Supporting the renewable energy transition in Kazakhstan

Kazakhstan’s renewable energy capacity has expanded rapidly in recent years, but renewables still produced less than 7 per cent of total electricity output at the end of 2025. Progress has been constrained by structural barriers, rather than a lack of resource potential or political commitment. Key obstacles include an embedded dependency on fossil fuels, limited grid capacity to absorb rising renewables output, and an underdeveloped legal and regulatory framework that did not sufficiently encourage privately financed renewable energy projects.

To tackle this and meet its goal of carbon neutrality by 2060, Kazakhstan has put in place a national programme to modernise grid infrastructure and signed a memorandum of understanding on creating the Just Energy Transition country platform for Kazakhstan (QaJET). QaJET is designed to mobilise large-scale investment in support of climate resilience, energy security and the country’s decarbonisation objectives. Its aims for 2035 include supporting the deployment of at least 10 GW of renewables, mobilising US$ 20 billion in investment and reducing annual greenhouse gas emissions by more than 20 million tonnes.

The EBRD has taken a holistic approach to supporting Kazakhstan’s development of renewable generation and infrastructure, including:

• strengthening grid and distribution networks
• helping to shape the enabling framework for competitive, transparent renewable energy auctions and power purchase arrangements (PPAs)
• broader renewable sector policies to crowd in private investment.

This is embedded in the Bank’s Kazakhstan Renewables Framework, co-funded by the Green Climate Fund. Launched in 2016 and expanded into a second phase in 2019, the framework provides a platform to finance renewable energy generation and grid integration, and complements these investments with policy and technical support.

Through the framework, the EBRD has supported an increase in renewable capacity across the country, including a portfolio of utility scale wind and solar projects, as well as strengthened grid infrastructure. As of the end of 2025, the framework had backed nine renewable energy projects with total capacity of 496 MW. The first phase also attracted four new international private investors. In parallel, the project has supported development of Kazakhstan’s policy framework for renewable energy, including strengthening auction design, improving PPA provisions – such as extending renewable PPA contracts from 15 to 20 years – and supporting site-specific wind auctions. Two wind auctions for a combined 150 MW under the new auction design were completed in 2022 and delivered record-low prices for wind power. The new PPA framework also enabled the launch of a competitive reverse auction mechanism for renewables in 2018. .

Collectively, these changes boosted the bankability of renewable projects and reduced risks for private investors by improving revenue predictability, decreasing currency-related risks and strengthening payment security for renewable projects. This has helped to lower financing costs and enable more competitive auction pricing. The changes have also strengthened the creditworthiness of the country’s sole renewable energy offtaker, the Financial Settlement Centre for Renewable Energy (FSC).

The improved operating environment helped secure the signing of the landmark 1 GW Mirny wind energy project, which is integrated with 600 MWh of battery storage. The scale of the project reflects not only the expansion of Kazakhstan’s renewable energy ambitions, but the increasing confidence of financiers and partners in the country.

Kazakhstan’s renewable energy sector has experienced market-wide transformation over the past five years.

Early EBRD supported projects demonstrated that utility scale renewable energy could be commercially financed, constructed and operated in a market with limited prior experience of privately financed clean energy. By providing proof of concept, these projects helped reduce perceived execution and policy risks and contributed to growing confidence among investors, lenders and policymakers.

As market activity and confidence continued to increase, competitive procurement processes evolved and private sector participation expanded. Kazakhstan’s auction system matured, including a shift towards site specific auctions and the preparation of pilot auctions combining wind generation with battery energy storage. Since the introduction of competitive auctions in 2018, Kazakhstan had held competitive tenders totalling 5,725 MW and successfully awarded 5,195 MW as of June 2025, with strong participation from domestic and international developers, such as TotalEnergies, and a marked decline in tariff levels, reflecting increased market maturity and competition.

Improvements to the PPA framework, the foreign exchange and CPI indexation of feed-in tariffs and auction tariffs, and stronger institutional backing for FSC reduced key revenue and currency risks across the market. By improving predictability, limiting exposure to currency volatility and lowering financing costs, these changes enabled more competitive auction outcomes and reduced reliance on concessional finance. The result has been a shift from demonstrating that renewable energy is feasible in Kazakhstan to establishing conditions under which it can scale sustainably, supported by growing private investment and an increasingly competitive market structure.

The strong government commitment to decarbonisation and renewable deployment created space for policy reforms and partnership. This also enabled close cooperation with government institutions, the grid operator, renewable developers and concessional finance partners, amplifying the impact of the EBRD’s work and ensuring it aligned with national priorities.

The sequencing of investment and reform, the framework approach and targeted risk reduction measures were critical to crowding in private capital.

Lessons learned included:

• Combining finance with policy dialogue and technical assistance delivers stronger systemic results than standalone investments.
• Reforms that support project bankability are as important as resource potential in attracting private capital.
• Grid integration must be addressed early to avoid bottlenecks as renewable penetration rises.• Demonstration projects can unlock broader policy and market confidence.