Development of electric industry in Kazakhstan.

The electric power industry was and remains a key factor of the countrys industrial renaissance and economic growth. The electric power generation accounts for about one tenth of all industrial output of Kazakhstan, while thermal power stations in Karaganda and Pavlodar supply almost half of the total power generation. Kazakhstan scores third among CIS countries in terms of electric power generation. Kaakhstan, has 54 thermal power stations, five hydroelectric power stations and one nuclear power station. One of the hallmarks of Kazakhstans power generation sector is the presence of some extremely large coal-fired plants with some of the cheapest coal available worldwide. About 70 percent of all electricity in Kazakhstan is consumed by the countrys heavily industrialized north. Until 1999 Kazakhstan was suffering from electric power deficit in the most productive period (year 1990) electric power output was 85.3 billion kWh while consumption was 104.7 billion kWh resulting in a power deficit of 18.4 billion. Currently, Kazakhstan manages to cover the countrys electric power needs and, under positive circumstances, to sell the excess abroad. The production of electric energy went up by 7% in 2011 compared to the 2010 figure. Kazakhstan has a wholesale market for electric power and energy reserve pool, which helps to assure stable prices for energy. Ministry of Energy has elaborated the long-term development concept of the energy sector. The foundation of this concept is based on following key ideas: Development of electric energy production based on gas and solid fuel; Construction of renewable sources of electric power (small hydro power plants, use of wind power and biomass); Building of a large transnational energy system, able to compete with other systems of power transmission; Preserving of combined heat/electricity production in cities; Complete liberalization of energy system. Currently, Kazakhstan energy sector is undergoing reforms aimed at shaking off its unprofitable and centrally planned past and gaining an independence from the vestiges of the former Soviet grid. Since gaining its independence, Kazakhstan has undertaken an aggressive privatization program. As a result, as many as 52 power stations, more than 85 % of the countrys power generation system, are now in private hands, while only three big power stations remains stateowned - Mangystau Electro-Technological Industrial Complex, Shardarinsky Hydro-power Plant and Ekibastouz GRES-2. Also, our country plans to construct five new combined heating and power stations: the 150 MW Uralskaya TETS, the 450 MW Aktyubinskaya TETS, the 300 MW Mainakskaya GES, the 1280 MW Yuzhno- Kazakhstanskaya TETS, and the 500 MW Zapadno-Kazakhstanskaya TETS-1. Our country is considering building a 560-mile (900 kilometer) transmission line to export power from Ekibastuz to Urumqi (China) in order to increase its electricity exports. The attractiveness of exporting power for Kazakhstan is that the wholesale electricity price in China is 5-10 times higher than Kazakhstans current production cost, with Kazakhstans costs to drop further with the completion of its planned new generating facilities. Negotiations have proceeded on initial annual exports of 150 million kilowatt-hours beginning in 2000, with the power to be supplied by the planned new nuclear power station near Lake Balkash. One of the problems in the Kazakhstan power sector is a high amount of transmission and distribution losses. It is estimated that at least 15 percent of all energy produced is being lost due to technical factors. Kazakhstan currently has over 560,000 km of transmission lines, the majority of which are in need of upgrading, repair or maintenance. The International Bank for Reconstruction and Development (the World Bank) has agreed to extend a USD 140 million loan to the Government of Kazakhstan and the Kazakhstan Electricity Grid Operating Company (KEGOC) toward a USD 258.4 million electricity transmission rehabilitation project in 1999.

Additional financing were to be provided by KEGOC (USD 62.4 million) and the European Bankfor Reconstruction and Development (USD 56 million). In 2009 consumption of electricity in Kazakhstan increased by 4,668.2 mln.kWh or 6.5% compared to 2008 and made 76,439.6 mln.kWh. Growth of electricity consumption was due to increasing domestic load as well as industrial load. Its noteworthy that in 2009 the growth of electricity consumption was recorded all regions of Kazakhstan. Maximum growth of consumption was in the North zone of Kazakhstan - by 2,552.7 mln.kWh or 5.4%. Electric energy consumption by zones of Kazakhstan distributed as follows: Kazakhstan............................. 76,439.6 mln.kWh or 100.0%; North Zone................... 49,694.6 mln.kWh or 65.0%; South Zone........................ 15,523.1 mln.kWh or 20.3%; West Zone................... 11,221.9 mln.kWh or 14.7%. Nowadays, our government tries to undertake different regulation in power sector which are meant for:

maximal satisfaction of energy consumers demand and protection of rights of the electric and heat energy market participants through establishing competitive market conditions, which shall guarantee that consumers has a right to choose the suppliers of electric and heat energy; reliable and stable functioning of electric power complex of the Republic of Kazakhstan; single management of electric power complex of the republic of Kazakhstan as a vital life supporting system of countrys economic and social complexes. In general our group thinks that, electricity industry is one of the most important industry in Kazakhstan, as well as for the rest of the world. However, every day, the generation of electric power produces more pollution than any other single industry in the Kazakhstan. This pollution is changing the planet's climate and ecosystems in ways that will harm generations to come. Moreover, the fuels most commonly used for electricity production, fossil fuels such as coal, oil and natural gas, are known as non-renewable resources. They take millions of years to be formed in the crust of the earth by natural processes. Once burned to produce electricity, they are gone forever. Thats why our group suggests to use renewable energy supplies, such as wind, solar, hydropower, and biomass energy, are obtained directly or indirectly from the vast amounts of solar energy that continually pours to earth from the sun. Unlike fossil fuels, these are power sources which when managed sustainably, are virtually inexhaustible. They tap the heat of the earth or a small part of the solar energy that is constantly flowing to some part of the earth, for example, by collecting the heat of the sun directly, by using the energy in the winds created by the effects of the heat of the sun and etc.

Department of Economics and Management

Academic Year 2011-2012

Fall Term

Development of electricity industry in Kazakhstan.

Subject: Credits: ECON 335 State Regulation of Economy 3

Date: October, 5 Approved by: Moderator, Assistant Professor Prepared by: Didar Ilyassov

Akhmetov Diana Bakhtishat Nigara Zhanaeva Aliya

Almaty 2011