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29 October, 2021

Current therapy: RF can double the supply of electricity to Kazakhstan

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Russia is ready to double its electricity exports to Kazakhstan in November 2021, said Inter RAO (a monopoly in the supply of electricity from the Russian Federation abroad). The company will carry out supplies at market prices, their increase is associated with the risk of a shortage of electricity in Kazakhstan in the coming winter. The lack of electricity in the country is mainly caused by an increase in the number of miners - they put a heavy load on the energy system, noted in Inter RAO. Experts believe that such an increase will positively affect the company's income and its position as a major exporter in the region.

Double non-standard

Russia is ready to double its electricity exports to Kazakhstan in November 2021 by increasing the power flow by 300-400 MW, Aleksandra Panina, a member of the board of Inter RAO, told Izvestia. The company will carry out additional supplies at market prices, their growth is associated with the risk of a shortage of electricity in Kazakhstan in the coming winter, she added.

- The lack of electricity in the country is mainly caused by the growth in the number of miners in Kazakhstan, they put a heavy load on the energy system, - said Alexandra Panina.

Now electricity supplies between Russia and Kazakhstan are carried out on non-commercial principles of parallel operation of power systems with a power flow of about 400 MW, said the top manager of the company. During a period of a decrease in demand for electricity, Kazakhstan supplies surplus electricity to Russia, and during a period of its shortage, it receives it from the Russian Federation at a cost without taking into account a number of services of Russian energy companies, Alexandra Panina explained. The technical possibility of organizing a scheduled supply in the discussed volumes (300-400 MW) is available, since these volumes are lower than the actual unscheduled intersystem flows existing today, the System Operator told Izvestia (it manages all the objects of the energy system in Russia).

On the eve, Energy Minister Nikolai Shulginov, during a meeting with President Vladimir Putin, said that work with the energy system of Kazakhstan today is of particular concern. The unscheduled deviation of the flow volume reaches 1–1.5 GW, the minister noted. The situation is complicated by the high accident rate of generating equipment in Kazakhstan, Nikolai Shulginov emphasized. In addition, electricity consumption in the country has increased by about 6% due to the operation of mining farms that have left China, the official added.

For Inter RAO, this increase in exports is a good volume of supplies, but since there is no data on the duration of this work and the duration of new contracts, it is difficult to assess the additional income of the company, said Anna Bodrova, senior analyst at IAC Alpari.

Power and revenue

In the first half of 2021, Kazakhstan occupied 7% of the volume of exported electricity, and, apparently, we are talking about an income of 1.5-2 billion rubles for 2022 instead of the standard 0.7-1.5 billion, the executive director estimated of the Capital Market Department of IC "Univer Capital" Artem Tuzov.

An increase in electricity exports to Kazakhstan may somewhat reduce the cost of capacity for Russian consumers, but the magnitude of such a decrease will depend on the delivery schedule, noted in NP Market Council.

If electricity supplies to Kazakhstan double or more, this will enable Inter RAO to increase its revenue by 1.4-1.8 billion rubles, says Aleksey Faddeev, Deputy Head of the Special Projects Department of the Fuel and Energy Complex Research Department of the Institute for Problems of Natural Monopolies (IPEM) ... Such a decision will also help to confirm Russia's status as a reliable supplier of electricity, and with a relatively low carbon footprint, he added.

It is possible that additional supplies of electricity abroad in the autumn-winter period may lead to the fact that less efficient power plants will be loaded in the day-ahead market (DAM) trading schedule, which is fraught with price growth, said Alexey Faddeev. Thus, one can expect an increase in the price of electricity for commercial consumers on the DAM, although it is difficult to quantify this effect, the expert concluded.

Kazakhstan is a key partner of Russia and Belarus in the Eurasian Union, therefore, it is important for Inter RAO to increase its presence in this region, noted Andrey Loboda, an expert on financial communications. It is quite possible that Minsk, Moscow and Nur-Sultan will launch a single energy market by 2025, so the current supplies can be identified as commercial, but at “human” prices compared to the stressful situation in the EU and other Western countries, the expert said.

In the first nine months of 2021, Inter RAO reached a historic maximum in electricity exports in 10 years, the company said on October 27. The volume of foreign supplies for this period amounted to more than 15.6 billion kWh, 85% higher than in the same period last year. Exports to Finland (3.2 times), the Baltic countries (1.5 times) and Georgia (2.9) grew especially, the company said in a report. The increase in supplies is associated with an increase in electricity consumption in a colder winter and spring in 2021 and hot summer weather against the backdrop of low water content and a decrease in output at wind farms. The price factor also played a role. In Europe, energy carriers have risen in price due to the growth of quotas for CO2 emissions for thermal generation.