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The Unicase Team made a comprehensive analysis of electricity tariff formation and balancing electricity services for regulating the capacity of large and small hydroelectric power plants in Kazakhstan. We drafted amendments to the Republic legislation, analysed and reviewed the experience of the most advanced countries in terms of the tariff formation and mechanisms for attracting investment to the hydropower industry development. The Team drafted amendments to the legislation to introduce the incentive tariffs, taking into account all costs for the HPPs construction. We also assisted the Client in the introduction of incentive measures for the hydro energy system development.


Electricity Tariff Setting System for Large and Small Hydroelectric Power Plants
The Project has been of the state importance. On September 4, 2020, the Government approved the Development Plan for the Hydropower Industry for 2020-2030, which aims to ensure the security of the country's energy by an increase in flexible electric capacity to regulate daily volumes of electricity generation and consumption. One of the main impacts of the Plan is to improve the conditions for the investment projects implementation: the construction of new, reconstruction, and modernization of existing HPPs, improvement of the local legislation and the hydropower industry model. The Plan would determine the economically effective hydro potential of the Republic, create an online map to list potential hydroelectric power plant projects, analyse electricity tariff formation for large and small plants.
Currently, the legislation supports hydropower development in the field of renewable energy through auctions based on the principle of reducing the price of electricity, starting from the fixed tariffs of 2014. Despite the measures taken to introduce modern renewable energy support mechanisms in Kazakhstan (auctions, fixed tariffs), against the background of the weighted average cost of buying electricity from hydroelectric power plants in the world, the pricing system and low electricity rates remain the main reasons for relatively low investment attractiveness of projects for the power plants construction in Kazakhstan.
Impact & Outcome
When planning the construction of a hydroelectric power plant, the most complex are to estimate the facility costs and determine other technical and economic indicators. Tariff regulation is at the core of these indicators; thus, future tariffs will have a direct impact on how the hydropower generation industry develops. Our work was to establish a fair tariff formation mechanism, which would make the building and reconstruction of HEPs feasible for operators and investors, and at the same time, would remain socially affordable for the government and the people.