The gradual reduction in the cost of renewable energy (the “RE”) technologies and the introduction of state support measures in many countries contributed to increased investments in the RE sector worldwide. The urbanisation and systemic problems in the electric power industry in many countries led to a growth of interest in the use of RE in the cities where the source of electricity is in close proximity to a consumer. Rooftop solar power plants (the "RTS") have great potential to cover the growing demand for electricity in cities. One of the important advantages of RTS is relatively high productivity, compactness and the ability to regulate the parameters of electric energy production. Moreover, RTS, a distributed generation source, does not require land allotment, allows us and makes it possible to receive additional income. The use of RTS is relevant for the cities of Kazakhstan, especially for the southern regions with high solar potential.
Currently, two types of state support for small-scale RE are available in Kazakhstan. For non-electrified zones, the Republic of Kazakhstan legislation provides a mechanism of direct support. A net metering mechanism is available for consumers connected to distribution electric networks. The support of large-scale renewable energy facilities based on the auction mechanism in Kazakhstan is considered relatively prosperous. However, the existing schemes supporting small-scale RE do not show positive results. The comprehensive development of RTS in Kazakhstan is hindered by several barriers, including designing, obtaining approvals from authorised bodies, and constructing and operating RTS.
1
The Legislative Definition of Small-scale RE and RTS
The legislation of the Republic of Kazakhstan does not stipulate a separate category and does not define the concept of small-scale facilities/projects, including RTS. Therefore, except for certain measures of state support for small-scale RE enshrined in the legislation of the Republic of Kazakhstan, their implementation falls under the general regulation of the activities of energy-producing organisations using RE.
In Kazakhstan, no separately developed legislative framework contributes to the development of RTS, including special regulatory and technical construction documentation, as well as separate regulations on the operation of RTS. This leads to the fact that RTS is required to comply with general requirements in terms of construction, operation, connection to networks, obtaining permits and other aspects, which can be a repulsive factor in the implementation of RTS in Kazakhstan.
To stimulate the widespread use of small-scale RE, it is recommended to allocate small-scale RE into a separate category, to which simplified legislative requirements will be applied, which will contribute to the creation of the necessary institutional support for RTS projects in Kazakhstan.
2
Difficulties of RTS Participation in RE Auctions
According to the current legislation of the Republic of Kazakhstan, if the total installed capacity of a RE facility exceeds 100 kW, such an object can sell the produced electrical energy of renewable energy through the RE auction mechanism.[1] Barriers to RTS participation in the RE auctions include the need to have a RE project in the auction schedule, the requirement for financial security for participation in the auction, the need to meet qualification requirements, etc.
Considering that RE auctions are aimed at implementing larger RE projects, including RTS, in the auction schedule, their participation in RE auctions is unlikely.
It is recommended to amend the current legislation on renewable energy support, simplifying and facilitating the participation of RTS and other small-scale RE in the RE auctions to have a possibility of selling electricity generated by RTS to the financial settlement centre.
3
Drawbacks of the Direct Support Mechanism
According to the RE Law, this type of state support is applied only to non-electrified settlements. Direct support is compensation by the state of 50% of the cost of the RE facility. One of the main conditions for obtaining support is purchasing equipment made in Kazakhstan with an installed capacity of no more than five kW.[2] All the conditions mentioned above make it much more difficult to get direct support. An individual consumer who has received explicit support for purchasing a RE installation is not entitled to sell electric and (or) thermal energy generated at this installation to other consumers.[3]
It is recommended to amend the RE Law by excluding provisions stipulating that the direct support mechanism applies only to non-electrified settlements, remove the requirement for Kazakhstani content, increase the amount in the budgets of the regions of the Republic of Kazakhstan for each year to finance this program, as well as simplify the procedure providing direct support to individual consumers.
4
Unsatisfactory Condition of Electrical Distribution Networks
The intermittent nature of RTS generation creates an additional burden on the outdated infrastructure of the distribution system, which is an obstacle to the comprehensive integration of RTS into the country's energy system. In addition, the legislation of the Republic of Kazakhstan does not establish requirements for investments in electric networks necessary to support the development of RTS.
It is recommended to include in the legislation of the Republic of Kazakhstan the obligation to include in the investment plans of energy transmission organizations the necessary funds for the modernization of networks for the integration of RTS.
5
Economic Barriers
The production and installation of RTS equipment require initial investments. The available measure of support of small-scale RE in electrified areas is a net metering mechanism. The mechanism allows net consumers to sell surplus electricity produced by the RE facility to the grid at the current tariff of the energy supply organisation. The maximum capacity of the RE facility eligible for net metering in Kazakhstan is 100 kW.[4] One of the main obstacles to investment in small-scale RE in electrified areas, including in RTS, is the low retail electricity prices, which leads to an increase in the payback period of RTS installation.