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Since 2019 legislative framework in the renewable energy sector
of Kyrgyzstan has been constantly changing to create effective and
viable mechanisms. In 2020 the Government of Kyrgyzstan adopted a
number of regulations, among which the main one is the Regulation
on the Conditions and Procedure for the Generation and Supply of
Electricity from Renewables (the “Regulation”) . The
Regulation determines the authorities of the stakeholders in
renewable energy, and establishes nine stages for the renewable
energy generation and supply within the established quotas, outside
the quotas, on a contractual basis, and for own needs, including
the procedure and conditions for such generation and supply, and
contains the requirements for maintaining the Renewable Energy
Entities’ Register (the “Register”).
According to the Regulation, there are five main stakeholders
and they have their own responsibilities in generation and supply
of renewable energy. The main stakeholders in renewable energy
sector are the following:
- Ministry of Energy;
- Department for Regulation of the Fuel and Energy Complex under
the Ministry of Energy of the Kyrgyz Republic; - Local self-government bodies (the “LSB”) and the
state registration service; - Distribution companies; and
- Renewable energy entities.
Also, the Regulation specifies the scope of the generation and
supply options:
- generation and supply within the established quotas;
- generation and supply outside the quotas;
- supply on a contractual basis; and
- generation for own use.
Renewable energy entities have the right to claim a tariff
preference for a grace period within the quotas. The Regulation
specifies that quotas are to be allocated on the “first come,
first served” basis. The Renewable Energy Law sets the
ratio equal to 1.3 for the maximum electricity tariff for the end
user for each type of renewable energy installation, if the latter
is constructed within the capacity quotas. The ratios shall be set
during the grace period, i.е. 10 years.
The Regulation identifies the following stages of renewable
energy generation and supply:
- inclusion of renewable energy entity in the Register;
- granting rights to land plot for construction of renewable
energy facility; - preparation of design documentation and electricity network
connection; - granting tariff preferences for grace period within
quotas; - obtaining a licence to sell renewable energy;
- setting tariffs for supply of renewable energy and payback
period for renewable energy facility; - conclusion of a renewable energy supply contract;
- construction of renewable energy facility; and
- acceptance and commissioning of a renewable energy
facility.
Stage 1: Inclusion of renewable energy entity in the
Register
Individuals and legal entities, foreign individuals and legal
entities, individual entrepreneurs intending to carry out and/or
carrying out activities in the field of production (in all types of
regimes) and/or supply (sale) of electricity generated from
renewables may act as renewable energy entity. Within 10 working
days upon submission of an application of required documents.
However, the legislation does not contain any requirements for the
applicants. Meanwhile, the Register must contain information on the
type and capacity of the planned renewable energy facility, the
regime of activity in the field of renewable energy and the
territory of such activity.
Stage 2: Granting rights to land plot for construction of
renewable energy facility
The rights to a land plot for the construction of a renewable
energy facility can be granted by the Land Agency or the LSB to a
renewable energy entity into ownership or use.
Stage 3: Preparation of design documentation and electricity
network connection
As part of the preparation of the design documentation for the
construction of a renewable energy facility, an environmental
impact assessment and the state environmental examination of the
renewable energy construction project are required.
Stage 4: Granting tariff preferences for grace period within
quotas
In order to obtain tariff preferences, a renewable energy entity
submits to the Ministry of Energy a written application, copies of
the title documents for the land plot, and a feasibility study for
the planned renewable energy facility.
Stage 5: Obtaining a licence to sell renewable energy
The Regulation contains references to Kyrgyzstan licencing
legislation. Generation of electricity and heat from renewables is
not subject to licencing. Sales, imports and exports of renewable
electricity and heat require a licence.
Stage 6: Setting tariffs for supply of renewable energy and
payback period for renewable energy facility
In order to obtain tariff preferences within quotas and without
quotas, for the supply of renewable electricity, a renewable energy
entity must submit to the Ministry of Energy an application and the
required documents. The grace period is a period from the
commissioning date of the renewable energy facility to the moment
when the net profit generated equals the cost of investments.
Stage 7: Conclusion of a renewable energy supply contract
A renewable energy entity that receives a grace period tariff
within quota or a tariff without quota for the payback period shall
apply to the largest distribution company in the
administrative-territorial unit in which the renewable energy
facility is located to conclude a renewable electricity supply
contract. The fulfillment of the obligations under the renewable
electricity supply contract by renewable energy entity that has
received a grace period tariff within quotas is ensured by a
guarantee deposit to be contributed by the renewable energy entity
to the Ministry of Energy’s deposit account.
Stage 8: Construction of renewable energy facility
The commencement of construction of a renewable energy facility
and its inclusion in the Register of Facilities in Construction
shall be based on the positive expert opinion for the design
documentation.
Stage 9: Acceptance and commissioning of renewable energy
facility
A renewable energy facility shall be accepted and commissioned
according to the Construction Regulation. A renewable energy
facility shall be commissioned based on a conformity assessment
certificate.
Renewable Electricity Purchase by Conclusion of Supply
Contract
Electricity generated from renewables within quotas and outside
quotas is purchased by concluding a supply contract. A renewable
energy entity shall supply electricity, which is generated by a
renewable energy facility within the quotas established by
department for regulation of the fuel and energy complex under the
Ministry of Energy (the “DRFEC”) is carried out in the
network of distribution companies at the maximum tariff for end
users by applying the multiplying ratio of 1.3 during the grace
period. Also, a renewable energy entity which is supplying outside
quotas generates in the network of distribution companies at the
maximum tariff for end-consumers, minus the electricity
company’s electricity transit costs during the payback
period. All payments are made in Kyrgyz soms. Indexation and
binding to the dollar exchange rate are not provided.
In addition to the supply of renewable electricity within quotas
and outside quotas, the Renewable Energy Law and the Regulation
provide for the possibility to purchase renewable energy on a
contractual basis, at a price determined by the parties. The
purchase of renewable electricity on a contractual basis are
governed by the general provisions of a purchase and sale contract
under the Civil Code.
The legislation of Kyrgyzstan does not provide for any other
forms/methods of renewable energy procurement such as auction or
tenders. Currently, competitive bidding is one of the most popular
policy tools for the procurement of renewable energy. The design of
auction schemes reflects each country’s priorities in terms
of technology, volume and location. Since 2018 Kazakhstan has been
deploying auctions mechanism which has already shown successful
results. Also, the other Central Asian country – Uzbekistan
deploys two-stages tender. In 2019 and 2020, the tender winner was
UAE-based Masdar which offered the lowest bid price.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
