The European Bank for Reconstruction and Development (EBRD) and the Clean Technology Fund (CTF), which also draws funds from several development banks, have agreed to co-finance the 50 MW Burnoye solar farm in Kazakhstan to the tune of 70 million (around US$78.1 million) and 13.8 million, respectively.
This is not the first time that the EBRD has backed a sustainable energy project in Kazakhstan, said EBRD president, Suma Chakrabarti. It is, however, a landmark project in that, upon completion, it "will be the first commercial-scale solar park in Kazakhstan."
Chakrabarti added, "It will be the first privately owned renewable energy generator in Kazakhstan. And it is the first use of a new project finance structure that will open the door to more private investment in renewables in the future."
The project, continued the EBRD, is also pioneering the use of a non-recourse project finance structure. Financing will be extended to Burnoye Solar-1 LLP, which is a project company founded by a joint Kazakh-U.K. venture, Samruk-Kazyna United Green LLP.
The venture is owned by UK-based United Green Energy Limited and Samruk Kazyna Invest LLP, the investment arm of Kazakhstans sovereign wealth fund.
The Burnoye solar farm (Burnoye SPP1), located in the Zhambyl region, South Kazakhstan, aims to provide power to the region whose development is hindered by an energy deficit. The area is also close to the Western Europe-Western China highway.
Development and planning on the project started in 2013, with construction getting underway in August 2014. It is scheduled for completion this July. There are about 200 workers currently involved in the construction; under its operation the PV farm will be manned by 20.
There are also plans for a second very similar solar PV plant, the Burnoye SPP2, which is expected to be built just north of the Burnoye SPP1.
Kazakhstan’s renewable energy law
Kazakhstan’s energy needs are predominantly met by coal, with coal-fired plants providing about 75% of the country’s total power generation. However, technical assistance from the EBRD saw the Kazakh government update its 2009 renewable energy law, which included the introduction of a feed-in tariff (FIT) scheme, tax relief, grants and outlined rules of land allocation for renewable power systems in January 2014.
The FIT tariffs offer renewable power stations a guaranteed power price for 15 years, thus hoping to trigger enough investment to achieve the country’s target to supply 3% of its electricity needs from solar PV and wind by 2020.
The tariffs are 34.61 KZT/kWh (around US$0.186) for PV plants utilizing Kazakh silicon, and 70 KZT/kWh for PV plants built with Kazakh modules. Wind power plants receive 22.68 KZT/kWh and hydro plants 32.23 KZT/kWh, respectively.
Furthermore, an exemption from customs duties is granted to Kazakhstan-based legal entities implementing an investment project, or a strategic investment project under an investment contract with Kazakhstan’s Ministry of Industry and New Technologies. Land and property tax benefits are also available for legal entities implementing an investment.
Taxes from the Burnoye SPP1 plant will be paid into the local budget, said the EBRD.
Kazakhstan’s solar irradiation is particularly good in the south of the country, which receives between 2,200 and 3,000 hours of sunlight, the equivalent of 1,300 to 1,800 kW/m² annually. This explains the installation of a 2 MW PV plant near Almaty, and six PV plants in various phases of development in Zhambyl, one of which is the Burnoye SPP1 plant.
The EBRD’s annual investments in Kazakhstan reached a record $700 million last year. This is expected to be repeated again in 2015, with the bank having already committed $400 million to various projects, including the Burnoye SPP1.
Edited by Becky Beetz