Kazakhstan forges ahead with Renewable Energy
NUR-SULTAN. KAZINFORM - The signing of a syndicated US$95.3 million deal to support the construction of the Zhanatas 100 MW wind farm in southern Kazakhstan, marks a major milestone in the decarbonisation and diversification journey away from the country’s coal legacy, ebrd.com reports.
This will be one of the largest windfarms in the region, achieving a myriad of breakthroughs in the market and firsts for the country: the first project for a large Chinese investor, the first renewable project for the Asian Infrastructure Investment Bank (AIIB) in Central Asia, the first renewable project in the country co-financed by a commercial bank and the first Kazakh windfarm under a project finance structure.
Construction of the wind farm proceeds at a strong pace despite global turbulence and challenges posed by the Covid-19 pandemic. Following lockdowns and restrictions, the Government of Kazakhstan extended deadlines for the completion of all renewable projects, providing crucial support to all stakeholders in the sector. Zhanatas Wind sends a strong message to the international energy community that it is possible to continue pressing on with the green agenda, despite immense global challenges.
The EBRD loan provides financing of up to US$24.8 million to support China Power International Holding (CPIH), in partnership with Visor Investments Coöperatief, with the construction and operation of the 100 MW wind power plant, as well as the construction of an 8.6 kilometre 110 kV single-circuit line connecting the facility to the national grid. The project is co-financed by a US$34.4 million loan from the AIIB, a US$13.3 million loan from the Industrial and Commercial Bank of China (ICBC), and a concessional loan of up to US$22.9 million from the Green Climate Fund (GCF).
In line with the EBRD’s Green Economy Transition approach, the Zhanatas Wind Project will reduce the country’s annual CO2 emissions by approximately 262,000 tonnes. The project also has a strong inclusive component, promoting employment opportunities in the renewable energy sector amongst young women and men through the development of gender-inclusive training and employment programmes.
This is the Bank’s 14th renewable energy project in the country and second signed under the Bank’s Kazakhstan Renewables Framework II. The original Framework approved in 2016 has been fully utilised in just three years, financing €300 million of renewable energy and grid integration projects. Kazakhstan’s Renewables Framework II builds on its predecessor and earmarks an additional €200 million to advance the green agenda in the country’s power sector.
The Zhanatas Wind Project entails the first-time entry of AIIB and ICBC into RES projects in Kazakhstan and Central Asia. «It is great to see such reputable investors and financiers joining Kazakhstan’s renewables story. We are excited to broaden our partnerships with CPIH, AIIB, GCF and ICBC,» said Nandita Parshad, the Managing Director of the EBRD Sustainable Infrastructure Group, at the virtual signing ceremony.
Aida Sitdikova, Director of Energy Eurasia in the EBRD Sustainable Infrastructure Group, commended the potential positive impact of China’s bolder policy on Central Asia, expressing hopes that China’s new 2060 Zero Carbon agenda will have a major spillover decarbonisation effect in the broader region.
Ms Parshad further voiced the EBRD’s intentions to continue supporting this exciting paradigm shift in Kazakhstan’s renewables journey, adding that «we would like to see sponsors, like CPIH, champion new investments in renewable energy in our countries. And I am sure, we, AIIB, ICBC and many others will be willing to support it. This signing sends a very important signal to governments and investors in the region showing that it is possible to preserve the green agenda despite the current challenges. I am delighted to have this piece of good news in the midst of the world’s fight with the coronavirus pandemic, keeping our eyes on the green recovery.»
Another piece of positive news just arrived earlier this week, when Kazakhstan held its first round of 2020 renewable auctions. Despite a worsened macroeconomic environment and weaker local currency (in which the tariff is set) the auctions were successful and re-confirmed continuing downward price trend. The auction scheme, established with the support of the Bank, further strengthens the country’s green agenda, and serves as an important mechanism in steering the country towards green recovery, even amidst a global crisis. With competitive pricing and support under the auction scheme, the country will incentivise introduction of more international players into the renewables market.