Modernization Efforts and National Strategy in Kazakhstan's Energy Sector: Obstacles Faced and National Blueprint
Kazakhstan Kicks Off Major Energy Sector Modernization Initiative
Kazakhstan is embarking on a comprehensive modernization of its energy sector, aiming to invest over $24.1 billion (13 trillion tenge) over the next five years to upgrade aging networks, reduce electricity losses, and improve efficiency.
The national project, launched in late 2024, encompasses the repair and construction of 86,000 kilometers of utility networks and the addition of 7.3 GW of new power generation capacity. The funding for this initiative comes from domestic and international financial institutions, banks, budget funds, and shareholder capital.
To tackle aging infrastructure and high network wear, pilot projects involving 35-36 natural monopoly entities are underway. These projects aim to reduce network wear below 40% by the end of 2025. In 2025, about 150 billion tenge ($278 million) is allocated to repair 8,500 kilometers of networks and replace approximately 42,000 equipment units. Investments will rise to nearly 1 trillion tenge ($1.9 billion) in 2026 to upgrade 9,700 kilometers of networks and replace 46,000 equipment units.
The modernization program also focuses on enhancing energy efficiency and reducing electricity losses through network modernization and equipment renewal. This should help optimize tariffs and reduce charges related to technical inefficiencies. The government has prioritized increasing domestic production value by identifying 2,786 product items worth 2.1 trillion tenge and establishing a pool of 220 local manufacturers to supply equipment, supporting the domestic economy and potentially reducing costs.
Kazakhstan is also accelerating its renewable energy deployment, especially wind and solar power. The aim is to diversify the energy mix, improve energy security, and align with global trends in clean energy, which complements infrastructure modernization and lowers long-term operational costs.
However, the project faces challenges in attracting investment and addressing workforce shortages in thermal power engineering. To address these issues, the government plans to cap utility costs for low-income households at 5% of their total income and simplify housing assistance rules to ease the transition to market-based tariffs while safeguarding vulnerable groups.
Despite these challenges, Kazakhstan's energy sector modernization initiative is a significant step towards sustainability and equitable solutions. The country aims to phase out cross-subsidizing tariffs and gradually shift to market-based pricing, promoting energy conservation, introducing a balanced electricity market, and integrating renewable energy sources to align Kazakhstan's energy consumption with global benchmarks.
Sports enthusiasts might find a refreshing break during the energy sector modernization process in Kazakhstan, as weather conditions could potentially impact outdoor activities while utility networks are being repaired and upgraded. Concurrently, the government is investing in local manufacturing to supply equipment, fostering a boom in economic opportunities in sectors beyond the energy sector.
