A high-altitude
and investment


Energy Sector Projects

If you take a look at Kyrgyzstan’s map, the appeal of developing power generation projects here becomes evident. Together with Tajikistan the Kyrgyz Republic is situated ‘on top of’ the region: the altitude drop from the summits to the valley is several kilometers. Glaciers form at heights over 3,500 meters, and their melting water feeds many small rivers and one particularly large river, The Naryn.

The Soviet Union built a power station on the Naryn river, feeding electricity to the surrounding areas. To balance against seasonal and decade-cycle drops in hydro power generation the USSR was planning the construction of a coal power plant on the Kara-Keche coal mine, but these plans failed to materialize.

Currently the country is looking for investors to build another big power dam on the Naryn river. The project was first owned by a State-owned Russian company INTERRAO, but the Russians got out of the project several years ago at the initiative of the Kyrgyz side, following unacceptably long delays in preparation.

What truly merits attention is the abundance of projects in the field of small scale power generation. Kyrgyzstan has several strong rivers besides the Naryn, and power generation units could be easily installed there.

Small scale power projects are actively promoted by the Kyrgyz government to potential investors. It is not hard to get a set of very detailed presentation and technical materials. Here we will just discuss three factors which must be taken into account when considering such investments.

First. If the project presumes the delivery of power into the local grid for sale in the domestic market, you should very realistically assess (1) the chances of the Government eventually raising the domestic energy tariff up to its market level and (2) the risk of non-payment by the local consumers.

Second. If the project is aimed at exporting the power to a neighbouring country, you will have to assess the potential dynamics of the power price in that country. For example, Kazakhstan currently experiences no deficit of electricity and will soon launch additional generation capacities. As far as China is concerned, we have no such information; please do your own research.

Third. Research the natural low-water cycles for the rivers where you consider installing a generation unit. There is a more or less substantiated theory that Kyrgyzstan is subject to 9-year low-water / high-water cycles which can cause the lack of hydro resources in the lowest years. Several years ago the Toktogul reservoir which holds the water in front of the main dam on the Naryn river got critically shallow (see the picture below). Now the reservoir is close to 100% of its capacity.

A big plus of developing energy projects in Kyrgyzstan is that if you have a viable business plan you can easily get the equipment for small power generation on a leasing basis, and the international finance organizations which are active in Kyrgyzstan would also most probably lend their support.

Alternative power generation

Many of those who come to Kyrgyzstan from Europe remark to the locals that ‘it seems like the sun is always shining here’. It is true: the number of sunny days in the country is around 240 per year which creates a good potential for developing solar power generation.

A number of pilot projects were launched in the country to run solar energy facilities; all of them are currently below the profitability line due to low, Government-sponsored tariffs for both consumer and commercial electricity.

However, as the KWt cost in solar panels is getting cheaper, and the capacity of batteries gets higher (for example, Tesla is actively working on it), the situation can change at any moment.

In the world there already are several countries where the solar power cost is below the commercial tariff of the local power grid. It is quite possible that within 5 years Kyrgyzstan will become such a country, too.



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