Renewable Energy Procurement And Supply
In Kyrgyzstan: Status Quo
Since 2019 legislative framework in the renewable energy sector of Kyrgyzstan has been constantly changing to create effective and viable mechanisms. In 2020 the Government of Kyrgyzstan adopted a number of regulations, among which the main one is the Regulation on the Conditions and Procedure for the Generation and Supply of Electricity from Renewables (the “Regulation”).
The Regulation determines the authorities of the stakeholders in renewable energy, and establishes nine stages for the renewable energy generation and supply within the established quotas, outside the quotas, on a contractual basis, and for own needs, including the procedure and conditions for such generation and supply, and contains the requirements for maintaining the Renewable Energy Entities' Register (the “Register”).
According to the Regulation, there are five main stakeholders and they have their own responsibilities in generation and supply of renewable energy. The main stakeholders in renewable energy sector are the following:
- Ministry of Energy;
- Department for Regulation of the Fuel and Energy Complex under the Ministry of Energy of the Kyrgyz Republic;
- Local self-government bodies (the “LSB”) and the state registration service;
- Distribution companies; and
- Renewable energy entities.
Also, the Regulation specifies the scope of the generation and supply options:
- generation and supply within the established quotas;
- generation and supply outside the quotas;
- supply on a contractual basis; and
- generation for own use.
Renewable energy entities have the right to claim a tariff preference for a grace period within the quotas. The Regulation specifies that quotas are to be allocated on the “first come, first served” basis. The Renewable Energy Law sets the ratio equal to 1.3 for the maximum electricity tariff for the end user for each type of renewable energy installation, if the latter is constructed within the capacity quotas. The ratios shall be set during the grace period, i.е. 10 years.
- 1
inclusion of renewable energy entity in the Register;
- 2
granting rights to land plot for construction of renewable energy facility;
- 3
preparation of design documentation and electricity network connection;
- 4
granting tariff preferences for grace period within quotas;
- 5
obtaining a licence to sell renewable energy;
- 6
setting tariffs for supply of renewable energy and payback period for renewable energy facility;
- 7
conclusion of a renewable energy supply contract;
- 8
construction of renewable energy facility; and
- 9acceptance and commissioning of a renewable energy facility.
Stage 1: Inclusion of renewable energy entity in the Register
Individuals and legal entities, foreign individuals and legal entities, individual entrepreneurs intending to carry out and/or carrying out activities in the field of production (in all types of regimes) and/or supply (sale) of electricity generated from renewables may act as renewable energy entity. Within 10 working days upon submission of an application of required documents. However, the legislation does not contain any requirements for the applicants. Meanwhile, the Register must contain information on the type and capacity of the planned renewable energy facility, the regime of activity in the field of renewable energy and the territory of such activity.
The rights to a land plot for the construction of a renewable energy facility can be granted by the Land Agency or the LSB to a renewable energy entity into ownership or use.
Stage 3: Preparation of design documentation and electricity network connection
As part of the preparation of the design documentation for the construction of a renewable energy facility, an environmental impact assessment and the state environmental examination of the renewable energy construction project are required.
In order to obtain tariff preferences, a renewable energy entity submits to the Ministry of Energy a written application, copies of the title documents for the land plot, and a feasibility study for the planned renewable energy facility.
Stage 5: Obtaining a licence to sell renewable energy
The Regulation contains references to Kyrgyzstan licencing legislation. Generation of electricity and heat from renewables is not subject to licencing. Sales, imports and exports of renewable electricity and heat require a licence.
In order to obtain tariff preferences within quotas and without quotas, for the supply of renewable electricity, a renewable energy entity must submit to the Ministry of Energy an application and the required documents. The grace period is a period from the commissioning date of the renewable energy facility to the moment when the net profit generated equals the cost of investments.
Stage 7: Conclusion of a renewable energy supply contract
A renewable energy entity that receives a grace period tariff within quota or a tariff without quota for the payback period shall apply to the largest distribution company in the administrative-territorial unit in which the renewable energy facility is located to conclude a renewable electricity supply contract. The fulfillment of the obligations under the renewable electricity supply contract by renewable energy entity that has received a grace period tariff within quotas is ensured by a guarantee deposit to be contributed by the renewable energy entity to the Ministry of Energy's deposit account.
The commencement of construction of a renewable energy facility and its inclusion in the Register of Facilities in Construction shall be based on the positive expert opinion for the design documentation.
Stage 9: Acceptance and commissioning of renewable energy facility
A renewable energy facility shall be accepted and commissioned according to the Construction Regulation. A renewable energy facility shall be commissioned based on a conformity assessment certificate.
Electricity generated from renewables within quotas and outside quotas is purchased by concluding a supply contract. A renewable energy entity shall supply electricity, which is generated by a renewable energy facility within the quotas established by department for regulation of the fuel and energy complex under the Ministry of Energy (the “DRFEC”) is carried out in the network of distribution companies at the maximum tariff for end users by applying the multiplying ratio of 1.3 during the grace period. Also, a renewable energy entity which is supplying outside quotas generates in the network of distribution companies at the maximum tariff for end-consumers, minus the electricity company's electricity transit costs during the payback period. All payments are made in Kyrgyz soms. Indexation and binding to the dollar exchange rate are not provided.
In addition to the supply of renewable electricity within quotas and outside quotas, the Renewable Energy Law and the Regulation provide for the possibility to purchase renewable energy on a contractual basis, at a price determined by the parties. The purchase of renewable electricity on a contractual basis are governed by the general provisions of a purchase and sale contract under the Civil Code.
The legislation of Kyrgyzstan does not provide for any other forms/methods of renewable energy procurement such as auction or tenders. Currently, competitive bidding is one of the most popular policy tools for the procurement of renewable energy. The design of auction schemes reflects each country's priorities in terms of technology, volume and location. Since 2018 Kazakhstan has been deploying auctions mechanism which has already shown successful results. Also, the other Central Asian country – Uzbekistan deploys two-stages tender. In 2019 and 2020, the tender winner was UAE-based Masdar which offered the lowest bid price.
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- Aidossova AishaUnicase Partner