Kazakhstan began to buy electricity from the Russian Federation at a higher price due to new trade rules

As Kommersant found out, Kazakhstan began to buy electricity from the Russian Federation at a higher price due to new trade rules between countries. The average delivery cost in the second half of 2023 increased by almost a third, exceeding 5 rubles. for 1 kWh. Kazakhstan, according to analysts, will increase the purchase of electricity from the Russian Federation, since it is experiencing a deficit due to long-term underfinancing of its own generation.

After the launch of the energy market on July 1, 2023, Kazakhstan increased the volume and cost of purchasing electricity from the Russian Federation, as follows from data from local regulators, which Kommersant analyzed. Judging by customs statistics, from July to December last year, Kazakhstan bought more than 3 billion kWh from the Russian Federation, which is 156% more than the supply for the same period in 2022. Cost: $172 million (175% increase). The average supply price in dollars increased by 7.5% year-on-year, to $0.057 per 1 kWh, and in rubles – by almost a third, to 5.4 rubles.

Kazakhstan buys most of its electricity from the European part of the Russian Federation and a smaller share from Siberia. Volumes and prices of supplies from the Russian Federation have increased as trade rules between countries have changed. Kazakhstan is obliged to plan the purchase of electricity from the Russian Federation for each hour of delivery on the next day. From July 1, the volume of electricity that Kazakhstan buys above the plan costs more, according to data from KOREM JSC (energy market regulator). In particular, the delivery price includes the profitability of Inter RAO (monopoly exporter of the Russian Federation) in the amount of 2.5% instead of the usual 0.5%. During peak hours of loading the Russian energy system, the wholesale price (excluding transmission tariffs) for Kazakhstan exceeded the plan above 52 tenge, or 10 rubles. for 1 kWh. Previously, Kazakhstan paid for these volumes below the market (“Kommersant” wrote about the problem on October 28, 2021).

Kazakhstan is extremely inaccurate in planning the purchase of electricity from the Russian Federation. The Ministry of Energy of Kazakhstan told Kommersant that from July to December the republic purchased about 2.96 billion kWh. The volume of purchases in excess of the plan for this period amounted to 0.91 billion kWh, that is, about 30% of the total supply, according to data from KOREM JSC. The total cost of delivery above the plan is RUB 3.27 billion. with an average price of 3.53 rubles. for 1 kWh. In December 2023, purchases in excess of the plan amounted to 303.2 million kWh for 1.1 billion rubles.

In January and February of this year, the total volume of exports from the Russian Federation to Kazakhstan was 697.3 million kWh, of which the planned supply amounted to less than half (250 million kWh), the country’s Ministry of Energy told Kommersant. The total cost of delivery over the plan for two months is 1.65 billion rubles. at an average price of 3.66 rubles. Poor consumption planning in Kazakhstan is caused by an extremely small number of metering devices. Inter RAO declined to comment.

Purchasing electricity from the Russian Federation in excess of the plan is unprofitable for Kazakhstan. The average monthly price of wholesale electricity within the country (equal to the price of a single buyer) ranges from 12.9–14.5 tenge, or 2.2–2.9 rubles. per 1 kWh, according to estimates by the analytical company SCM Market Predictor. According to SCM Market Predictor estimates, from July 2023 to February 2024, about 27 billion kWh were sold within the framework of the launched wholesale energy market in Kazakhstan, of which 36% was sold at centralized auctions (analogous to the Russian day-ahead market). Kazakhstan buys approximately 5% of demand from the Russian Federation during peak shortage hours, and a small volume of up to 0.5% is purchased from Kyrgyzstan.

The price for supplying electricity from the Russian Federation to Kazakhstan looks quite market-based, says Sergei Sasim, director of the Center for Electric Power Research at the Higher School of Economics. Moreover, at the end of 2023, the single-rate price in the first price zone (the European part of the Russian Federation and the Urals) was about 2.78 rubles. for 1 kWh, and in the second (Siberia) – 2.32 rubles, which is even slightly lower than the average price of a single buyer on the Kazakhstan market in some months, the analyst clarifies. Moreover, the wholesale price of the Russian market already takes into account large-scale generation renewal programs, which also made it possible to meet export needs, Mr. Sasim points out: “If we take into account the absence of the marginality principle in the Kazakhstan market, we can assume that the objective market price in the republic should be significantly higher and is restrained through non-market mechanisms.”

Sergei Rozhenko from Kept believes that a structural deficit of electricity will remain in Kazakhstan in the medium term. Reasons: steady growth in demand up to 30% by 2030, as well as systemic underinvestment in traditional generation. Some management decisions to increase coal capacity have been made, but the construction process is slow (five to seven years), therefore, he believes, the situation should not be significantly improved in the near future.

Polina Smertina; Alexander Konstantinov, Astana