Kazakhstan

Technical assistance for the development of the energy performance contracting scheme

EXPERTISE : , Financing Mechanisms
SECTOR : , Utilities

client

UNDP United Nations Development Programme

project description

Due to its climatic conditions, Kazakhstan uses a significant amount of heat energy. It is estimated that over 50% of the urban heating demand is covered by DH systems, which are connected to large combined heat and power (CHP) plants and large central heat-only boilers (HOBs). Apart from using cogeneration as a source of heat in some systems, the DH systems have low efficiency, with heat losses reaching up to 50% of the primary energy used.

Today, Kazakhstan is paying high attention to energy savings and energy efficiency across its economic sectors. Examples of ongoing initiatives include the National Energy Saving Programme (set to run until 2015) and the new Law on Energy Saving and Energy Efficiency. Another important initiative is the Housing Infrastructure Mobilization Programme, which will run until 2020. This program includes municipal heat supply and retrofits in residential buildings. Many energy-related private companies have shown interest in improving energy services by actively taking part in the reduction of heat and energy losses in municipal heat systems during the generation, transportation and consumption phases.

The United Nations Development Programme (UNDP), as an implementing agency of the Global Environment Facility (GEF), has initiated a project focusing on private investment leverage schemes to develop the energy efficiency market in Kazakhstan’s building sector. More specifically, the UNDP/GEF project puts emphasis on the energy service company (ESCO) model, which is very attractive for building owners since the funds invested in the building’s energy savings are recovered through the achieved heat savings. Despite increased interest in the ESCO model, several barriers to ESCO creation and development as well as to the implementation of energy performance contracting (EPC) still exist.

highlights

As part of its efforts to address these barriers and promote ESCOs in Kazakhstan, the UNDP commissioned Econoler to (1) conduct an analysis of the current conditions in the country for ESCO performance, (2) identify barriers to ESCO creation and development as well as to the implementation of energy performance contracting (EPC), (3) propose recommendations on removing these barriers, and (4) conduct training for Kazakhstan specialists on energy service issues related to ESCOs and EPCs mainly in the municipal heat supply sector.

To fulfil this assignment, Econoler carried out the following activities:

  • Reviewing international experience on the development of ESCOs and energy services on the basis of EPCs, with a focus on Eastern European and CIS countries, including a review of organizational and administrative ESCO schemes, types of energy service projects, EPC models, and ESCO financing;
  • Analyzing Kazakhstan’s conditions for ESCO development and providing energy services based on EPCs, identifying current barriers and developing recommendations on their removal, and creating necessary conditions for ESCO development in municipal heat supply;
  • Developing the agenda and training modules for the training on ESCO creation and operation for Kazakhstan specialists, including the following sections: organizational and administrative ESCO schemes, legal and regulatory framework for ESCO activities, types of energy service projects, energy auditing, models and formats of EPCs, economic analysis and software for the economic assessment of projects, risk assessment, and development of business plans for financing;
  • Conducting a mission to Kazakhstan to present the results of the first two activities mentioned above and to conduct training for Kazakhstan specialists. At the end of the training, the participants had the theoretical knowledge and practical skills required for the creation and further operation of ESCOs and the preparation of EPCs and business plans for financing.

At the end of this assignment, Econoler presented the findings of the first two activities at a workshop which brought together government and municipal officials.

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