Renewable energy for sustainable development of kazakhstan swot and competitiveness analysisDocument Transcript
Renewable energy for sustainable development of Kazakhstan
Competitiveness factors and SWOT analysis
Astana capital of Kazakhstan chosen as the venue for International Exhibition EXPO2017 is presented with an excellent opportunity to demonstrate how the wide scale
use of renewable energy sources can foster harmonious and sustainable economic
growth of our society.
Sayan Kombarov, Ecowatt LLP
Winner of Red Herring 100 Global and Asia 2010
Principles of sustainable development
As it is known, sustainable development of society is based on production of consumer goods and
the means of their manufacture for wide scale use at stable and affordable prices. The more such goods
are available the higher general welfare of the whole community. The better quality of such goods, the
more they are demanded by the markets, the more profitable is their production yielding more
economic benefits through their provision for all investors and stakeholders, the more jobs and valuable
products can entrepreneurs and capitalists create.
Therefore only that production is sustainable that creates value for consumers resulting in the stable
increase of social and material capital of society leading towards full satisfaction of its current needs
without compromising the wellbeing and requirements of its future generations.
Sustainability of renewable energy sources
One the ways on the path to sustainability is the use of alternative or renewable energy sources,
such as wind, solar and hydro power, with which our country is greatly endowed. Kazakhstan can
promote its stable economic growth by engaging in efficient production of environmentally friendly
"green" and inexhaustible energy creating high added value for the benefit of mass consumers. More so,
construction, maintenance and operation of renewable energy generation capacities would allow
creating permanent and highly skilled professional jobs in civil engineering, electric components,
composite materials and machine building industries. Significant renewable energy potential of
Kazakhstan would not only provide for supply of clean and inexhaustible energy to resource poor and
electricity deficient regions of the country, such as south-eastern parts of it, but would also be sufficient
for diversification of export with non fossil energy for mass consumption abroad.
Mass production of renewable energy at affordable low prices would lead to the following beneficial
1) Stable and even ever growing market demand at affordable and stable
2) Benefit for long term social and economic development of the country,
3) Generation of sustainable profit levels for the foreseeable future,
4) Creation of new jobs and industries,
5) Preservation of environment and natural wildlife habitats,
6) Preservation and rational use of non-renewable energy sources of the
needs of future generations.
With that said, one must bear in mind that the most effective and profitable mass production and
resource concentration is possible only thanks to the international labor specialization. It makes sense
for Kazakhstan to specialize in those production industries, where it has competitive advantages
rendered due to the natural, geographical and traditional industry related conditions.
Specialization, as the basis of international and industrial division of labor, would allow attaining
competitive advantage by means of resource concentration for production of the most beneficial goods
as deemed by its added value per labor unit. According to classical Say's law, after XIX century French
economist Jean-Baptist Say, mass production resulting in low product unit prices due to economies of
scale would thereby itself create a very elastic consumer demand making possible other innovative ways
of energy use and consumption. In Kazakhstan that would lead to such instances as mass spread of
electric means of transport, hydrogen production and underground water extraction in Central part of
Renewable energy potential, especially availability of wind corridors, where the wind flow is having
only one direction, such as Yerementau in Akmola and Zhuzymdyk in South-Kazakhstan region, or two
periodically alternating in opposite directions, such as Dzhungar Gates and Shelek in Almaty and Korday
in Dzhambyl region, would allow Kazakhstan to attain even lower costs having significantly boosted the
volume of power generation sufficient for both domestic and foreign markets.
Kazakhstan renewable energy potential
One of such conditions, enabling Kazakhstan to achieve international competitive edge, is its
abundance of not only fossil, but also unlimited renewable energy resources. Renewable energy is
particularly attractive due to their inexhaustible supply making possible ecologically pure power
According to Harvard University professor and Nobel Prize winner for economics Michael Porter's
competiveness factors analysis, the following factors lay foundation for specialization for a country to
create competitive industry of world class:
Related and supporting industries
Strategy and structure to sustain long-term competitive advantage.
The following Porter's factor analysis indicates the conditions necessary for creation in Kazakhstan
of world class "green energy" industry, integrating all production stages from research and tentative
studies to manufacturing, construction and operation of renewable power generating capacities:
Success Factors for Renewable Energy development in Kazakhstan
Wind power potential tens of thousands MWs
(from 10 MW/sq. km for compact innovative
turbines) or over 1 trillion kWh p.a. - one of the
best in the world per UNDP and Kazakhstan
Ministry for protection of Environment
Hydro energy potential thousands of MW;
Favorable solar climate;
Proximity to main markets with high demand;
Long distance of large energy consumption
centers in the south of Kazakhstan from
traditional fossil energy sources;
Availability of specially favorable conditions in
wind tunnels, where the winds are blowing in
either one, (Yereimentau, Zhuzymdyk) or
periodically alternating opposite directions
(Dzhungar gates, Shelek corridor, Korday
Related and supporting industries
Development of renewable energy leads to the
diversification of national economy;
Availability of production capacities and
materials for manufacturing, installation and
Creation of new forms of energy,
transportation and energy storage;
Stimulation of research and innovations aimed
at creation of low cost and highly productive
High energy demand on domestic and foreign
markets of neighbor countries;
Potential electricity market up to 50 billion kWh
Diversification of export potential from non
fossil fuel energy sources;
Carbon oxide emission quotas market;
Substitution of traditional energy sources with
Strategy, structure and competition
Strategy: sustainable and scalable power
generation based on high capacity, highly
productive and low cost renewable energy
generation technology to alleviate reliance on
consumption of non-renewable fossil and
carbon energy resources;
accumulation and transportation of electric and
heat energy, seasonal synergy and mutual
complementarily of different types of
renewable energy. High capacity divisibility and
scalability allowing to introduce stage-by-stage
investments and capacities;
Competition: nuclear, fossil fuels energy are
characterized by relatively higher costs, long
lead periods, negative environmental impacts,
technological complexity and remoteness from
main consumption centers, e.g. in the southeast of Kazakhstan.
South-eastern part of Kazakhstan is particularly rich with renewable energy. Due to the
remoteness from traditional energy sources, such as coal deposits, oil and gas fields, energy supply from
these sources is draught with considerable costs and losses. It is expected that the renewable energy
market for the region is quite large. Potentially, ecologically clean energy sources in the south-east of
Kazakhstan can not only supply the domestic market several times over, but also neighboring countries,
for example China, which is constantly experiencing growing demand for electric power.
According to some estimates, current and future demand for electricity from Kazakhstan to
China totals about half of its annual power production. China, under the auspices of Shanghai
organization for cooperation, expressed interest in importing some 40 billion kWh of electricity p. a. It is
expected that power prices both in Kazakhstan and China would gradually grow. In some regions of
China electricity prices are 30-50% higher, than in Kazakhstan. Secure power supply is a matter of vital
importance for sustainable development not only for Kazakhstan, but for our closest neighbors as well.
Having said that, huge renewable energy sources of the region, fist of all its wind power potential, is
practically untapped. One of the main reasons for this backlog lack of national electro technical and
machine manufacturing in Kazakhstan, which cannot support neither construction, nor facilitate raising
investments into erection of wind and solar power capacities, small and medium hydro power stations
on the rivers of Trans-Ili and Dzungarian Alatau. Domestic mass manufacturing of electric equipment
and turbines would allow rendering construction and production of renewable energy cheaper and
more affordable for the end consumer. These favorable conditions constitute comparative advantage
for generation and utilization of renewable energy in Kazakhstan.
Thereby successful utilization of renewable energy sources in Kazakhstan would
only be sustainable thanks to the development of locally based related and
supporting manufacturing and technological industries.
Choice of optimal strategy and technology for sustaining competitive advantage of renewable
Exploitation of these resources would be most beneficial economically when coupled with creation
of domestic manufacturing and technological base closely adapted to local particularly favorable
conditions. This approach involves implementation of new design solutions aimed at achieving a number
of cost and production performance advantages.
Large scale renewable energy production in Kazakhstan, including wind power, would require its
price and productivity competitiveness versus traditional sources of energy. Wind power in Kazakhstan
is particularly interesting as it can generate industrial volumes of electric energy which can be
transmitted via electricity grids to remote consumers, as well as to use in order to generate heat energy,
for example in the form of hot water.
Costs of renewable energy can be reduced with the help of special design and technical solutions
which must fully take into account and as much as possible fully utilize characteristics and huge
potential of the best wind sites of Kazakhstan, such as Dzungar Gates and Shelek corridor, as well as a
number of other similar wind sites.
Shortcomings of conventional tower mounted wind turbines
Production of industrial volumes of wind electricity by universal tower mounted wind turbines
under the conditions of the richest by their potential sites, such as Dzhungar Gates, can prove very
difficult because of the extremely powerful winds and significant temperature seasonal changes. Among
shortcomings of such turbines are their big mass mounted at high altitude of their masts, which make
them very vulnerable to possible earthquakes and frequent hurricanes and gusty winds with velocity
above 20 m/sec (absolute maximum 50-60 m/sec). Under such extreme winds conventional wind
turbines usually are put into idle condition in order to prevent their damage and therefore will produce
some 30% less in such sites as Dzhungar Gates than it is possible if the turbines operated without such
forced idleness. Conventional turbines equipped with guidance and turning systems towards the wind
that are unnecessary in one directional winds, long and heavy blades which can be damaged by strong
winds, high cost and installation and maintenance, low density of placement with intervals of up to 10
radius of the blades between the adjacent musts.
Apart from that, construction of wind power stations in Kazakhstan based on imported tower
mounted wind turbines would require high costs, and correspondingly high and subsidized by
government budget for their payback tariffs. Their high cost, vulnerability to breakdowns under
conditions of high speed and gusty winds in sharply continental climate and seismicity of south-east
Kazakhstan, as well as low electricity tariffs may appear unattractive to investors, whereas their erection
would come very expensive and cumbersome, especially under the extreme weather and climatic
Not only imported technologies are necessary to use for the most efficient development of the best
wind sites of Kazakhstan. It is also possible to develop and apply such technical solutions which would
fully take into account their features and be free from the above shortcomings. Such turbines must be
characterized by low cost, high capacity and productivity performance, be simple and easy to build,
mount and service, аs well as available for serial manufacture in Kazakhstan.
Development of such technological solutions would allow implementing mass production of wind
turbines with large capacity for large scale development of wind power potential of the most
perspective wind sites in Kazakhstan for wide circles of industrial and private consumers.
Of course, tower mounted imported wind turbines can and will be operated in Kazakhstan.
However, high cost of import would require high tariffs and subsidies rendering such green
development economically unprofitable and unsustainable.
Strategy, cost and production structure competitive advantage
In order to create successful green industry in Kazakhstan it is necessary to introduce such
development strategy which would be aimed at reaching structural and price competitive advantages
attaining long-term benefits and added value for all stakeholders and society at large.
Renewable energy strategy must be derived from position analysis of green energy of Kazakhstan
and be directed at conversion of weaknesses and mitigation of risks to reach matching of opportunities
and strengths. It is important to develop and apply such technological innovations which would aimed at
achieving best competitive advantages versus existing technology due synergy of natural, production,
geographical factors, which would determine technological structure of renewable energy, its cost and
Kazakhstan would rather benefit more from not merely importing ready produce, which would only
strengthen its role of importer of not the best adequate and expensive technologies. That would
discourage use of renewable energy due to their high price barrier. Therefore, in order to assure
affordable and profitable mass consumption of renewable energy in Kazakhstan, it is necessary to apply
maximum efforts for creation of domestic industry founded on existing in the country technological
base. Of course, it is absolute pre-requisite to take into full account all state-of -the-art technological
solutions found in the technologically advanced economies in this area.
Special design and technical solutions developed by Ecowatt LLP are aimed to implement this
approach n Kazakhstan. These solutions take into consideration peculiarities of the most powerful
energy potential of best wind sites, such as Dzhungar Gates and Shelek corridor, as well as
Yereymentau, Zhuzymdyk, and Korday with the view to make its most efficient use. Total area of these
perspective sites is thousands of square km.
Green energy, according to Kazakhstan President Nursultan Nazarbayev, must be innovative.
Kazakhstan being represented by Ecowatt LLP can offer such innovations, which would make such a
better use of local outstanding wind and geographic conditions, thereby allowing to start mass
manufacturing of not only productive and capital intensive technologies with large added value, such as
wind turbines, generators, fibro glass materials, but also generation by their means of such mass
consumption goods as electric power. Such production should correspond to all requirements of
sustainable development and green growth that is highly demanded by international community.
Large scale generation and reduction of price for renewable energy due to economies of scale could
bring maximum economic effect thanks to implementation of design and technological disruptive
innovations, aimed at attaining sustainable and log-term competitive advantage in the following areas:
Specific cost per MW of generation capacity ($/МВт)
Productivity increases in the form of operating efficiency with full capacity load (hrs. p.a.),
including during hurricanes and gusts up to 50 m/sec
Improvement of generation capacity land placement (MW/sq. km.)
Quick and inexpensive construction, transportation, installation turnaround of generating
Innovative technologies in renewable energy must be aimed at creation of powerful high
performance output wind turbines with capacity in the range from a hundred kW to 1-5 MW, so that
they can produce electricity with low cost, more dense placement and stable under possible seismic
activity. This would have beneficial effect on the price of the final product - electric power and would
invoke a huge demand for it. It can be reasonably expected, that chances for such successful harnessing
of some of the best wind sites in Kazakhstan will be more promising.
Wind power potential of Dzhungar Gates and other perspective sites
Land area, which would be utilized for construction of wind power stations, could be in the range
from 100 to 500 sq. kms. With target placement density from 10 to 100 special wind turbines per 1 sq.
km. with forecast cost of $1 million/MW, 1 sq. km. area can accommodate some 10 to 100 MW of wind
power generation capacities, comprising of compact innovative wind turbines 1 MW each, located with
the distance of 100 m from each other. Conventional wind turbines, due to their large size, usually take
more land area, since they must be located up to 10 blades radius away from each other, whereas their
generation would be some 30% less, than forecasted for innovation turbines made in Kazakhstan.
SWОT green energy of Kazakhstan
Wind potential tens of thousands MW (10
MW/sq. km. for compact innovative turbines)
or over 1 trillion kWh p.a. - one of the world
best according to estimates of the Kazakhstan
Ministry for Environmental protection and
3 - 5,5 thousand effective hrs. p. a. with full
capacity load vs. less than 3 thousand hrs. in
Hydro power potential thousands MW;
Favorable solar climate;
Proximity to main markets with high demand
Tax investment preferences;
Guaranteed purchase of "green energy" by the
state under approved by regulator businessplan tariff;
Free of charge electricity transportation
towards final user;
Priority dispatching of renewable "green
Strong and gusty winds, especially in Dzhungar
Gates, with velocity up to 50-60 m/sec,
restricting utilization and increasing the cost of
construction of wind energy generation
Seismic activity in south and south-eastern
Kazakhstan pose a risk of severe damage to
wind renewable energy facilities, restricting
utilization and increasing the cost of
construction of wind energy generation
Lack of own manufacturing capacity for
producing of electric equipment;
High cost of construction of renewable energy
facilities from imported technologies and
Transmission Lines (PTLs), long distances
between generation and consumer centers
causing high transmission losses.
Threats and risks
Creation of domestic manufacturing and
producing base in the field of "green energy",
construction and synthetic materials;
Increase of potential and productivity by means
of creation and application of disruptive
Creation of additional export and transit energy
Improvement of ecological situation on large
urban cities by conversion of their energy
supply and transport to ecologically clean
renewable energy sources;
Accumulation of energy for subsequent heat
and power supply of cities;
Power generation for subsequent production of
cheap hydrogen and extraction of water from
underground aquifers for agriculture and other
Adaptation to local natural, climatic, seismic
conditions to improve cost and production
Guaranty for observation of capital and
intellectual property rights;
Insufficient technological and design experience
for development of innovations and
introduction of new technologies;
Relations with suppliers equipment and
Risks of errors in coordination, planning which
may lead to delays in construction and
Operation and maintenance under the
conditions of sharply continental climate;
Weather and climate risks;
Entry into new markets;
Under-developed infrastructure and PTLs;
Regulative and legal risks.
Estimated parameters for 1 GW wind power station in Dzhungar Gates
on the basis of 10
Estimated volume of
billion kWh p.a.
revenue, $ million
100 sq. km х 10 wind power turbines each with capacity 1 MW, which would total 1 thousand MW
or 1 GW of installed capacity, with estimated cost of ориентировочной стоимостью $ 1 billion.
Operating and maintenance costs of such wind power stations would be small, not more than 5% of
sales revenue, which can be achieved due to more rigid and strengthened blades, reducing the odds for
breakdowns and idleness due to repairs. According to estimates of the project developers, payback
period, without taking into account taxation, can be reached in some 4 years, with power selling price
Application of compact and not obstructing each other innovative wind turbines, the
density of placement for power generating capacities can be increased up to 100
It is estimated, that a 1,000 MW wind power station in Dzhungar Gates with average full capacity
efficiency of 5.5 thousand hrs. per year can annually yield some 5.5 billion kWh for $275 million at
selling price of ¢5/kWh.
But, useful area available for construction of wind power station situated in Dzhungar Gates gorge
80 km long and 10-15 km wide is actually totaling some 1,200 sq. km. That area can house some 48,000
MW of power generating capacities (based on the assumption that 1 sq.km can accommodate 40 MW)
which can produce c. 264 billion kWh p.a. or more than 3 times of total Kazakhstan current power
generation. According some to expert estimates, number of effective wind generation full load
operating hrs. in other prospective wind sites in Kazakhstan on average can reach 3-3.5 thousand hrs.
The following table indicates characteristics of the most perspective sites of Kazakhstan with
unidirectional or alternating in opposite direction wind flows:
based on 10
Cost, $ billion
based on $1
*Data on specific capacity and efficiency of operation is based on estimates by Ecowatt LLP.
The capacity per sq. km. indicator of 10 MW/sq.km. can be increased 4-10 times due to more dense
turbines placement corresponding to 40-100 generating units per sq. km. which can be located at 100 158 m intervals between each other. Alternatively, more dense capacity placement can be reached by
increasing capacity of individual turbines. Above total wind power capacity estimate can reach 500-700
Growth limits for green energy of Kazakhstan
Current total installed capacity of all power generating electric plants in Kazakhstan amounts to c.
19 GW, capacity at disposal is 14.6 GW. Installed power generating capacities of Russian Federation total
218 GW, of Chinese - 900 GW, Central and Eastern Europe - 900 GW. Installed wind power generating
capacities of EU total 1,000 GW.
In accordance to above estimates, total wind power potential of Kazakhstan can reach 500-700 GW,
which is 26-35 times more than currently installed capacity. Per the previous table, power generation of
only some of the best known wind sites of Kazakhstan can total c. 483 billion kWh p.a., which is over 5
times, than cumulative power production in Kazakhstan that reached 86.2 billion kWh in 2011. Wind
power potential of Dzhungar Gates alone is estimated at some 1,000 billion kWh p.a. It is becoming
clear, upon examination of above estimated data, that wind energy potential at disposal in Kazakhstan
has huge investment attraction and capacity, forming the foundation for sustainability for the
development of the country for many years ahead.
According to the theory of power grids, such eletric closed systems can remain in stable equilibrium
if their renewable energy sources total 10% of all installed capacities connected to them. Should the
power grids of Europe, Central Asia, China and South-east Asia be connected, the share of renewable
energy of such Pan-European Energy system connected with Pan-Asian within the framework of Green
Euro-Asian energy bridge can be quite substantial.
Strategic location of perspective wind sites, such as Yereumentau in Akmola region, Shelek and
Dzhungar Gates in Almaty region near the largest capital cities of Kazakhstan and western provinces of
China, will allow for organization of power transmission to supply mass consumer with cheap and
ecologically pure energy.
Generation of sufficiently large volumes of electricity in the future would make possible not only use
of renewable energy for electric and heat supply for population, but production of hydrogen fuel,
extraction of large volumes of underground water in Central Kazakhstan for agricultural needs, provision
of cheap electricity for electric means of transportation and so on.
Prospects for creation of world class renewable energy industry in our country are from onset are
much more promising exactly due to the exceptionally favorable natural factors, primarily because of
open large land areas and best wind conditions. It is estimated that in comparison with Europe and the
rest of Asia, wind power turbines in Kazakhstan can produce some 30% more electricity with the help of
special innovation performance improvements. As it was noted above, even more opportunities can be
reaped through implementation of special innovative technological solutions aimed at increasing
productivity and generation capacity allocation per land area unit.
Due to simplicity of manufacturing, construction and installation, economies of scale through mass
power generation экономии and local content, it is expected that specific generation capacity cost can
be reduced to $1 million/MW, which is almost twice lower than the similar indicator for Hydro and Coal
Fired Power plants. For comparison, cost of construction of Balkhash 1,320 MW Coal Fired Thermal
Power Plant is forecast at around $2.3 billion, or c. $1.7 million/MW. Cost of imported wind power
turbines is estimated at some $1.5-2 million/MW plus.
With that said, development of renewable energy would be most beneficial thanks to creation and
manufacturing of own innovative wind turbines in the Republic of Kazakhstan, which would address the
issue of achieving cost and production leadership through the better use of local geographical,
topographical and natural comparative advantages. That would lead to further development of
connected and related industries, such as construction, production of synthetic materials, electric
technical equipment, which are already founded in Kazakhstan. It is important, that special design and
construction solutions in wind energy would not pose present noise discomfort for population, threat to
migrating birds and wild life in Kazakhstan, as well as not make disturbances for radio navigation and
Thereby, development and introduction of renewable energy sources at national enterprises would
be in the best interest for generation and electric and heat energy from ecologically pure sources of free
energy, enhance non-raw materials export of Kazakhstan, and therefore correspond to the import
initiatives of the Program of Forced Industrial Innovation Development (FIID) of Kazakhstan and
development of its "green" industry and creation on its basis of export "green" energy bridge,
interconnecting Europe, Central and South-east Asia and China.
The Program FIIR of Kazakhstan, initiated by the President Nursultan Nazarbayev and the
Government of Kazakhstan must be directed towards industrialization of the country with the aim of
introducing innovative technologies enabling sustainable and economically profitable development of its
comparative natural and geographical advantages, such as rich sources of renewable energy.
It is not surprise that it is precisely in the field of renewable energy Kazakhstan private techno startup demonstrated possibilities for creation of large market value from scratch that won prestigious Red
Herring 100 Global award for 2010.
Thanks to technological innovations such as those proposed by Ecowatt LLP,
Kazakhstan has opportunity for not only putting renewable energy at the disposal of
its national economy and people, but also to do so in the most beneficial and
profitable way having created a huge demand for its produce in domestic and foreign
markets, so that the lion's share of the development costs and subsequent revenues
would remain in the republic.
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8. Hal Foster. EcoWatt designs new type of windmill for breezy gorge