Analysis of 1000 MW Wind Power Projects: Comparative Assessment of Market-Based and Intergovernmental Approaches

Comparative Analysis of RES Investment Models in Kazakhstan

Amid the active development of Kazakhstan’s renewable energy sector, the efficiency of investment mechanisms used for large-scale energy projects has become a particularly relevant issue.

This analytical review compares two simultaneously implemented models of RES support: the market-based model (via open auctions held by KOREM JSC) and the non-auction model (based on Intergovernmental Agreements – IGAs). Special attention is paid to the financial, legal, and institutional risks arising from the coexistence of two unaligned approaches.

1. Financial Burden:

• The tariff under IGAs is at least 18% higher than the result of the market auction held on April 15, 2025, by KOREM JSC, leading to an overpayment of over $437 million over 20 years, and an additional $109 million in the following 5 years for just one IGA (the PPA contract under IGA lasts 25 years).
• Kazakhstan plans to sign 5 IGAs totaling 4.8 GW, which will result in a total overpayment of $2.6 billion for the market and its participants over the entire contract period.

2. Legal and Market Disproportion:

• Auction projects are implemented in accordance with the legislation of the Republic of Kazakhstan, while IGA-based projects create legal precedents for exceptions, including minimal participation of Kazakhstani companies.

3. Decline in Market Trust:

• Granting privileges to IGA-based projects undermines the credibility of the competitive auction system, which has already demonstrated its effectiveness.

4. Risks of a “Parallel Model” for RES Development:

• The development of two models (auction-based and IGA-based) without unified rules may lead to sector imbalance, reduced investor confidence, and uncertainty in the manufacturing sector.
• There is also a risk of reduced RES capacity being auctioned due to the “premature” fulfillment of national RES generation targets.