The beginning of the autumn-winter period in the electric power industry is always a test of the stability of the National Grid System. This year, the system has faced new challenges and "old sores". Due to sharp increase in electricity consumption explained by development of digital mining, there was a shortage of generation in the system, which was aggravated by the emergency failure of power units at key energy facilities of the country. To mitigate the situation, the system operator-imposed restrictions on consumption, and together with the Ministry of Energy of the Republic of Kazakhstan, measures were taken to limit digital mining.

PROJECTED ELECTRICITY SHOPTAGE

According to the System Operator of the NGS of Kazakhstan, there is an abnormal rate of electricity consumption in the country. In comparison with the same period in 2020, for 9 months, the increase in energy consumption was 7.2 percent, while in the Southern zone -11.8 percent, in the Northern zone - 5.8%, and in the Western zone - 6.6%. During the hours of maximum loads, power consumption in the Republic of Kazakhstan exceeds last year's values by 1,500 megawatts, which is comparable to the consumption of an entire region, for example, Almaty.

Power engineers expect that the deficit in the National Grid System of the Republic of Kazakhstan in October-December may amount to about 1.7 billion kilowatt-hours. This is due to the need for repairs at power plants, a low-water period, which caused an insufficient level of reserves at the HPP, and unresolved issues with the provision of fuel at the Zhambyl GRES.

 All these factors indicate an increasing likelihood of restrictions, especially in the southern regions. According to "KEGOC" JSC, the projected maximum consumption in the Southern zone is 4,350 megawatts, while generation covers only half of the needs -2,250 megawatts, provided that the Zhambyl GRES will operate in 4-block mode. The volume of transit from north to south is limited to 2,100 megawatts, and about 400 megawatts for balancing will have to be purchased from Russia at the peak price.

EMERGENCY AND UNSCHEDULED REPAIRS

The situation is significantly aggravated by a shortage of generating capacities due to a large number of emergency and unscheduled repairs at power stations of the National Grid System. Thus, on October 14, 2021, with an interval of several hours at Ekibastuz GRES-1 and Ekibastuz GRES-2, large power units with a capacity of 500 MW were shut down. Also, a boiler with a reduction in generation by 150 MW was stopped in an emergency at the power plant of "EEC" JSC.

Thus, the total volume of emergency reduction of generation at the above three power plants exceeded1000 MW.

In the conditions of the already existing power shortage, these emergency shutdowns at power plants led to unacceptable power deviations at the border with the Russian energy system, with the overload of interstate power transmission lines with the threat of a system accident.

RESTRICTIONS IN GRIDS AND REPLACEMENT OF 0U-1-GOING GENERATION

According to the legislation of the Republic of Kazakhstan, JSC "KEGOC" as a System Operator is obliged to ensure the reliability of the National Grid System of the Republic of Kazakhstan. With over-planned consumption, "KEGOC" JSC is forced to take measures to certain categories of consumers to comply with the consumption regime according to planned values, in accordance with the requirements of current legislation.

On October 5, 2021, as part of the fulfillment of the obligations imposed on the System Operator, the following measures were carried out to limit consumption according to the schedules agreed with local executive bodies: Restrictions in the grids of "AZHK" JSC - 75 MW (over 160 MW, over the range of 90 MW). Restrictions in the grids of "Kyzylorda REC" JSC - 31 MW (39 MW excess, over the range of 33 MW). Restriction of "Enegix" JSC are 68 MW (over 100 MW, over the range of 90 MW).

In addition, in order to minimize situations requiring consumer restrictions while reducing generation by power plants of the Republic of Kazakhstan, the Ministry of Energy, together with "KEGOC" JSC, has developed a number of measures aimed at meeting the consumers' needs for electricity and capacity. The measures include mandatory replacement of emergency generation by power plants to eliminate the risk of disconnecting consumers (they will be put into effect at the end of October 2021). These norms of regulatory legal acts are designed to protect consumers from disconnection due to shortages caused by accidents at power plants. It will also encourage more efficient repairs at the stations.

If the above measure is insufficient and it is necessary to introduce consumer restrictions, additional amendments to the regulatory legal acts of the Republic of Kazakhstan provide for the priority restriction of consumers engaged in digital mining.

As a result of the measures promptly taken and the work carried out by "KEGOC" JSC on interaction with neighboring power systems, the situation in the power system is relatively stabilized.

DIGITAL MINING HAS "EATEN" ALL THE RESOURCES OF THE SYSTEM

The excess of power consumption over its production was due to a sharp increase in consumption by consumers engaged in digital mining and increased accidents at power plants. According to the Ministry of Energy of the Republic of Kazakhstan, the increase in consumption of more than 7% in the country's energy system is directly caused by the emergence of cryptocurrency processing centers, or so-called mining farms. At the moment, the volume of consumption of mining farms is about 1000 megawatts of our resources, which is commensurate with the electricity generation of Ekibastuz GRES-2.

In order to preserve the reliable operation of the entire energy system, the Ministry of Energy, together with the system operator KEGOC, developed an order "On some issues of electrical installations of consumers engaged in digital mining activities." The document is aimed at identifying and limiting the work of so-called "gray" miners who work outside the law and who account for about half of the electricity consumption of mining farms. Such farms will have to shut down and go through legally established procedures.

At the same time, the Ministry of Energy of the Republic of Kazakhstan assured that mining farms officially registered in the country will not be discriminated. They will continue to work in the volume prescribed by their contracts, at the same energy prices.

However, according to the above order, during the peak evening hours, when there is maximum consumption and certain risks arise, the system operator will have the opportunity to limit the consumption of mining farms. In addition, new mining farms that want to work in Kazakhstan will have limited opportunities. Thus, the system operator has the right to consider applications and approve those that will consume up to 1 megawatt of energy. In total, if there is an excess of 100 megawatts of applications throughout Kazakhstan, the system operator will also have the right not to issue a permit to connect new farms.

At the same time, according to a study conducted by the University of Cambridge, in the fall of 2021, Kazakhstan ranked second in the world in cryptocurrency mining. After China recognized mining as an undesirable activity. Kazakhstan increased its share in the global hashrate (total operations) to 18%. It was outpaced only by the USA with 35.4%. Russia is in third place with 11%, and Canada is in 4th place with 9.6%. It is known that in September, the People's Bank of China issued a statement in which it attributed operations with cryptocurrencies to illegal financial activities and about 50 Chinese crypto farms transferred their activities to Kazakhstan.

As a result, Kazakhstan’s share of mining in global turnover has tripled since the beginning of the year. Experts note that the main reason for the rapid development of mining in the country is that Kazakhstan has one of the lowest electricity prices in the world, and today there are no prohibitions on mining.