Introduction and Background: Kazakhstan’s energy system remains predominantly dependent on fossil fuels, with coal accounting for approximately 70% of electricity generation, complemented by oil and natural gas, while renewable energy (RE) sources contribute merely 5% to the total energy supply as of 2023. Thereby, Kazakhstan stands as the largest CO2 emitter in Central Asia, exhibiting a carbon intensity of GDP approximately 70% above the global average according to UNECE. The energy sector accounts for approximately 85% of the nation’s total greenhouse gas emissions (GHG), with electricity and heat generation representing over 50% of this total. Moreover, aging infrastructure compounds these challenges, leading to substantial transmission losses and continued reliance on water-intensive cooling processes for thermal power plants. Despite these constraints, Kazakhstan possesses significant RE potential, with wind power capacity estimates exceeding 920 GW. When integrated with advanced energy storage solutions such as battery energy storage systems (BESS), RE could substantially advance the decarbonisation of the national grid and facilitate cross-border electricity trade with neighbouring countries including Uzbekistan and the Kyrgyz Republic, thereby reducing dependence on electricity imports from Russia.  

The development of these two RE plants is highly relevant to the implementation of Kazakhstan’s Nationally Determined Contributions under the Paris Agreement, as it addresses two critical goals: reducing GHG emissions and expanding RE capacity. 

Project Goals and Approach to Transformational Change: The Project supports the development of two RE plants with an installed capacity of up to 2 GW wind power and 600 MW/1,200 MWh BESS, adding substantial green energy capacity to the grid while reducing coal dependency and enhancing energy security. Grant financing addresses financial barriers associated with high upfront capital costs by partially funding capital expenditures for wind turbines and BESS installations at both plants. The integration of BESS mitigates intermittency challenges commonly associated with RE sources that often impede grid connections. Construction at this scale is anticipated to stimulate local economic growth through job creation during both construction and operational phases. Moreover, development of these facilities is expected to increase installed RE capacity from 2.9 GW in 2024 to 3.9 GW upon commissioning, anticipated between 2028 and 2029, supporting Kazakhstan’s ambitious transition from coal-based generation.  

In addition, the Project incorporates a technical assistance (TA) component focused on cybersecurity risk mitigation and compliance with international standards and national grid requirements to enhance bankability and operational resilience. Beyond infrastructure development, the Project will demonstrate grid stability solutions for large-scale RE integration while supporting policy frameworks for energy storage and ancillary services. Knowledge dissemination initiatives will include case studies, performance data sharing with grid operators, and comprehensive cost-benefit analyses. Capacity building programs will train regulators, utilities, and investors on storage technologies and digital grid solutions, fostering public-private collaboration to expand investment and accelerate technology adoption. Finally, regional engagement will promote replication of successful approaches across Central Asia, including in lower-income neighbouring countries 

Project Components and Support Mechanisms: The requested Project investment grant of EUR 24.4 million will partially cover capital expenditures for constructing two wind power plants and up to 600 MW/1,200 MWh BESS, enabling financial leverage of approximately EUR 3 billion. The grant addresses financial constraints including high capital costs and extended payback periods, ensuring commercial viability and securing long-term financing currently unavailable in the market. Enhanced RE adoption will contribute to cost reductions, ultimately making renewable sources competitive with coal. Additionally, the Project’s TA component valued at EUR 600,000 will address workforce development, including increasing women’s participation in the renewable energy sector, and cybersecurity risk mitigation to ensure compliance with international standards. 

Mitigation Potential and Long-Term Impact: The Project is expected to reduce approximately 8.9 million tCO₂ over the operational period of the plants, with an estimated total lifetime of 20 years.