Boston, MA -- (SBWIRE) -- 11/11/2013 -- We expect demand growth in Kazakhstan to remain healthy over our 10-year forecast period to 2022, due to the country's robust economic expansion. Conventional thermal sources are to provide the bulk of new generating capacity, with gas and coal playing a central role due to the country's significant domestic resources. Kazakhstan's supply/demand gap is relatively tight and electricity imports are typically required to meet domestic power demand. We expect this trend to continue as power consumption increases over the forecast period; while Asian influence is growing in the Kazakh energy sector, we believe Russia will be the country's most important trading partner as it tries to bring nuclear capacity online.

While Kazakhstan has vast reserves of gas, the country's power industry is seeking to avoid overdependence on the fuel in electricity generation, and has a diversified policy involving coal, hydropower and renewables. Nuclear has been sidelined over the past few years, but could emerge as a key component of the power portfolio over the long term, thanks to huge uranium wealth. System losses are considerable, and improved efficiency would have the potential to narrow the supply/demand gap significantly. Ongoing high level investment in generation, transmission and distribution infrastructure is therefore necessary, and foreign partners, largely from Asia and Russia, are being lined up for the major projects.

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Key trends and developments in the Kazakh electricity market:

- Growth in Kazakh power consumption is forecast to average 4.3% per annum between 2013 and 2022. This reflects the relative immaturity of the energy market, though the risks to this forecast are largely to the upside as increased hydrocarbons-backed wealth stimulates the economy. Growth in power generation is anticipated to average 4.4% per annum over the period, which may prove insufficient to increase market coverage and ensure adequate supply, unless system losses can be reduced greatly.
- The Eurasian Development Bank's May 2013 announcement that it will provide a US94mn loan to help support the construction of a wind farm in Kazakhstan is a positive sign for the country's renewable energy industry and the wider prospects for energy security in Kazakhstan. However, and in spite of the country's hefty targets - the government expects the total share of renewable power generation to rise to 11% by 2030 - we believe that renewable energy projects will be one-off developments, as the regulatory framework is not in place to incentivise widespread investment into the renewables industry. Furthermore, the country's vast hydrocarbon reserves and nuclear aspirations are likely to draw interest away from the sector.

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