In mid-July, the Ministry of Energy of the Republic of Kazakhstan presented a draft concept of the law “On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Issues of Heat and Power Industry”.

The main message of this document is aimed at launching a balancing electricity market (BEM) in a real mode, which until now has existed in a simulation mode for 13 years. The peculiarity of the BEM operation in the simulation mode is that all costs for imbalances in the UPG of the Republic of Kazakhstan, admitted by any market participant, are distributed to all its participants, that is, there is an even distribution of responsibility of certain market participants to all market participants at once. In this case, everyone pays the average price in proportion to the sum of their consumption and their generation, regardless of whether large or small, significant or insignificant imbalance was allowed. The authors of the draft document note a number of factors that negatively affect the energy system:

-      lack of financial responsibility for created imbalances (deviations of hourly actual volumes of production and consumption of electric energy from hourly planned values);

-      lack of economic incentives for balancing among market entities, leading to the lack of interest of these entities in the optimal planning of the schedule for the production and consumption of electricity and participation in covering deviations;

-      increasing volumes of deviations of subjects of the electricity market of the Republic of Kazakhstan;

-      significant deviations of the actual balance of electricity flows at the border with the energy system of the Russian Federation from the planned values ​​(with an allowable range of 150 MW, the volume of deviations is 1500 MW).

As the renewable energy sources (RES) being developed in the country today, which are unstable and do not bear any responsibility for their imbalances, have already reached such a volume in terms of capacity that about 10% of all daily deviations in the energy system of the Republic of Kazakhstan occur in the evening due to such sources. It is noted that this upward trend in the negative impact of the renewable energy on the energy system of the Republic of Kazakhstan continues to persist, as the introduction of renewable energy from year to year is growing. Considering target indicators until 2030, the situation will be even more difficult. As a result, according to the developers of this document, the BEM introduction in a real mode will solve the problem of imbalances in the energy system of the Republic of Kazakhstan. In addition, created mechanism for the financial settlement of imbalances will allow plants with a maneuverable generation mode to work effectively in the power system.

Certainly, from the point of view of the RES stations’ functioning in the energy system, Qazaq Green has always advocated improving the quality of forecasting electricity generation and increasing the responsibility of RES facilities. However, it is necessary to understand that BEM is, first of all, a market mechanism, designed by an economic method to increase the responsibility of market entities in terms of generation and consumption of electricity.

In addition, there are infrastructural problems in the energy system, which put forward the thesis that “physics” is still primary, and economic methods are secondary. First of all, I mean the problem of obsolescence of generating capacities and the growth in the volume of emergency repairs. Thus, in terms of the growth rate of accidents, the results for 2021 exceeded the volumes for the previous year by 6%. We all remember the alarming messages of the system operator in November 2021, when 1,150 MW of power was in the emergency repair at the key generating facilities of the country and regional CHPPs.

It is also unsatisfactory with scheduled repairs, which at the beginning of the autumn-winter period had capacities that worked 2–4 times more than the established standards. For example, in November, power unit No. 2 at the Ekibastuzskaya GRES-2 with a capacity of 500 MW was under scheduled repair (it worked for 12,304 hours without taking it out for repairs with an annual operating standard of 6,570 hours); power unit No. 7 at the Ekibastuzskaya GRES-1 with a capacity of 500 MW ( worked without withdrawal for repair 25,968 hours with an annual work standard of 6,570 hours).

We believe that without solving these problems, UPG of the Republic of Kazakhstan, even when BEM works in real time, will continue to experience difficulties, since a set of problems in the domestic energy system requires not only market and organizational solutions, but also infrastructure investments.

However, so far neither traditional energy market players, nor potential investors in gas generation, nor large renewable energy companies are ready to make serious investments due to the lack of clear signals from the government about the future fate of the electric power industry as an industry, lack of a strategic vision for the development of the industry and, importantly, lack of a predictable electricity tariff policies. As a result, taking into account the current situation in the industry and all internal and external risks, there is a big problem of ensuring the energy security of our country.