakhstan NPG having a strategic importance for the republic:

Second phase of Kazakhstan Electricity Transmission Rehabilitation. Project volume consists of upgrade of substations and equipment not covered by first phase of Kazakhstan Electricity Transmission Rehabilitation project. Project implementation period is - 2008-2017.

“Scheme of power distribution to Moinakskaya GES”. Lead time - 2011.

Construction of “Alma” SS with connection to NPG Kazakhstan by the lines of 500, 220kV. Lead time – 208-2014. Realization of project is directed to provision of reliable energy supply of Almaty and Almaty oblast, and also provision of power distribution to first phase planned to construction of Balkhashskaya TES (1320 MW).

During the period to 2015 in Kazakhstan, there are an upgrade and reconstruction of TETs to be realized with replacement of main equipment: 66 turbine units of 3265 MW, replacement of 60 boiler units and also big volume of capital repair at the stations and regional electricity networks.

To realize the planned measures (taking into account the investments in the heating systems) an attraction of investments in electric power industry to 2015 in volume of 2.8 billion KZT is required (unadjusted for devaluation of national currency), including:

necessary volume  of investment in generation sector – 1.55 billion KZT;

in development of National Power Grids – about 200 mlrd. KZT;

for rehabilitation and development of distribution networks – 963 mlrd. KZT.

     So, present time an acute problem is an attraction of investments in power industry. Existing level of prices on electric energy and the tariffs for services of transmission and distribution don’t provide payback and an acceptable rate of profit for the potential investors on advantageous terms for them.

The participants of the meeting satisfyingly noted and fully supported the decision made by the Government of RK and the Ministry of Energy and Mineral Resources of RK on introduction of new pricing mechanism to electric energy for the energy producing stations. This measure will allow providing an investment attraction of the energy producers.

They also note that present situation gives a priority to the power industry. Development of state economy can not be without developed power industry and the priority rates of power supply.

The participants of meeting gave special attention to the questions of energy saving and using of renewable energy sources.

Effective consumption of energy is a quick, inexpensive and clear method which extends the terms of using the energy resources reserves. The Republic of Kazakhstan has a considerable potential of fossil energy resources (coal, oil, gas, uranium), at the present time Kazakhstan is on the one of the last places in energy saving field at the post-Soviet space. This is connected with a weak government regulation of energy saving.

Experience of the industrially developed countries on overcoming the economic crisis of 1970s demonstrates an insistent need to decide the important tasks in a field of energy saving, transformation of energy saving in continuous process of implementing the pipeline of projects directed on scientific and technically sound energy saving especially in material production field. In connection with growth of energy consumption in human economic activity, a problem of energy saving takes on a resource, a political and an economical significance. It became the one of evaluation criterion of international standing of the state including the estimation of investment climate.

Today Kazakhstan has a significant potential of energy saving both on heat energy and electrical energy which makes 30-35%. To realize energy saving potential it is necessary to carry out full work package on the main directions:

Energy saving at the consuming end (covers all branches of economy, including an energy saving on transport, for industry, in housing and utilities sphere, in construction complex, at consumers market and service sector).

Energy saving at production and distribution of energy resources.

     Considering current state of things, the work on creation and development of normative legal base on energy saving in Kazakhstan is in prospect. The Law “On energy saving” effective as on 1997 actually is declaratory and is not performed because many subordinated legislation are not worked out. The law has not a social direction that not provide an attraction of all layers of society not only the major producers and energy consumers to the problem of energy saving.

Besides, it is necessary to form a list of normative and legal documents in energy saving: technical regulations, standards, requirements, norms of energy efficiency parameters for new construction, reconstruction, capital repair and also the operating standards for the current consumers and types of production. According to this a new edition of RK Law “On energy saving” is to be prepared.

One of the priorities of state technical policy is an introduction and development of power industry based on using of the renewable energy sources.

Kazakhstan has the significant resources of renewable energy in the form of water energy, energy of wind, sun and biomass. However, aside from partial using of water energy, these resources have not been used up to present day.

The main reason of this situation is an availability of abundant supplies of fossil fuel-and-power resources, absence of public policy and legislative base on supporting and development of RER.

In the conditions of current power market the wind energy resources of Kazakhstan are practically not used. The main reason is a non-competitiveness of wind industry at the power market. Cost of electric energy from WPS taking into account a return of investments can make about 8-10kzt/kWh. Cost of electric energy on the buses of energy producing companies at present time makes 2-4.5 KZT/kWh. Forecasting cost of electric energy from the energy producing companies to 2015 can make: in South zone – 5.5 KZT/kWh, West zone – 5-6 KZT/kWh, Akmolinskaya oblast – 5.5-7.9 KZT/kWh, Karagandinskaya oblast – 6-7 KZT/kWh. It is necessary to note that after return of investments the wind industry may be competitiveness at power market.

In connection of increasing in demand of electric energy and generating capacity, the tariffs will continue to increase and can make 7-10 KZT-kWh for the outlaying regions in the near future. So, using of wind industry is an economically sound already now, starting with provision of energy supply for the small population localities which have not a reliable centralized power supply or not connected to it that is a partial decentralization of power supply of the outlying village areas of the republic.

Ministry of Energy and Mineral Resources in 2008 prepared a draft National Program of wind industry development to 2015 with perspective up to 2024.

Program objective is to use a wind energetic potential of Kazakhstan for power production in volume of 900 mln. kWh per year to 2015 and 50mlrd. kWh to 2024.

Ministry of Energy and Mineral Resources of RK has developed the Draft law “On support of using the renewable energy sources”, which is under consideration of the Parliament of the Republic of Kazakhstan. This law must determine a legal, economic and organizational base for development of using the renewable energy sources in Kazakhstan.

Legislative base on using RES (renewable energy sources) must be a powerful tool of state technological policy in this field.

During last ten years our society holds discussion concerning nuclear power industry in Kazakhstan.

The society ambiguously attitudes to this question. There is no clear and argumentative position of the specialists, the professionals and a science against a background of the discussions and the varied opinions.

Kazakhstan has a heavy stock of explored uranium, its field development is carried on.     At that the developed fields exert negative influence on environmental than the working nuclear power station. According to the opinions of the international organizations and the specialists, a nuclear power industry may be an alternative for deciding a problem of climate change. Nuclear power station practically does not make greenhouse gas emissions. The only problem of nuclear power station is a solution of question on treatment of radioactive wastes. This problem is soluble by the experience of the foreign countries. If we will say about the experience of other states, we can use the experience of island Japan with its Hiroshima and Nagasaki. Today in this country there are about 50 nuclear power stations. By life interval Kazakhstan needs several decades to approach this index of Japan.

Therefore in estimating of acceptability of nuclear power industry in Kazakhstan it is necessary to use scientific, professional and practical argumentation rather than a policy, the emotions and populism. It is impossible to confuse a nuclear power station with an atomic proving ground. Development of nuclear power industry in Kazakhstan is real and perspective.

  II. Resolution

Considering the present situation and necessity in implementing a package of measures on turn the power industry from crisis and provision of sustainable development, the participants of the meeting offer:

Consider a question on improvement of effective management of power industry. One of the ways would be an institutional fixing of all state functions in power industry field to the one independent state body.

In accordance with “The Program of industrial and innovation development of economy of the Republic of Kazakhstan for 2007-2015” to provide the promotional conditions for increasing an investment attraction of power industry by introduction of modifications and additions to Budget, Tax and Customs Codes and the Law of RK “On local state management”, “On power industry”, “On investments”, “On natural monopolies”.

Prepare a Draft Law of RK “On introduction of modifications and additions to the normative legal acts of RK concerning the power industry”, taking into account the suggestions of energy producers for perfection of tariff making on the power market, exceptions of compulsory wage restriction of the energy producers’ employees, determination of funding source for development of power networks in connection with cancel of payment for connected load, method preparation which obliges the entities of market to set the devices for reactive-power compensation, etc.

Legislative settlement connected with heat supply and the heat networks, structure and functioning of heat market, determination position and a role of the mixed-mode stations. Create a working group for preparation of the proposals on correction of tariff calculation method for CHP (cogeneration of heating and power) stations.

Make changes and additions in the acting normative legal acts with the view of perfecting the legal regulation of relations of state, the entities of power industry and the services receivers.

Create a permanent Technical Committee on normative-technical documentation attached to the Committee of State Energy Supervision. Provide working out of joint normative-technical documentation for using by all entities of power industry on the territory of RK, including the norms of raw materials consumption during maintenance and repair of electrical equipment, the standards of staffing level on the power producers including for the energy supplying companies, etc.

Announce a corrected Plan of measures on development of power industry for 2007-2015 as a priority (anti-crisis) on overcoming the Republic of Kazakhstan the crisis.

Provide financing of this Plan from the funds of the republican budget, National fund, NWF “Samruk-Kazyna”, other sources, attraction of domestic and foreign investors, providing all necessary volume of state guarantees and securities.

With the view of keeping qualified personnel to intercede on provision of desired salary level for the employees of energy producers.

With the aim of stimulating a development of domestic service infrastructure of power industry to give priority to the qualified specialized repair services for the contractors works on repair of fixed assets of the power objects by means of including such requirements in the conditions of the tenders.

For development and enhancing a role of science in power industry to create on a basis of the existing institutes a scientific-research center of power industry in form of joint-stock company.

The power companies should provide a preparation of the engineer and regular labor force for own needs on a contract basis in cooperation with the educational institutions in accordance with the Labour Code of RK.

Work out the concrete plans on development of wind industry and wind energy construction in Kazakhstan for the next 5 years.

Pass a new version of Law of RK “On energy saving” for the following realization in all fields of society. To determine a state system of energy saving management.