ADB and Samruk-Energy sign an agreement to promote efficient heat and power generation in Kazakhstan

The Asian Development Bank (ADB) and the joint stock company Almaty Electric Stations (ALES) have signed a loan of approximately $214 million to replace an inefficient coal-fired combined heat and power (CHP) plant in Kazakhstan with state-of-the-art combined cycle gas turbine (CCGT) units, significantly reducing the plant’s carbon emissions central.

The modernization of JSC Almaty Electric Stations CHP Plant 2 will increase fuel efficiency by more than 20%, significantly reduce emissions of carbon dioxide and other air pollutants, improve the city’s overall air quality and ensure that residents of Kazakhstan’s largest city can continue to heat their homes during the country’s winters.

“Kazakh winters are long and cold, and the heating season lasts for more than half a year,” said Suzanne Gaboury, ADB Director General of Private Sector Operations.

“Replacing this coal-fired facility will bring significant environmental and health benefits to the people of Almaty, while meeting their heating needs.” Kazakhstan is in dire need of decarbonization, and ADB funding will help the country achieve this transition.”

About 70% of Kazakhstan’s electricity is produced from coal, while energy-related activity, including heat and power production, accounts for more than 80% of its total greenhouse gas emissions.

Coal-fired cogeneration plants are major sources of air pollutants such as carbon dioxide and particulates. Studies estimate that the average risk of mortality attributable to air pollution is about 16,000 cases per year.

The project, a joint effort of ADB sovereign and non-sovereign teams, will also provide secondary standby generation capacity to balance the intermittency of renewable energy generation and manage load peaks. This will allow Kazakhstan’s power system operator to integrate more renewables into the country’s energy mix, helping to meet the government’s climate targets.

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In February 2023, President Kassym-Jomart Tokayev approved Kazakhstan’s long-term decarbonization strategy, which aims to achieve carbon neutrality by 2060. In May 2023, the ADB launched a new five-year strategy for Kazakhstan focused on addressing the impacts of climate change and decarbonise the economy.

The project is part of the national Green Kazakhstan project, 2021-2025, to create a favorable living environment for the population and improve the environmental conditions of the country.

In accordance with its 2021 Energy Policy, the ADB requires natural gas-fired electricity generation projects to employ the best available technologies and only supports natural gas projects in specific circumstances and according to strict criteria.

These include the global reduction in emissions, the absence of cleaner options that are technically, economically and financially viable to provide the same energy services, and the adaptation of the project to the national contribution provided for in the Paris Agreement.

Created in 2006, ALES is one of the main providers of electricity and heat for the city and the Almaty region. Samruk-Energy is a Kazakh state holding company with vertically integrated subsidiaries and joint ventures engaged in power and heat generation, as well as transmission and distribution. Samruk-Energy is the largest company in the energy sector of Kazakhstan.