Change for the better in Kyrgyz Republic’s renewable energy sector
The expediency of the accelerated development of renewable energy sources in the Kyrgyz Republic is accentuated by the current shortage of electric energy – today the energy sector faces an acute problem of commissioning new capacities, both large and small, for production of electrical energy.
More than 90% of all electricity in the republic is generated by large hydroelectric power plants. However, hydro resources of small rivers in the republic constitute only 1.47% of total electricity generation in Kyrgyzstan, produced by 18 small hydroelectric power plants with a total capacity of 53.86 MW.
Considering the temperature rise in the region, contributing to melting glaciers, with the mean precipitation rates remaining virtually unchanged, reductions in water resource availability can be expected. Thus, diversification of renewable energy sources in the energy mix shall be considered as crucial for ensuring energy security of the country.
Despite the fact that the Kyrgyz Republic is one of the countries with significant potential for renewable energy, solar, geothermal energy, wind and biogas technologies are still used in very rare cases and only for own energy needs.
At the same time, renewable energy sources can provide competitive energy supply, reducing the negative impact of traditional energy sector on the environment and human health, opening up opportunities for universal access to inexpensive, reliable, sustainable and modern energy sources for various categories of consumers, which is one of the obligations of the Kyrgyz Republic to achieve the Goals United Nations in the field of sustainable development (SDG-7).
With the assistance of experts from the Center for Renewable Energy and Energy Efficiency Development (CREEED), implementing partner of the UNDP-OFID “Energy Access Small and Medium Development” Project in the Kyrgyz Republic, the Government of the Kyrgyz Republic has developed and approved the Regulation on the conditions and procedure for the implementation of activities for the generation and supply of electricity using renewable sources of energy on October 30, 2020.
This means that the “rules of the game” have been finally developed for investors and entrepreneurs who want to produce electricity using RE systems and supply it to the grid. This is just one of the possible modes of operation of RE systems, according to the current edition of the "Law on Renewable Energy" of the Kyrgyz Republic.
First approved in 2008, the RE Law was amended several times in order to give rise to the development of the renewables market in Kyrgyzstan, but each time an obstacle was the lack of by-laws, both in relation to the activities for the generation and supply of electricity, and in relation to land issues, as well as the fact that the payment for electricity generated with the help of renewable energy sources at an increased tariff was included in the costs of the already unprofitable distribution companies of the power industry .
The main changes introduced to the RE Law in July 2019, were: first - compensation for additional costs of distributing companies for the purchase of electricity generated using renewable energy sources. Now these costs will now be taken into account when calculating and approving the national electricity tariff for consumers, which takes the load of distribution companies. The second - is the revision of the FIT coefficients to the maximum tariff at which RE-electricity will be purchased - now the coefficient is 1.3 for all types of RE, which, of course, stimulates the development small hydroelectric power plants instead of other renewable sources. Third, quotas for RE capacities have been introduced - the establishment of the total electric capacity of RE stations, who will be able to receive an increased tariff by region and by type of renewable energy sources for a certain period of time.
Thus, the current legislation defined the fundamental principles and conditions for carrying out activities in the field of renewable energy sources, but there was no mechanism regulating the procedure for the generation and supply of electricity using renewable energy sources within the established quotas, outside quotas, for own needs and on a contractual basis.
The approved Regulation the conditions and procedure for the development of activities and the supply of electricity from renewable energy sources, have been developed for implementation of the norms and requirements of the Law of the Kyrgyz Republic "On Renewable Energy Sources".
1) conditions and procedures for the implementation of activities of generation and supply of electricity from renewable energy sources (hereinafter - RE) and regulating the legal regime of generation and supply of electricity using renewable energy sources within the established quotas, regardless of quotas, on a contractual basis and consumption for own needs;
2) mechanism of interaction between all parties involved in the generation and supply of electricity activities process with the use of renewable energy sources (the authorized state bodies, local state administrations, local authorities and RE actors) with the aim to differentiate and increase the responsibility in terms of compliance and procedures stipulating the process for the supply and the fulfillment of contractual obligations for the supply of electricity using RE.
Regulation defines Renewable Energy entities as "natural and legal persons, foreign natural and legal persons, individual entrepreneurs who have expressed the intention and / or are operating in the sphere of generation (all types of legal regimes), supply (sale) of electricity generated using renewable energy sources."
In addition to RE entities, the process of generating and supplying electricity using RE is currently involves:
• the authorized state body for the development of energy policy - the State Committee for Industry, Energy and Subsoil Use of the Kyrgyz Republic (GKPEN);
• the authorized state body for regulation of the fuel and energy complex - the State Agency for Regulation of the Fuel and Energy Complex under the Government of the Kyrgyz Republic (GARTEK);
• authorized state bodies in the field of regulation of land legal relations and local authorities;
• distribution enterprises.
The role, rights and obligations of each of the participants are also defined in the Regulation.
For FIT and other preferences, Regulation provides procedure for the inclusion of renewable energy entities in the State Register of RE entities. Inclusion in the Register of RE entities - official source confirming the legal status of a RE entity and issuing an official document (certificate), resolves the problem of securing and confirming the legal status of a RE entity. Maintaining the Register of RE entities is also needed to ensure the assessment and statistical accounting of electricity generated using RE.
The Regulation also describes in detail all four of the legal regimes and stages of activities for the generation and supply of electricity using renewable energy sources:
• supply of electricity using renewable energy sources within the framework of quotas,
• supply of electricity using renewable energy sources outside the quotas,
• supply of electricity using RE on a contractual basis,
• generation of electricity using renewable energy sources for their own needs.
Thus, renewable energy entities have the right to claim a tariff preference for a grace period within quotas established by GKPEN.
Quota for RE are defined as "set by a State Committee on industry, energy and natural resources of the Kyrgyz Republic (GKPEN) amount of installed electric capacity of power plants using RE by regions and RE types for a certain time period, whose generation of electricity will be reimbursed at a maximum rate for the end users, times the FIT coefficient."
Tariff preferences in the amount of the maximum tariff for end consumers (2.24 soms), with the use of a multiplying coefficient (1.3) during a grace period (no more than 10 years), for RE stations within capacity quotas, is provided to RE entities included in the Register of RE entities. Capacities within the limits of quotas are allocated according to the "first application filed" rule, in the order of priority of the application for a tariff preference.
The RE entity, after exhausting the volume of quotas of installed capacities and / or when constructing a RE power plant outside the quotas, when supplying electricity to distribution companies, is provided with a tariff for the RE electricity it generates at the level of the maximum tariff for end consumers (2,24 soms) , minus the cost of the transit service of the electric networks company, for the payback period established by GARTEK (no more than 8 years) .
To determine the "rules of the game", Regulation:
1) Determines the procedure for considering applications by RE entities for obtaining tariff and other preferences;
2) Establishes requirements for RE entities on the need to prepare a feasibility study, design and estimate documentation, go through the procedure for coordinating the connection of a RE facility to power grids and obtain architectural and planning conditions (AAP) and technical specifications (TU) for connecting RE plants to networks;
3) Determines the requirements for RE entities to obtain a license in cases provided for by the legislation of the Kyrgyz Republic;
4) Describes the process for providing and establishing tariffs for the supply of electricity generated using renewable energy within the specified quota, and outside quota for the duration of the payback period;
5) Determines the procedure for concluding a contract for the supply of electricity generated using RE;
6) Provides a procedure for the acceptance of power plants using RE into operation and defines the rules for the operation of RE facilities.
Now the Regulation has already entered into force, and the GKPEN is preparing to approve quotas for the first few years of work with renewable energy sources.
The adoption of the Regulation is a big positive step towards improving the energy and environmental security and improvement of electricity supply due to increase of the share of renewables in the energy balance of the country, creating jobs in the design , construction and operation of RE plants , providing incentives to renewable energy equipment manufacturers and suppliers as well as creating conditions for the development of a market for renewable electricity, which one of the main goals of the UNDP-OFID Energy Access Small and Medium Development” Project in the Kyrgyz Republic.
Center for Renewable Energy and Energy Efficiency Development (CREEED) held a webinar on November 12, 2020 to clarify issues related to working with the new “Regulation on the conditions and procedure for the implementation of activities for the generation and supply of electricity using renewable energy sources”, video recording and presentations of experts can be found on the website of the Green Energy Platform - https://www.greenenergy.kg/blog-ru/renewable-news-kr-2020-1/.
Author: Tatyana Vedeneva, Center for Renewable Energy and Energy Efficiency Development (CREEED)