Wind turbines, June 2018 – Photo credit : Swann Bigot
ENI has decided to build a 50 MW wind farm in Kazakhstan. This will be the largest wind power plant developed abroad by the Italian energy company. ENI took last June the Final Investment Decision to build, develop and operate the Badamsha wind power plant, located in North West of Kazakhstan, revealed a corporate press release.
The construction of the Badamsha wind farm in the Aktobe oblast will start in the coming months. The connection to the local power grid and the commercial operation will begin by the end of 2019. This 50 MW wind farm will provide the region with an annual electricity generation of about 198 GWh. Kazakhstan is not the first country where ENI invests in renewable energy, as the company current global portfolio includes investments in solar, wind and hybrid projects for 1.2 billion euros over the next four years.
The Italian energy company explained that the Badamsha wind farm project represents “the first material step” of the Memorandum of Understanding signed in Astana in June 2017 between ENI, the U.S. company General Electric (GE) and the Kazakh Minister of Energy, Kanat Bozumbayev, to promote the development of renewable energy projects in Kazakhstan.
ENI signed a number of strategic cooperation agreements both in the upstream and renewable energy sectors with the aim of supporting the sustainable economic growth of this former soviet republic which decided to reduce its dependence on fossil energy.
The Italian company has been present in the energy sector of Kazakhstan since 1992. ENI is a joint operator of the Karachaganak gas field and is an equity partner in various energy projects in the Northern Caspian Sea, including the giant Kashagan offshore oil field. In December 2017 ENI became a 50% joint operator in the exploration and production of hydrocarbons from the Isatay block, located in the Caspian Sea, with the national company KazMunaiGas (KMG).
30% of national energy balance in 2030
The President Nursultan Nazarbayev said during its annual address to the Kazakh citizens in January 2018 that Kazakhstan needs to increase the share of renewable energy sources in the national energy balance to 30% by 2030 and must stimulate private companies to invest in this sector.
The Kazakh Energy Minister announced last February that 52 renewable energy facilities totaling 2 GW of power capacity and a global investment worth 1 trillion tengue (2.37 billion euros) are expected to be completed by 2020. The European Bank for Reconstruction and Development will help to fund these projects, bringing up to 200 million euros, according to the Minister.
Kazakhstan generated 1.1 billion kWh through renewable energy sources in 2017 and five renewable power plants totaling 36.5 MW have been completed according to the Ministry of Energy. The country has 58 renewable energy facilities in operation, totaling 352 MW of power capacities, reported the Kazakh Energy Minister Kanat Bozumbayev during an official meeting of the government last June. The Minister added that the renewable energy capacities in Kazakhstan will reach 490 MW by December 2018 with the completion of ten new power plants.
In addition, the Kazakh authorities work on an auction mechanism in order to reduce the cost of renewable energy projects implemented in the country :
“In the future, we will reduce the cost of renewable energy with the introduction of an auction mechanism. On the one hand, this will make the selection process of projects and investors more transparent and understandable. On the other hand, it will rely on more efficient technologies and projects to minimize the impact on end-user tariffs from the commissioning of renewable energy facilities,” said the Minister Kanat Bozumbayev.
The first Kazakh auction over construction of renewable energy facilities was held from May 23 to June 8 and covered 250 MW. All the tenders of 2018 will cover 1 GW of capacities. According to the Minister of Energy, the first tenders showed the interest of companies. Auction rates at a starting price of 22.68 tenge for wind energy decreased to 17.49 tenge.
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© Copyright 2019 – Swann Bigot, lawyer and consultant in international affairs.