Despite the progress in the introduction of renewable energy sources (RES) into the Unified Energy System of the Republic of Kazakhstan (UES), several issues related to the integration of RES still remain to be addressed.

The factors hindering the development of RES include a severe shortage of balancing capacities, limited transmission capacity of electricity networks, partly due to their extensive length, as well as a significant need for thermal energy, which exceeds electricity consumption.

Meanwhile, further legal improvements are needed to reduce investment risks and bring more efficient energy sources into the energy balance—particularly by developing microgeneration, which may soon play a major role in ensuring stable and affordable power.

KEY ISSUES AND CHALLENGES

Lack of flexible generation (balancing capacities)

As of today, the main constraint limiting further development of renewable energy and the biggest challenge for the energy sector as a whole is the limited availability of balancing capacities in Kazakhstan.

In Kazakhstan, as in many other countries, it is not only impossible to fully abandon traditional energy in favor of renewables but also to achieve the level of renewable energy integration seen in European countries as Denmark - because this is a matter of energy security. In Kazakhstan, renewable energy sources require backup from domestic flexible generation capacities, as external sources cannot provide the necessary reserve capacity required for dynamically developing RES. In countries as Denmark, renewable energy is developing at a rapid pace, with traditional energy sources being actively replaced by renewables. This stems from multiple factors: elevated tariffs, active consumer engagement, and timely deployment of grid stability technologies. A crucial factor, beyond having sufficient domestic flexible reserves, is Denmark's 100% transmission capacity reserve with neighboring countries' power systems. This enables balancing through cross-border electricity exchanges with nations like Norway, Sweden, and others. For this purpose, EU countries maintain extensive intergovernmental energy and economic links, ensuring power exchanges equivalent to Denmark's total energy system capacity. This mechanism of interaction at the supranational level is enshrined in relevant EU directives, which are legally binding, providing a certain guarantee of energy security for countries like Denmark. Under such conditions, Denmark can rely on imports from neighboring European countries to cover its entire required capacity. Spain faces greater difficulties in this regard due to its limited power grid interconnections with France. Compared to Kazakhstan's power system consumption, the available cross-border exchange capacity with neighboring countries is limited. Furthermore, the absence of a unified balancing electricity market in Central Asia's power systems constrains additional opportunities for maintaining grid balance.

The existing generation capabilities in the Republic of Kazakhstan for variable operation modes are insufficient to meet consumer load profiles. Under the current frequency regulation technology within the synchronous area, generation deficits and surpluses relative to consumption lead to imbalances at the border with Russia's Unified Power System.

According to the current capacity balance and generation capabilities, Kazakhstan currently has a formal capacity surplus of several gigawatts. However, accounting for scheduled and emergency power plant maintenance, unavailable capacity due to fuel shortages, equipment degradation, and restrictions imposed by water management practices, this reserve capacity becomes inaccessible during peak demand periods in Kazakhstan's power system. This systematically leads to deviations at the interconnection with Russia's grid reaching 1,000 MW or more.

In Kazakhstan, RES require backup from flexible generation capacity, as opportunities to balance fluctuations through cross-border power exchanges are nearly exhausted. While the permissible power deviation at the Kazakhstan- Russia interconnection is set at ±150 MW, actual deviations reach ±1,000-1,500 MW - exceeding the limit by 10x and often approaching Russia's maximum balancing capabilities.

Kazakhstan needs to develop flexible generation capacities, as coal-fired power plants, which form the backbone of the country's generation fleet, lack sufficient flexibility. This results in an overall deficiency in the flexibility of Kazakhstan's power system.

Integrating renewable energy into the national power system is becoming increasingly difficult each year, as renewable generation volumes continue to grow while production remains unstable. This challenge can be addressed either by developing additional flexible generation capacities or by implementing energy storage systems - a more costly but faster solution. Both of these solutions require significant investments, extending the payback period of RES projects.

Additionally, the following options could be considered to address the flexible capacity shortage:

• optimized utilization of existing hydropower plants. Construction of counter-regulators at existing hydropower plants to unlock 'trapped' flexible capacity; • Encouraging active consumer engagement in power markets via: advanced demand response mechanisms; restoration of differentiated tariffs, stimulating energy conservation measures.

Gas power plant expansion is hindered by congested gas transmission infrastructure, exacerbated by the spatial disconnect between primary gas sources (western regions) and power deficit areas (southern grid). Moreover, gas demand currently outstrips supply capacity.

Previously, there were insufficient market signals for electricity market participants (generators and consumers) to incentivize their engagement in load regulation within the power system. However, the market mechanism established in Kazakhstan's Balancing Electricity Market (BEM) enables the utilization of existing generation and demand-side flexibility potential. This should create conditions for optimized construction of new flexible generation capacity.

Renewable energy accumulation requires energy storage system (ESS) deployment. Several renewable energy projects already incorporate energy storage systems. Addressing the issue of balancing capacities through energy storage will become a more attractive solution in the future, given the ongoing cost reduction and extended battery lifespan trends.

The development of hydropower also appears to be an attractive option, as hydroelectric power plants offer high flexibility and low operating costs. Additionally, hydropower has minimal environmental impact and produces no harmful emissions. The key barriers to hydropower development in Kazakhstan include the high capital investment requirements; the need to preserve fertile land; remote geographical locations of potential HPP sites. A government-led strategic approach to hydropower development planning is essential for maximizing Kazakhstan's hydro potential. This approach will maximize HPP capacity utilization while minimizing capital expenditures.

Demand-side management and price-responsive consumption represent a cost-effective alternative to building new flexible generation capacity. This approach will involve the consumer in the process, help to increase their energy awareness, since in this case they will have the opportunity to participate in the electricity market.

A well-developed ancillary services market with market-based pricing enables the procurement of sufficient balancing capacity regardless of the type of flexibility source, which, in turn, will facilitate the establishment of fair pricing in the energy market, assuming an electricity surplus. In the presence of an operational balancing market with sufficient flexible reserves, conventional power plants and RES will be able to compete under more equal conditions.

Degraded State of Conventional Generation Assets

According to the Committee for Atomic and Energy Supervision and Control of the Ministry of Energy of the Republic of Kazakhstan, the Unified Power System of Kazakhstan is experiencing a high level of wear and tear in its generating equipment. A significant portion of the operating equipment has exceeded its design lifespan. The figures below provide information on the operational hours of boiler units, steam turbine equipment, hydro units, and gas turbine equipment.

The Need for Power Grid Development

For renewable energy to develop effectively in Kazakhstan, a well-developed infrastructure is essential— not only flexible power plants but also an extensive electricity network with high transmission capacity.

One of the key features of Kazakhstan's power system is the uneven distribution of generation and consumption hubs. The majority of power generation is concentrated in the Northern zone, while the densely populated southern regions of the Republic are demonstrating the most dynamic growth in electricity consumption, averaging around 5% per year. Currently, the Southern zone experiences an energy deficit of approximately 2,000 MW, and according to the forecast balance, this deficit is expected to persist in the coming years.

Another feature of Kazakhstan's power system is that the electrical grid does not cover large (sparsely populated) areas of the country, which limits the ability to connect renewable energy facilities to the National Electric Grid. The diagram below presents maps of solar and wind resources across Kazakhstan. When comparing these resource maps with the diagram of Kazakhstan's electrical grids, it is evident that a significant portion of potential renewable energy installation sites has limited access to the main grid. Developing renewable energy projects in these locations would require additional investments in grid infrastructure and connection.

Issues with the Stability of Parallel Operation

The energy deficit in the Southern zone is primarily covered by electricity supplies from the energy-surplus Northern zone through the extensive 500-220 kV North-

East-South transit. As a result, the main stability issues in Kazakhstan's unified energy system are observed in the transit connecting the Northern and Southern zones. The intermittent nature of renewable energy generation requires constant balancing. Given that balancing capacities are mainly located in the Northern zone, the imbalances in the Southern zone are compounded by the power flow through the North-East-South transit. It should be noted that the transmission capacity of this corridor is almost fully utilized.

The impact of the integration of renewable energy sources on the stability of the North-South transit was examined by specialists in 2018. The study analyzed a scenario of the loss of part of the RES generation in the Southern zone, leading to a power draw on the North-South transit. At the 2021 consumption level, the transmission capacity of the North-South transit allowed for reserving potential generation losses in the Southern zone through power flow from the Northern zone.

However, with an annual consumption growth rate of 5% in the Southern zone and the planned increase in the share of RES, this growth will not be sufficient to cover the deficit. At the same time, the increasing share of renewable energy sources leads to higher potential power surges at the grid section.

Considering the significant share of renewable energy sources, especially in the south of Kazakhstan, stability issues become even more relevant due to the reduction in system inertia. An update of the regulatory legal acts of Kazakhstan governing the reliability requirements of the UES is already required. These should address measures to prevent unacceptable conditions in the power system, where the reliable operation of the UES cannot be ensured under normative emergency situations.