Kazakhstan: Sergey Agafonov: Europe has equipped 1.3 million balconies with solar panels, yet we cannot connect a solar station to the 'Dama'

Kazakhstan’s energy sector is on the brink of a major transformation. Aging grid infrastructure, rising tariffs, and stringent international environmental commitments are forcing domestic businesses to seek alternatives to traditional energy sources. Sergey Agafonov, head of Green Platform, told Exclusive.kz why solar power plants pay for themselves in five years, when banks will start financing green generation on a large scale, and why summer blackouts may become the new norm in Central Asia.

– In October, many of us felt the shock of rising electricity tariffs. And this is just the beginning. What arguments are there for businesses to start installing alternative equipment right now?

– One of the main incentives is indeed the rise in tariffs. I support their increase and continue to argue that current electricity and heat tariffs have not yet reached their true value. My forecast is a rise of about 20%, which will occur over the next three to four years, roughly until 2030. After that, tariffs should be indexed at a rate that outpaces inflation.

However, the distributed generation sector plays a fundamental role. As of the end of the first nine months of 2026, the share of renewable energy sources (RES) in Kazakhstan’s energy balance stood at 8.4%. Since 2019, this figure has increased approximately fourfold, having been around 2% at that time. When deploying large-scale RES (we have declared several gigawatt-scale projects), it is equally important to introduce a comparable volume of distributed generation in parallel. This enhances the resilience of the power system, as generation is distributed across the grid rather than concentrated in specific locations.

In Germany, where the share of RES reaches 60%, approximately 60–65% of solar energy comes from rooftop generation. The country has already equipped 1.3 million balconies with solar panels. Households provide their spaces and receive discounts on electricity, while the power system gains stability. By 2050, the share of RES in Kazakhstan’s energy balance will be at least 50%, and all indicators point in that direction.

– Under the old tariffs, the payback period for installing such equipment ranged from three to seven years. How will the increase in tariffs affect the payback period?

– The tariff rate is an important factor, but there are also factors such as insolation and the intensity of solar radiation. In northern Kazakhstan, the capacity utilization factor (CUF) is around 10–11%, while in the south, when using trackers, it can reach 20–21%. Another important indicator is the cost of capital; however, there is currently no extensive range of financial instruments. If we are talking about venture capital with low interest rates, the payback period in the south can be as short as two years. In the north, it is 3–4 years. On average, solar power plants are recouped in no more than five years, while the upper limit of seven years is more characteristic of household energy storage systems.

– In Uzbekistan, the state subsidizes the installation of alternative energy sources. What is the situation in Kazakhstan, and why are there so few such mechanisms?

– We do not have financial instruments, but I am closer to the Western European experience, where the market is stimulated rather than directly managed by the state. In Europe, one of the most in-demand instruments is a form of leasing, where a bank provides funds for the purchase of a solar power plant, and the household repays the loan gradually.

After all, leasing in Kazakhstan is highly developed, with approximately 90% of agricultural machinery acquired through this scheme. However, leasing companies do not yet recognize solar power plants as eligible assets. Meanwhile, a tractor has a service life of 8–10 years, whereas a solar power plant will last at least 20–25 years, producing a liquid commodity with a constantly rising price. Manufacturers provide warranties on panels for up to 30 years. My forecast is that within a three-year horizon, banks will begin to intensively conclude leasing agreements for the installation of solar power plants, and this will become a mass phenomenon.

– A year ago, you stated that banks were reluctant to finance such projects. Has the situation changed?

– The situation has not changed significantly. Banks and leasing companies need to see working models that ensure loan repayment and profitability. The first such model is the Abai sewing factory. After nine months of operation, it became clear that approximately 90% of the factory’s energy consumption would be covered by the installed solar power plant, with a 15% discount. The project was financed with venture capital.

By the end of October, we plan to announce the launch of another project in the city of Saran in Karaganda Region. For the first time in Kazakhstan, a solar power plant will be installed under a leasing scheme. Once we demonstrate this model and the investment return to financiers, I am confident that similar projects will be scaled up.

– What does the solar panel market in the country look like in terms of imports and local production?

– This is an extremely painful topic. Currently, Chinese equipment dominates, accounting for approximately 60–70% of the global market. Domestic manufacturers do exist, but we lack full-fledged protectionism. The import of foreign equipment is exempt from VAT, meaning we are incentivizing foreign producers. China itself abolished export preferences for its own manufacturers on April 1, while we have maintained the exemption on imports. To develop our own production, this preferential VAT must be abolished. Chinese and European panels should become more expensive within Kazakhstan, so that all parties are on equal footing.

– Is a state program needed to stimulate the generation of alternative energy?

– Unfortunately, we have not yet been able to include the solar power plant in the list of projects eligible for funding by the Damu fund. I would prefer a National Energy Efficiency Project, which would require administrative support. Therefore, for now, the main factor pressuring this sector remains tariffs.

Moreover, distributed generation produces carbon credits that can be sold on international markets. There is enormous potential in establishing the collection of carbon credits at the retail level. Distributed generation shortens the distance for electricity transmission and encourages a reduction in grid losses.

– Nevertheless, have you managed to launch a pilot project on the territory of the Saryarka Special Economic Zone?

– Yes, Green Platform Industries won the competition to install a 1 MW pilot power plant in the Saryarka SEZ. Residents of the SEZ purchase energy from the wholesale market, where tariffs have recently become higher than those on the retail market. Since 1 MW is a small capacity, all the generated electricity will be used for the needs of the SEZ itself (to compensate for grid losses and for operational purposes).

The second key role of this project is to alleviate bottlenecks in the grid. When a Special Economic Zone (SEZ) is unable to issue technical conditions for connecting new capacities, distributed generation helps expand this capacity, thereby reducing the overall load on external transmission networks. We aim to demonstrate this operational model to investors and local executive offices (akimats) to facilitate further scaling.

– In the end, which is more cost-effective: maintaining traditional energy infrastructure or stimulating renewable energy? And how do you assess the risk of blackouts?

– This is a philosophical question of the energy transition. By 2060, Kazakhstan has committed to completely eliminating its carbon footprint. Currently, 70% of our power generation is produced from coal. By 2050, the share of renewable energy is expected to reach 50%, while nuclear power is projected to account for approximately 20–25%. The transformation of the energy sector will require significant investment, and the increase in tariffs is linked not only to the reduction of network wear and tear but also to this energy transition. Coal-fired power generation will remain in small volumes to ensure we do not lose the expertise required to operate it.

As for blackouts, the risk of their occurrence is increasing. In the past, energy operators followed the rule of "loads in winter, maintenance in summer." However, due to extreme heat this summer, Central Asia reached its peak energy consumption in summer rather than winter for the first time in history. Due to high loads, the grid could not undergo maintenance even in the summer. The aforementioned blackout also occurred in the summer during peak load conditions. To prevent such situations, we need to expand the "bottleneck" and build direct current transmission lines to utilize the export potential with neighboring countries.

The cover illustration was generated using AI.

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