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Kazakhstan Power Report Q1 2012
Business Monitor International, Jan 2012, Pages: 44
Business Monitor International's Kazakhstan Power Report provides industry professionals and strategists, corporate analysts, power associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Kazakhstan's power industry.
BMI View: Kazakhstan has near-term issues with inadequate power supply and longer-term decisions to make over nuclear power. Demand growth is healthy, reflecting the economy’s expansion. Current plans for new generating capacity remain focused on conventional thermal sources, with gas taking the lead thanks to the state’s substantial domestic resources. Asian influence is growing, as China and South Korea enter the power arena. However, Russia may emerge as the partner of choice, if Kazakhstan goes down the nuclear route.
In spite of Kazakhstan’s vast and largely untapped gas reserves, the country’s power industry is seeking to avoid overdependence on the fuel in electricity generation, and has a diversified policy involving coal, hydro and renewables. Nuclear is currently on the side lines, but may well emerge as a component of the power portfolio over the long-term thanks to huge uranium wealth. System losses are considerable and improvements here could bridge the existing supply/demand gap. Ongoing high level investment in generation, transmission and distribution infrastructure is therefore necessary, and foreign partners, largely from Asia and Russia, are being lined up for the key projects.
Key trends and recent developments in the Kazakh electricity market include:
- The likely average annual growth rate for Kazakhstan power consumption is 4.9% between 2011 and 2016, remaining close to this level even beyond 2016. This represents 70% of BMI’s real GDP growth forecast, and reflects the relative immaturity of the energy market. Growth in power generation over the next five years averages 4.7% per annum, which will prove insufficient to increase market coverage and ensure adequate supply. Only greater expansion of supply above the rate of demand growth can remove the need for net imports.
- State grid operator KEGOC has already approved a long-term investment strategy, under which a total of KZT530bn will be invested by 2025. It has embarked upon several projects, including rehabilitation of substations, transmission lines and other equipment, building a new substation near Almaty, and power lines to the Moinak power plant. KEGOC is now considering building a new 500kV north-south power line and new transmission lines, in order to connect the west Kazakhstan regions of Uralsk, Atyrau and Mangystau to the national grid.
- South Korea and Kazakhstan have agreed on a US$4bn project for the construction of thermal power plants in the Central Asian country. Partners Samsung C&T and Kepco are likely to begin construction work as early as 2013, according to Deputy Industry and Technology Minister, Bakhytzhan Dzhaksaliyev. The first plant will cost US$2.2bn and is expected to be operational by 2014, with capacity of 1.2-1.5GW.
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