Daribayev Aidos Nagimadinovich, Chairman of the Management Board of KOREM JSC

In the era of active transition to renewable energy sources (RES), Kazakhstan is taking important steps to create a sustainable and independent energy system. One of the key elements of this process is the introduction of a balancing electricity market, which plays an important role in stabilizing the energy system and supporting the integration of renewable energy sources.

New market model

The transition to a new target model of the electricity market, based on the mechanism of a single buyer and a balancing market in real time represents a significant improvement for the energy industry in Kazakhstan. KOREM JSC, as the Settlement Center of the balancing market, carefully analyzes the results of the implementation of this model, which show significant progress in resolving imbalances and stimulating market participants.

RES and the balancing market

Integrating renewable energy sources such as solar and wind power stations into the energy system requires special attention to managing imbalances. Renewable energy sources are characterized by variable generation, which complicates forecasting and load balancing. The balancing market helps to solve these problems by providing:

1. Imbalance management: Physical and financial imbalance management allows efficient integration of renewable energy sources, minimizing risks to the energy system.
2. Stimulating participants: Market participants receive incentives for accurate forecasting and compliance with the daily schedule, which is important for integrating renewable energy sources with their variable generation.
3. Stability of the power system: Precise balancing of electricity production and consumption prevents emergencies and ensures stable operation of the power system.
4. Transparency and equal conditions: The new pricing mechanism and strict controls ensure market transparency and equal conditions for all participants, which contributes to effective competition and sustainable development of the industry. 

Problems and solutions

As part of the analysis of the balancing electricity market, some aspects related to price signals that affect the efficiency of the market have been identified.

The analysis results showed that at certain hours in the electricity purchase market, prices turned out to be lower than those of a Single Buyer. The discrepancy between price signals and real supply and demand led to a forced volume of electricity purchases from the Russian Federation, which subsequently contributed to shortages during peak hours. As a result, there was an increase in prices for electric energy in the wholesale market.

In conditions of instability and uncertainty, when price signals do not reflect the true costs and needs of the market, the price structure is distorted, which makes supply and demand management less effective.

In response to the identified problems, it became obvious that changes are needed in the current concept of the rules of functioning of the balancing market.

The main areas of reform include the following aspects:
1. Improving supply and demand forecasting: It is important to implement more accurate forecasting models that take into account seasonal fluctuations as well as factors affecting demand changes during peak hours.

2. Revision of the Rules of Price Formation: the approach to pricing has been revised to ensure a more accurate reflection of real market conditions. This should eliminate the imbalance between market prices and prices of a Single Buyer, thereby improving the predictability and stability of prices.

3. Optimization of the Daily Schedule: as part of the reform, the approach to the formation of the daily schedule was changed by introducing fines of up to 30% for deviation of actual generation or consumption from the planned schedule by more than 20%. This encourages participants to accurately predict and follow schedules.

4. Increased Transparency and Accessibility of Information: transparency of operations in the balancing market will be enhanced, which will allow participants to plan their actions more effectively and adapt to changes in the market situation.

Thus, the analysis of the balancing electricity market in Kazakhstan appeared as a challenge requiring prompt and balanced decisions. Changing the rules of its operation will be an important step towards a more efficient and stable electricity market. Optimization of tariff policy and improvement of forecasting – all this can significantly affect price stabilization and efficient allocation of resources in the energy market. The measures taken should contribute not only to reducing prices, but also to creating a favorable environment for market participants, which ultimately will create a more predictable and stable environment for all participants.

The successful reform of the balancing electricity market will become the basis for the successful and long-term development of the energy sector in Kazakhstan, providing its consumers with reliable and affordable resources.