According to experts, Kyrgyzstan has a great potential in development of renewable energy sources. However, many issues need to be solved to have this sector function in full.
The practicability of accelerated development of renewable energy sources in Kyrgyzstan is driven by several factors. In particular, by global pledge signed at the climate change conference in Dubai in December 2023. The paper binds the countries to increase renewable energy capacity three times by 2030 in order to reduce the use of fossil fuels.
Another significant factor is the energy crisis in the republic, which has gained momentum in recent years. From summer 2023 to the end of 2026, the country, according to the president’s decree, is in the energy emergency regime. The deficit exceeds three million kilowatt-hours of energy. According to Emilbek Orozbaev, director of Green Energy Fund, authorities focus on renewable energy sources to fill power deficiency.
What does the state do?
In the interview to CABAR.asia, Emilbek Orozbaev said that 12 minor HPPs were put into operation in various areas of Kyrgyzstan in 2023. About 16 such facilities are expected to be put into operation this year. According to him, investors of these plants are citizens of Kyrgyzstan.
The president’s decree simplified the allocation of land plots for installation of RES facilities since March 2023.
“Previously, investor came to our country and applied to local governments in order to receive a land plot, but now the Fund has the so-called one-stop-shop. It provides assistance to investors in receiving permits and land plots for RES facilities,” the official said.
Moreover, according to the order of the cabinet of ministers, a list of goods and equipment exempt from VAT upon importation to the country has been approved. The list is replenished regularly.
According to the law on RES, which has been amended for several years, there is a grace period for energy buyback. It is 15 years for projects based on hydraulic power, and 25 years for wind and solar plants.
“Say, an investor builds a small HPP, puts it into operation, connects it to the system, and starts selling electrical power. And the state is obligated to buy out electrical power from the investor for 15 years,” Orozbaev said.
Director of Green Energy Fund said that authorities of Kyrgyzstan go beyond construction of small HPPs. They plan to develop solar and wind plants.
“We have always had enough water resources and we headed towards hydropower generation at Toktogul HPP. But past experience shows that climate change decreases water availability and we make efforts to have another option,” Orozbaev said.
Thus, a capsule was laid in April last year in Issyk-Kul region for the construction of the solar plant with 300 megawatt capacity. The project is being implemented by the Kyrgyzstan-based company ‘Bishkek Solar” and Russian company ‘Unigreen Energy’. Also, according to Orozbaev, Chinese company ‘China Power’ signed the document for the construction of the solar plant with 1 gigawatt capacity.
Moreover, the ministry of energy of Kyrgyzstan signed an agreement for the construction of a wind farm with the wind power division of ‘Rosatom’ on March 26 at the forum ‘ATOMEXPO-2024’ in Sochi. The facilities are expected to be located in Issyk-Kul region.
According to Orozbaev, similar projects are planned for implementation in other regions. There are potential investors from different countries including South Korea, France, UAE, etc.
According to him, Kyrgyzstan generally has a great potential for development of renewable energy sources and taking the plans into account, “the republic can not only develop the sector, but also fill power deficiency and increase the generation across the country” until 2030.
“A critical factor here is funding of projects. If our domestic investors can build small HPPs, then big plants – wind or solar – require more money. So, we are looking for ways to attract foreign investors,” Orozbaev said.
Low tariffs
RES-generated electricity tariffs remain the point at issue. In March 2024, the parliament passed amendments to the law “On renewable energy sources” in the first reading.
The draft law, particularly, suggests setting the maximum electricity tariff for renewable energy companies instead of the fixed one, which will enable the bidding mechanism. Thus, the maximum price will be 4.42 Kyrgyz som (about five cents) per one kilowatt-hour, which can go down.
There will be monthly adjustment of electricity tariffs for renewable energy companies depending on the national currency rate fluctuations in order to protect investors from losses in case of devaluation.
According to Eleonora Kazakova, chair of the Association of Renewable Energy Sources, it would be difficult to revise the tariffs every month given that the law “On renewable energy sources” does not specify which foreign currency should be recalculated in relation to the national currency.
“Second, invoices issued every month for payment by various renewable energy companies with recalculated tariff and based on the exchange rate of different currencies on the last day of month will create a mess in payment transactions,” Kazakova said.
According to her, it is more reasonable to make adjustments every year given the real cost that has accrued for 12 months and based on fluctuations of the exchange rate, which should be specified by law.
Meanwhile, according to Ilgiz Kambarov, executive director of Green Alliance of Kyrgyzstan, current tariffs are low and there will be no high demand for RES in Kyrgyzstan with such tariffs.
“So, I think we need to think about their increase,” Kambarov said. “It is not only for development of renewable sources, but also for cost-effective generation of electricity.”
According to Nurzat Abdyrasulova, president of Unison Group, determination of price of any commodity consists of several factors. First, it is the net cost because commodity production requires a certain amount of resources. In particular, it is human labour, infrastructure maintenance costs, taxes and other deductions.
“Electrical power is also a commodity of a certain nature, which we buy to meet our needs and for our convenience. And the price of any commodity must cover at least its net cost, otherwise there is no point in producing it,” Abdyrasulova said.
According to her, it should be explained in detail what the tariff consists of, where and how funds are distributed, and a transparent cost allocation system is needed. In this case, end users will know that every penny they pay affects the overall energy infrastructure and energy security of the country.
Other issues unsolved
Experts agree that Kyrgyzstan has many opportunities for RES development. However, much work needs to be done to make the sector function in full.
Thus, according to Eleonora Kazakova, chair of the Association of Renewable Energy Resources, the issue of water supply for the construction of small HPPs remains unsolved.
“In fact, there is no concept of the “right to water”, which guarantees the investor the water volume necessary for power generation and within the time limits specified in the project. This issue must be clearly spelled out by law given the priority of irrigation regimes,” the expert said.
She added that the next question is what volume of electrical power from renewable sources can Kyrgyzstan afford. According to her, the press issues messages from time to time about another signed memorandum, which provides for construction of renewable energy facilities.
“However, authorities keep on telling about the deterioration of the power system, equipment, etc. Will our power grids handle the amount of electricity, which was specified in memorandums? Probably not, given the current availability and state of grids,” Kazakova said.
Another critical moment is low staff capacity. According to Eleonora Kazakova, the phrase “renewable energy sources” has emerged quite recently, and many power engineers in Kyrgyzstan have been trained in the Soviet times.
“Thus, we have run out of young specialists. And it should be taken into account. Students must have practice during study. They should see how a small HPP looks like now, not in five years. We need power engineers like we need doctors and teachers, so staff must be trained in a quality way,” Kazakova said.
According to the expert, all these issues may not be solved in a snap. However, comprehensive work should not be delayed, while agencies and ministries must have the same vision and unified plans of project implementation.
In turn, Ilgiz Kambarov, executive director of the Green Alliance of Kyrgyzstan, said that they should not rely only on water resources and be limited only to small HPPs.
“I think that the policy of accelerated increase of the number of small HPPs via the One-Stop Shop system is not wrong, but the risks of the lack of water should be considered as well. Budget expenses on the renovation or maintenance of a huge HPP will increase over the years. And it is unknown whether there would be water in 20, 30, 50 years. So, we should not put all eggs in one basket, but we need to develop solar and wind plants, as well,” the expert said.
President of ‘Unison Group’ Nurzat Abdyrasulova indicated that Kyrgyzstan bound itself under the Paris Agreement to reduce emissions by 2030 by taking measures in power industry, agriculture and other spheres of land use, industry and recycling of wastes.
“And this is probably how our foreign policy manifests itself. In other words, we need additional external assistance, donor funds to implement these measures. On the one hand, we need to reduce emissions, and, on the other hand, we need to increase the proportion of renewable energy sources in the energy balance,” Abdyrasulova said.
She also emphasised that demand creates supply, and once there is the global treaty, and the mankind has a task to triple the potential of RES. Particular financial resources, parties concerned, investors and technical specialists will appear then.
“So, we need political will, which, in turn, will be accompanied by economic and market opportunities,” Nurzat said. “I believe Kyrgyzstan needs to be open to the world in this regard, to bring in the best practices as much as possible.”
According to Abdyrasulova, the process of construction of small HPPs, wind or solar plants is quite a labour-intensive one. Usually, all procedures must be followed, including not only a search for funds, but also obtaining approvals, terrain estimation, conclusion of a preliminary contract, tariff fixing, negotiations with the local population, and so on.
“It usually involves a whole team of specialists – lawyers, economists, construction workers, power engineers. The process can take several years sometimes. Of course, we need to build large power facilities and it must be our strategic goal, but we should pay attention to small power plants, too,” the expert said.
According to her, small power plants is an opportunity to engage domestic investors, i.e. citizens of the country.
“Some may have a large land plot, others may have some other opportunities to install a 10-20 kWh plant at their home or on their own site,” she said.
Thus, according to her, residents can improve energy efficiency of their enterprises or houses, and the country will have an opportunity to increase energy independence, improve the environment, and reduce carbon dioxide emissions.
“Engineering analysis of local grids must be certainly performed and power engineers have a lot of work to do. But if we want to develop RES, we have little time to get started. We need to speed up and solve all issues once they arise,” Abdyrasulova said.