Context
Kazakhstan’s energy system remains heavily reliant on fossil fuels, with coal generating around 70% of electricity and renewables contributing only 5% of the energy mix in 2023. As the largest CO₂ emitter in Central Asia, the country’s carbon intensity is approximately 70% above the global average, according to UNECE. The energy sector accounts for roughly 85% of national greenhouse gas emissions, with electricity and heat generation responsible for more than half. Aging infrastructure further exacerbates these challenges through high transmission losses and water-intensive thermal power generation.
At the same time, Kazakhstan has vast renewable energy potential, including over 920 GW of estimated wind capacity. Combined with battery energy storage systems (BESS), renewable energy can accelerate grid decarbonisation, strengthen energy security, and support regional electricity trade with neighbouring countries such as Uzbekistan and the Kyrgyz Republic, reducing dependence on imports from Russia.
The development of these two renewable energy plants directly supports Kazakhstan’s Nationally Determined Contributions under the Paris Agreement by reducing GHG emissions and expanding renewable energy capacity.
Goals and approach to transformational change
The project supports the development of two renewable energy 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.
Beyond infrastructure, the project will demonstrate how large-scale renewable energy and storage can enhance grid stability and support the development of policy frameworks for energy storage and ancillary services. It will also foster knowledge sharing through case studies, performance data, and cost-benefit analyses, alongside capacity-building for regulators, utilities, and investors. By promoting public-private collaboration and regional exchange, the project aims to accelerate renewable energy adoption and support replication across Central Asia.
Components and support mechanisms
As part of the Financial Cooperation (FC) component, the requested 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.
The Technical Cooperation (TC) 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.
Long-term impact
The Project is expected to reduce approximately 8.9 MtCO2e over the operational period of the plants, with an estimated total lifetime of 20 years.