Saniya Perzadayeva, Kurmet Zhumagaliyev (Unicase)
1 Overview of the Renewable Energy Sector
1.1 What is the basis of renewable energy policy and regulation in your jurisdiction and is there a statutory definition of ‘renewable energy’, ‘clean energy’ or equivalent terminology? The legal framework for renewable energy in Kazakhstan is mainly regulated by the following laws and regulations:
■ Law on Support of the Use of Renewable Energy Sources dated 4 July 2009 No. 165-IV (Law on RES).
■ Law on Electric Power Industry dated 9 June 2004 No. 588.
The Kazakhstan government adopted the following state programmes, which are aimed at the development of renewable energy sources (RES):
■ Concept on Transition to Green Economy of the Kazakhstan Republic.
■ Concept of Development of the Fuel and Energy Complex of the Kazakhstan Republic 2030.
■ Energy Balance Plan for Kazakhstan 2035.
The Ministry of Energy is currently developing the Concept of Electric Power Industry Development 2035 based on the Energy Balance Plan for Kazakhstan 2035.
The government presented a draft version of the Doctrine (Strategy) on Achieving Carbon Neutrality of the Kazakhstan Republic 2060, which will be finalised in the upcoming months. The Law on RES defines RES as energy sources that are continuously renewable due to natural processes, including the following: solar radiation energy; wind energy; hydrodynamic water energy; geothermal energy, including heating of the soil, groundwater, rivers and reservoirs; and anthropogenic sources of primary energy resources, including consumer waste, biomass, biogas and other fuel from consumer waste used for the production of electrical and/or thermal energy.
1.2 Describe the main participants in the renewable energy sector and the roles which they each perform. The main participants of the renewable energy sector range from private sector companies operating renewable energy facilities to state authorities, which oversee and support participants.
The Ministry of Energy implements state policy to support the use of RES. Kazakhstan Electricity Grid Operating Company (KEGOC), as an electricity transmission system operator of the unified power system of Kazakhstan, energy-transmitting organisations and energy-supplying organisations are responsible for transmission and distribution. The Kazakhstan Electricity and Power Market Operator (KOREM) acts as an operator of the centralised trading market and an auction organiser. The Financial Settlement Centre (FSC) carries out the centralised purchase and sale of electric energy produced by renewable energy facilities. Energy-producing organisations supply RES and qualified conditional consumers act as consumers of electricity produced by RES. Other participants include the non-profit associations Qazaq Green and the Association of Regional Environmental Initiatives (ECOJER), which play a significant role in renewable energy promotion. Development banks and financial institutions provide financing and technical assistance for the construction and commissioning of renewable energy facilities.
1.3 Describe the government’s role in the ownership and development of renewable energy and any policy commitments towards renewable energy, including applicable renewable energy targets.
The Ministry of Energy is an authorised body for renewable energy development, responsible for implementing state RES policy. The Ministry: develops and approves technical regulations and improves national standards in the field of design, construction, operation, and safety of RES objects and output; approves RES facilities alongside target indicators for the sector development; approves the procedure and monitors the use of RES and the sale of planned facilities; moderates every aspect of RES auctions from start to finish; develops and approves the rules for the centralised energy purchase and sale to the FSC, for determining fixed tariffs; and carries out international cooperation.
Kazakhstan sets the following ambitious targets with respect to renewable energy deployment:
■ A 6% share of renewable energy in total electricity production by 2025.
■ A 15% share of renewable energy in total electricity production by 2030.
■ A 50% share of alternative and renewable energy in total electricity production by 2050.
According to the draft version of the Strategy on Achieving Carbon Neutrality of the Kazakhstan Republic 2060, it is expected that solar power will account for up to 46% of total electricity generation and 56% of renewable electricity generation, while wind power will account for 33% and 40%, respectively.
In 2022, the Ministry of Energy announced the auction schedule to select projects for renewable energy facilities construction. The total installed capacity auctioned in 2022 is 690 MW, broken down by type of power plant:
■ solar power plants (SPPs) – 60 MW;
■ wind power plants (WPPs) – 400 MW;
■ hydropower plants (HPPs) – 220 MW; and
■ biogas power plants (Biogas plants) – 10 MW.
Most of the renewable energy facilities are owned and developed by the private sector with government support, which is done in the form of guaranteed purchase of the entire volume of RES electricity at fixed tariffs or auction prices and distribution to conventional power plants at the renewable energy support tariff.
2 Renewable Energy Market
2.1 Describe the market for renewable energy in your jurisdiction. What are the main types of renewable energy deployed and what are the trends in terms of technology preference and size of facility?
Solar and wind energy are the most widely deployed sources of renewable energy in Kazakhstan. Based on a wind atlas of Kazakhstan developed in 2009, the potential of wind power is estimated at approximately 900,000 GWh of electricity per year.
According to a solar atlas of Kazakhstan, the southern part of the country has a huge potential for the development of solar energy, estimated at 2.5 billion kWh per year. According to the Ministry of Energy as of August 2022, there are 142 operating renewable energy facilities with a total capacity of 2,332 MW (43 WPPs – 894 MW, 54 SPPs – 1,150 MW, 40 HPPs – 280 MW, five biogas plants – 8 MW).
According to the Ministry of Energy, the total installed capacity auctioned in 2022 is 690 MW, broken down by type of power plant:
■ SPPs – 60 MW;
■ WPPs – 400 MW;
■ HPPs – 220 MW; and
■ Biogas plants – 10 MW.
Based on estimates of experts, Kazakhstan has a substantial hydropower potential – 170 billion kWh, with 30 billion kWh economically viable.
In terms of trends, small-scale renewables are rising in popularity; however, there is a lack of a comprehensive regulatory framework for the operation of small-scale renewable facilities. The commission of renewable energy facilities with energy storage systems and establishment of a legal framework for energy storage systems is planned.
2.2 What role does the energy transition have in the level of commitment to, and investment in, renewables? What are the main drivers for change? Kazakhstan ratified the Paris Agreement in 2016 and submitted its National Determined Contributions (NDC) aimed at reducing greenhouse gas emissions by 15% from 1990 levels by 2030.
The Concept on Transition to Green Economy and draft version of the Strategy on Achieving Carbon Neutrality of the Kazakhstan Republic 2060 highlight the importance of RES in the transition to a green economy and carbon neutrality.
The main drivers for change are energy transition targets set in state policies driven by decarbonisation and climate change agendas.
2.3 What role, if any, has civil society played in the promotion of renewable energy? Сivil society is generally supportive of renewable energy development, except some industrial groups that use conventional energy such as coal, petroleum and gas. Some industrial groups are shifting towards developing RES facilities in order to support the green economy agenda promoted by the government. Under the Law on RES, qualified conditional consumers include conditional customers, which are energyproducing organisations using coal, gas, sulphur-containing raw materials, oil products and nuclear fuel that operate RES facilities.
Qualified conditional consumers are obliged to conclude annual contracts with the FSC for the purchase of electricity produced by energy-producing organisations using RES, energy waste disposal and flood electricity.
2.4 What is the legal and regulatory framework for the generation, transmission and distribution of renewable energy?
The Law on RES and by-laws provide a legal and regulatory framework for the generation, transmission and distribution of renewable energy. The Law on Electric Power Industry and by-laws provide a legal and regulatory framework for the use and development of renewable and non-conventional energy sources.
2.5 What are the main challenges that limit investment in, and development of, renewable energy projects? There are several obstacles that impede investment and the general development of renewables. First, the main barriers include high volatility of the national currency, absence of indexation for the construction period, high interest on loans, lack of long-term financing and a low level of marginal auction tariffs. In order to make indexation more attractive to investors, it is planned to make 100% of the auction price indexation related to the change in the exchange rate of the tenge against the US dollar.
Second, model power purchase agreement (PPA) contracts need some improvements. There is no take or pay clause in model PPA contracts, which refers to a contractual structure in which the buyer must purchase (take) the goods in a certain quantity at a certain time and pay for the goods (pay), regardless of the buyer’s actual ability to take delivery of the goods. Under the Law on RES, the centralised purchase and sale of electricity produced by RES facilities is carried out by the FSC. The FSC is only obliged to make payments to the developer for the electricity supplied to the grid. Therefore, there is a risk that developers will not be able to receive certain additional payments from the FSC, due to possible limitations from the classical electricity-generating organisations in accepting and transmitting the entire volume of electricity (generated by the developers) to the grid. The introduction of a take or pay clause will mitigate this risk.
The introduction of a direct agreement will allow project lenders to claim the position of borrower/sponsor in case of contractual default with the introduction of provisions such as notices to creditors, extension of repayment periods, step-in rights, and the right to novate the PPA in favour of the substitute organisation. There is currently no international arbitration provided in model PPA contracts, which might be unattractive to foreign investors. Furthermore, small-scale renewables development is halted by insufficient support measures, complex and time-consuming procedures for connecting to the electricity networks, high cost of installations for net consumers, and challenges in licensing procedures for connecting small-scale renewables to the grid at the level of regional power grid companies.
Overall, there is insufficient manoeuvring capacity in the energy system to cover intermittent renewable energy production.
2.6 How are large utility-scale renewable powerprojects typically tendered? Large utility-scale projects are typically tendered through auction, a competitive bidding process, or bilateral agreements. Bilateral agreements are not generally regulated by Kazakhstan legislation, and do not provide advantages if a model PPA contract is signed with the auction winner. For example, when signing bilateral agreements, investors will likely face difficulties with grid connection.
An auction mechanism was first introduced in 2018, and it provides for fair competition, transparency, and the investment climate improvement. Auctions are conducted annually and information on capacity and zones is published on the websites of the Ministry of Energy and KOREM.
2.7 To what extent is your jurisdiction’s energy demand met through domestic renewable power generation? According to the Ministry of Energy, electricity generation from RES facilities generated 2.4 billion kWh of electricity in Kazakhstan in the first half of 2022, which accounts for 3.7% of the total energy production of Kazakhstan.
According to the Ministry of Energy, the country faces an electricity deficit of 1.3 GW, while the northern part has a surplus of energy.
3 Sale of Renewable Energy and Financial
Incentives
3.1 What is the legal and regulatory framework for the sale of utility-scale renewable power? Under the Law on RES, the FSC distributes the expenses for the support of RES used among the conditional consumers of electricity, in proportion to their shares of delivery to the grids. The conditional consumers sign agreements with the FSC for the purchase of electricity produced in accordance with the standard form and pay for the electricity no later than 30 calendar days after the end of the month it was delivered on a yearly basis.
In 2020, the concept of pass-through tariffs was introduced, which aim to reduce the losses of conventional energy-producing organisations that buy electricity produced by RES facilities. The costs of purchasing electricity produced by RES facilities from the FSC are included in the surcharge in excess of the marginal tariff of the conventional energy-producing organisation.
3.2 Are there financial or regulatory incentives available to promote investment in/sale of utility-scale renewable power?
RES legislative framework, inter alia, provides for the following support measures:
■ Guaranteed purchase of all electricity produced and supplied to the grid.
■ PPAs are concluded at auction prices for 20 years.
■ Creation of a reserve fund at the FSC.
■ Annual indexation of tariffs.
■ Exemption from payment for the transmission of electric energy.
Investment preferences are provided depending on the type of investment projects. Renewable energy facilities fall under the category of investment and priority investment projects implementation. Investment preferences include tax preferences, state in-kind grants and exemption from customs duties.
3.3 What are the main sources of financing for the development of utility-scale renewable power projects? The main sources of financing for the development of utilityscale renewable power projects are debt financing and equity.
Financial institutions and multilateral development banks provide financing for renewable energy projects, while commercial banks in Kazakhstan are reluctant to provide financing due to bankability issues. According to publicly available sources, the European Bank for Reconstruction and Development (EBRD) provided debt financing in the amount of around US$500 million in order to create 14 RES facilities with a total capacity of around 800 MW as of April 2022.
3.4 What is the legal and regulatory framework applicable to distributed/C&I renewable energy? Kazakhstan legislation does not differentiate between utilityscale and distributed/C&I renewable energy. Therefore, the analysis provided in this chapter applies to both.
3.5 Are there financial or regulatory incentives available to promote investment in distributed/C&I renewable energy facilities? Kazakhstan legislation does not differentiate between utilityscale and distributed/C&I renewable energy. Therefore, the analysis provided in this chapter applies to both.
3.6 What are the main sources of financing for the development of distributed/C&I renewable energy facilities? This is not applicable; please see question 3.5.
3.7 What is the legal and regulatory framework applicable to the development of green hydrogen projects?
Currently, there is no legal and regulatory framework applicable to the development of green hydrogen projects. Under Kazakhstan legislation, conventional hydrogen is usually produced from natural gas and is defined in several national standards related to transportation and industrial use.
Today, in light of the absence of a legal and regulatory framework for green hydrogen, the laws governing green hydrogen are the following: the Law on RES for the purpose of using renewable energy for green hydrogen production; the Land Code for the purpose of land plot selection and land rights registration; the Environmental Code and by-laws for the purpose of compliance with environmental permits and environmental impact assessment (EIA); the Entrepreneurial Code in terms of the applicable investment preferences; and the regulations on transportation of hazardous substances, including flammable ones, to which green hydrogen belongs.
3.8 Are there financial or regulatory incentives available to promote investment in green hydrogen projects? The Ministry of Energy is currently developing a draft Law on Development of Alternative Sources of Energy, which aims to provide a legal framework for the operation of hydrogen, industrial gases, coalbed methane, biofuels and municipal solid waste.
Green Hydrogen Alliance was established recently with the support of Task Force. Founders of Green Hydrogen Alliance include Linde (Germany), Svevind AB (Germany), Rödl & Partner (Germany), QazaqGaz (Kazakhstan), Atasu Group (Kazakhstan), Green Spark LTD (Italy), Astana International Finance Centre (AIFC) Green Finance Centre (Kazakhstan), GCA Partners (Kazakhstan), Ajusa Hydrogen Technologies (Spain) and other international companies from the EU. The Ministry of Energy is currently working on the Hydrogen Development Strategy, which is expected in the upcoming months.
3.9 What are the main sources of financing for the development of green hydrogen projects in your jurisdiction? Green hydrogen projects are at a preliminary development stage.
Generally, the main sources of financing for large-scale infrastructure projects in the renewable energy field are debt financing and equity only. The same sources are likely to be employed for green hydrogen projects.
3.10 What is the legal and regulatory framework that applies for clean energy certificates/environmental attributes from renewable energy projects? The International REC Standard Foundation (I-REC Standard) has recently approved Kazakhstan for I-RECs for Electricity issuance. ECOJER is the issuer of I-RECs.
3.11 Are there financial or regulatory incentives or mechanisms in place to promote the purchase of renewable energy by the private sector? The end user has no idea on the type of energy they use, green or not: they simply pay for the utility bill, and electricity – unspecified – is among other basic payments in the package.
RES legislative framework, inter alia, provides for the following support measures:
■ Guaranteed purchase of all electricity produced and supplied to the grid.
■ PPAs are concluded at auction prices for 20 years.
■ Creation of a reserve fund at the FSC.
■ Annual indexation of tariffs.
■ Exemption from payment for the transmission of electric energy.
Investment preferences are provided depending on the type of investment projects. Renewable energy facilities fall under the category of investment and priority investment projects implementation. Investment preferences include tax preferences, state in-kind grants and exemption from custom duties.
4 Consents and Permits
4.1 What are the primary consents and permits required to construct, commission and operate utilityscale renewable energy facilities? The primary permit to launch a project is to obtain land use rights. It includes permission to use a plot of land for engineering survey activities, inclusion in renewable energy facilities’ siting plan as part of an auction and an in-kind grant for temporary gratuitous use of the land.
When developing an HPP, the developer must also obtain the right for water use. A permit for special water use is issued by the regional branches of the authorised body, Catchment Authorities of the Ministry of Agriculture. The construction and operation of renewable energy facilities requires several stages of project procedures and design. A request for the provision of source materials is submitted to local state authorities. Source materials include architectural planning specifications, technical specifications for connection to the sources of engineering and utility provision, cross profiles of roads and streets, vertical design elevations, extracts of the detailed design plan and a layout scheme of external utility networks. After receiving source materials, the schematic design is developed, which must be approved by local executive authorities.
The design documentation is developed by individuals and legal entities that are licensed for the relevant types of survey and design activities in architecture, urban planning and construction under the Law on Permissions and Notifications. Design documentation is considered complete after approval by local executive authorities.
Furthermore, depending on the specific nature of a renewable energy facility, feasibility studies, design and estimates may be subject to additional approval by: the Ministry of Industry and Infrastructural Development, responsible for industrial safety, water transportation, and the study of subsoil; the Ministry of Agriculture, responsible for land resource management; the Ministry of Internal Affairs of the Republic of Kazakhstan, responsible for civil protection; and local executive authorities, on whose territory the implementation of the construction of a renewable energy facility is planned.
For the implementation of construction and installation works, the investor must conclude an agreement with a specialised organisation that has a state licence on construction and installation works, stipulated in the Law on Permissions and Notifications, for implementing these works.
Finally, the investor should obtain an entitlement document with a note on the introduction to the information system of the legal cadastre of a newly created immovable property or renewable energy facility.
4.2 What are the primary consents and permits required to construct, commission and operate distributed/C&I renewable energy facilities? This is not applicable; please see question 4.1 above.
4.3 What are the requirements for renewable energy facilities to be connected to and access the transmission network(s)?
A request to identify the closest connection point should be submitted to an energy transmission organisation. In addition, an investor contacts a specialised project organisation, which will develop the “power generation scheme”. KEGOC, an electricity transmission system operator, agrees on the “power generation scheme” with the organisation to whose grid connection is planned to be carried out.
An energy-producing organisation planning the creation (expansion, reconstruction) of new or existing RES facilities, and an energy transmission organisation, to whose electrical grids the facilities are directly connected, sign a standard agreement on the facilities’ connection under the control of authorised bodies in the RES and electric power industry sectors. RES facilities are exempted from payment for transmission of electricity in case of electricity sale to the FSC.
4.4 What are the requirements for renewable energy facilities to be connected to and access the distribution network(s)? Requirements for energy transmission for RES facilities to be connected to and access the distribution network are the same as for the connection to transmission network (see question 4.3).
4.5 Are microgrids able to operate? If so, what is the legislative basis and are there any financial or regulatory incentives available to promote investment in microgrids? There is no legal definition of microgrids under the Law on RES. Nevertheless, microgrids are able to operate with electricity consumed from an RES facility operating in an off-grid mode in non-electrified settlements and/or settlements, where centralised electricity supply is not economically feasible.
4.6 Are there health, safety and environment laws/regulations which should be considered in relation to specific types of renewable energy or which may limit the deployment of specific types of renewable energy? The Environmental Code requires enterprises to conduct an EIA, depending on the hazard class. The investor and project developer should take into account the results of EIA and ensure the least damage to the environment and health. EIA procedure results in the preparation of an environmental management plan, and the results are then submitted for the state environmental expert review. Environmental permits for emissions are issued by authorised environmental protection bodies, depending on the hazard class.
Project developers, including renewable energy, should comply with fire, industrial, and health and safety regulations and instructions under the Kazakhstan legislation. Non-compliance may lead to administrative or criminal liability in case of severe damage to health and safety.
5 Storage
5.1 What is the legal and regulatory framework which applies to energy storage and specifically the storage of renewable energy? Legal and regulatory framework for energy storage lags behind the pace of development of the renewable energy industry itself. Currently, there is no concept of energy storage specified in Kazakhstan law. Several state programmes, strategies aimed at the development of the electric power industry and the industrial and innovative development of the country as a whole were adopted; however, energy storage systems are mentioned only tangentially. The absence of tax, subsidies and other preferences are considered by the developers a barrier that impedes the development of energy storage systems. Double charging of network usage for imported and exported energy from a storage device may be viewed as another issue to equitable treatment of electricity storage.
5.2 Are there any financial or regulatory incentives available to promote the storage of renewable energy? The Ministry of Energy is working on amendments to the RES legal framework aimed at establishing a legal definition and operation of energy storage systems.
6 Foreign Investment and International
Obligations
6.1 Are there any special requirements or limitations on foreign investors investing in renewable energy projects? There are no special limitations on foreign investors investing in renewable energy projects. The government encourages and welcomes foreign investment and constantly improves the legal framework in order to increase the investment attractiveness of Kazakhstan, including in the renewable energy sector. Renewable energy projects are included in the priority investment project category. The priority investment project is a project for the creation of new production facilities, providing for investment by a legal entity in construction of new production facilities in an amount no less than US$13 million or, for expansion and/or renovation of existing production facilities, providing for investment by a legal entity in an amount no less than US$32 million.
6.2 Are there any currency exchange restrictions or restrictions on the transfer of funds derived from investment in renewable energy projects? Currency transaction is subject to registration with the National Bank in the following cases: receipt of property (money) in Kazakhstan and/or occurrence of obligations of a resident to return property (money) to a non-resident in the amount exceeding US$500,000; or transfer of property (money transfer) from Kazakhstan and/or occurrence of the resident’s requirements to return the property (money) by non-resident in an amount exceeding US$500,000.
The repatriation of national and/or foreign currency is ensured within the time frame stipulated by the currency export or import contract. The repatriation of national and/or foreign currency on export or import consists of crediting to bank accounts in authorised banks: proceeds in national and/or foreign currency from exports; or national and/or foreign currency, transferred by a resident in favour of a non-resident to make settlements on import, in cases of non-fulfilment or incomplete fulfilment of obligations by a non-resident.
6.3 Are there any employment limitations or requirements which may impact on foreign investment in renewable energy projects? There are no specific employment limitations or requirements that may impact foreign investments. Nevertheless, investors should obtain permission to attract foreign employees, the quantity of which is regulated by the relevant quota.
6.4 Are there any limitations or requirements related to equipment and materials which may impact on foreign investment in renewable energy projects? RES auction winners are required to use only new equipment for the construction of RES facilities. In Kazakhstan, direct subsidies as a support are provided to autonomous renewable plants up to 5 kW. The mechanism covers up to 50% of investment costs, provided that the equipment was manufactured in Kazakhstan. However, the local equipment manufacturing industry is currently in its infancy in Kazakhstan and the purchase of local equipment (if available) may be unprofitable due to the high cost.
7 Competition and Antitrust
7.1 Which governmental authority or regulator is responsible for the regulation of competition and antitrust in the renewable energy sector? The Agency for the Protection and Development of Competition (Antimonopoly Agency) is the national governmental authority responsible for: managing the protection of competition and limitation of monopolistic activities; control and regulation of activities classified as state monopoly; as well as state control and licensing of activities in the field of commodity exchange, including the renewable energy sector.
7.2 What power or authority does the relevant governmental authority or regulator have to prohibit or take action in relation to anti-competitive practices? The Antimonopoly Agency can initiate an investigation upon receipt of a complaint or at its own initiative. It can also request the information necessary for conducting the investigation from any entity operating on the market or from state bodies. Upon completion of proceedings, the Antimonopoly Agency may impose fines or remedial measures and terminate contracts that violate the competition legislation.
7.3 What are the key criteria applied by the relevant governmental authority or regulator to determine whether a practice is anti-competitive? Horizontal agreements are prohibited if such agreements may result in or lead to: the establishment or maintenance of prices (tariffs), discounts, extra charges (extra payments) and/or markups; the increase, decrease or maintenance of prices at the auctions, or the misrepresentation of the results of trades, auctions and contests, including by dividing by lots; the division of the commodity market on a territorial basis, the volume of sale or purchase of goods, the range of goods sold or the composition of sellers or customers (clients); the reduction or termination of the goods production; or the refusal to conclude contracts with certain sellers or customers (clients).
Vertical agreements between market entities are prohibited if such agreements result in or lead to the establishment of the resale price of the goods, unless the seller establishes for the customer (client) the maximum resale price of the good. Such an agreement provides for the obligation of the customer (client) not to sell the goods of a market entity that is a competitor of the seller. This prohibition does not apply to agreements on the organisation by the customer of the sale of goods under a trademark or other means of individualisation of the customer or producer; such an agreement provides for the seller’s obligation not to sell goods to a market entity that is a competitor of the customer (client).
The concerted actions of market entities engaged in the production and sale of goods aimed at restricting competition are prohibited, including those concerning: the establishment and/or maintenance of prices or other conditions for the purchase or sale of good; the unreasonable restrictions on the production or sale of goods; the unreasonable refusal to conclude contracts with certain sellers (suppliers) or customers; and the application of discriminatory conditions to equivalent contracts with other entities.
8 Dispute Resolution
8.1 Provide a short summary of the dispute resolution framework (statutory or contractual) that typically applies in the renewable energy sector, including procedures applying in the context of disputes between any applicable government authority/regulator and the private sector. There is no specific dispute resolution framework applicable to renewable energy. Mainly, disputes are resolved through litigation or arbitration. The parties to the agreement may specify in the contract the arbitration clause, except in cases where the dispute can be resolved only in the state courts of the Republic of Kazakhstan. Currently, AIFC courts and arbitration are gaining popularity among parties when stipulating dispute resolutions in agreements. AIFC is a financial hub, attracting, implementing and protecting local and foreign investments based on the common law.
8.2 Are alternative dispute resolution or tiered dispute resolution clauses common in the renewable energy sector? The Kazakhstan court system consists of three layers: court of the first instance; Appellate court; and Supreme court. Mainly, disputes in the RES sector are resolved by litigation or arbitration. Under model PPAs with the FSC, disputes may be resolved by the International Arbitration Centre of AIFC. Before concluding the Arbitration Agreement, the FSC shall make a request to the Ministry of Energy for consent to conclude such agreement.
8.3 What interim or emergency relief can the courts grant? Under the Kazakhstan legislation, claimants may apply to the court for an injunction in order to secure their claim at any stage of litigation proceedings. Injunctions include, but are not limited to: imposition of arrest on property owned by the defendant and held by him/her or other citizens; the prohibition of the defendant to perform certain actions; prohibition of other persons to transfer property to the defendant or perform other obligations in relation to him/her, as provided by the law or contract; suspension of the sale of property in the event of a claim for the release of property from seizure; suspension of the contested legal act of a state body or local government body; suspension of recovery upon an enforcement document contested by a debtor in the court proceedings; suspension of bidding for out-of-court sale of the item under the loan; suspension of the disputed acts and actions of the judicial executor connected with the address of collecting on the property made in the enforcement proceeding.
8.4 Is your jurisdiction a party to and has it ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and/or the Convention on the Settlement of Investment Disputes between States and Nationals of Other States and/or any significant regional treaty for the recognition and enforcement of judgments and/or arbitral awards? Kazakhstan has been a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards since 1995. Although Kazakhstan has not formally ratified the Convention, it is considered binding with regard to the enforcement of foreign arbitral awards.
8.5 Are there any specific difficulties (whether as a matter of law or practice) in litigating, or seeking to enforce judgments or awards, against government authorities or the state? Under the Kazakhstan legislation, a party may protect its interests by all available legal means, starting from filing a lawsuit in court and ending with indispensable measures of decision executions. Generally, there are no difficulties litigating against government authorities.
8.6 Are there examples where foreign investors in the renewable energy sector have successfully obtained domestic judgments or arbitral awards seated in your jurisdiction against government authorities or the state? There are no such cases yet.
9 Updates and Recent Developments
9.1 Please provide a summary of any recent cases, new legislation and regulations, policy announcements, trends and developments in renewables in your jurisdiction. The Ministry of Energy and stakeholders are working on amendments to the RES legal framework related to tariff indexation, improvement of pre-qualification requirements in the auction bidding process, further development of small-scale renewables, and establishing energy storage requirements. The Strategy on Achieving Carbon Neutrality of the Kazakhstan Republic 2060 is currently being developed. Kazakhstan has set an ambitious goal to become carbon neutral by 2060, with renewable energy indicated as one of the key tools to achieve this goal.
The government considers green hydrogen an alternative source of energy, which will play a significant role in decarbonising the economy. Green Hydrogen Alliance has been established recently by key players, consultants and governmental authorities. The development of green hydrogen requires a comprehensive legal framework for deployment, including safe transportation and storage.
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