The New Tariffs for Renewable Energy Sources (RES)

published on 10th July 2023

In order to stimulate electricity production by RES facilities, the Government of Kazakhstan approves fixed tariffs for a period of 15 years for each type of RES, namely: (i) solar radiation energy; (ii) wind energy; (iii) hydrodynamic water energy (small and large hydroelectric plants); (iv) energy derived from biogas. Fixed tariffs are approved in tenge.

Thus, the amount of the approved fixed tariff as of 04.10.2022 is as follows:

№ п/п	RES technology used to generate electricity	Amount of tariff
1.	Wind power plants for wind energy conversion	22,68 tenge/kWh
2.	“Astana EXPO 2017” 100 MW wind power plant, for wind energy conversion	59,7 tenge/kWh
3.	Photovoltaic solar energy converters for converting solar radiation energy	34,61 tenge/kWh
4.	Hydro power plants using hydrodynamic energy from water	41,23 tenge/kWh
5.	Biogas systems	32,23 tenge/kWh

It should be noted that the fixed tariff applies only in the case of a concluded electricity purchase and sale contract with a Settlement and Financial Centre (RFC), as stated in Article 8-1 of the Law of the Republic of Kazakhstan "On Support to Renewable Energy Sources", i.e. in the case of bilateral electricity purchase and sale contract (Private PPA) the fixed tariff does not apply and as a result is not indexed in the manner provided for in the renewable energy source support legislation. However, the parties to a bilateral power purchase agreement (Private PPA) have the possibility to mutually agree on other tariffs.

Fixed tariffs are subject to annual indexation, which depends on (i) the financing structure of the project and (ii) the economic feasibility. Calculation of the fixed tariff indexation is based on the government-approved formulas specified in the Rules for Determination of Fixed Tariffs and Auction Price Limits approved by Decree of the Government of the Republic of Kazakhstan No. 271 of March 27, 2014.

(i)

It should be considered that in the formulas for calculating the indexation of the fixed tariff the consumer price index (CPI) accumulated for the 12 months preceding October 1 of the year of indexation, which is determined based on data from the competent authority in the field of state statistics, is of no small importance, therefore, the fixed tariff is indexed once a year as of October 1. For example, CPI as of 01.10.2021 was 108.9%, and CPI as of 01.10.2022 was already 117.7%.

Thus, the calculation of fixed tariff indexation is carried out by the RFC annually by October 10. Further, the calculation of fixed tariff indexation and the indexed fixed tariffs are published on the RFC website no later than October 15 of the respective year.

For example, the number of indexed tariffs considering the earlier indexation in 2021 and 2022 is as follows:

№ п/п	Type of RES	Indexed tariff for 1 October 2021	Indexed tariff for 1 October 2022
1.	Minor hydropower plants	18.19 tenge/kWh	21.40 tenge/kWh
2.	Wind power plants	24.69 tenge/kWh	29.06 tenge/kWh
3.	Photovoltaic solar energy converters	37.69 tenge/kWh	44.36 Tenge/kWh

However, it should be noted that the first application of the indexation of the fixed tariff is not made before the 1st calendar year after the start of electricity supply from RES to the RFC, and the indexed fixed tariffs are subject to application by the RFC twice a year: from July 1 in case electricity supply to the RFC starts from January to June, and from January 1 in case electricity supply to the RFC starts from July to December.

Thus, in 2023, the indexed tariff for

for (i) small hydro power plants is 19.66 KZT/kWh,
(ii) wind power plants are 26.69 KZT/kWh and
(iii) solar photovoltaic converters are 40.73 KZT/kWh

The condition on the application of fixed tariff indexation for the supply of electricity produced by RES facilities plays an important role in the planning of works on the construction of RES facility and, as a consequence, affects the forecast for the profit derived from the RES facility.

We would be pleased to support you in the tax and legal aspects of RES projects throughout all phases of RES facility construction.