ADB, Almaty Electric Stations sign $214m loan to promote efficient heat and power plant

“Kazakh winters are long and cold and the heating season lasts for more than half a year,” said ADB Director General for Private Sector Operations Suzanne Gaboury.

 The Asian Development Bank (ADB) and Joint Stock Company Almaty Electric Stations (ALES), wholly owned by Samruk-Energy JSC (Samruk-Energy), have signed a 98 billion Kazakhstan tenge local currency loan (around $214 million) to replace an inefficient coal-fired combined heat and power plant (CHP) in Almaty with state-of-the-art combined cycle gas turbine (CCGT) units, significantly cutting the plant’s carbon emissions.

Upgrading the JSC Almaty Electric Stations CHP Plant 2 will increase fuel efficiency by more than 20%, significantly reduce carbon dioxide emissions and other air pollutants, improve the city’s overall air quality, and ensure residents of Kazakhstan’s largest city can continue heating their homes through the country’s winters.

“Kazakh winters are long and cold and the heating season lasts for more than half a year,” said ADB Director General for Private Sector Operations Suzanne Gaboury. “Replacing this coal-fired facility will deliver significant environmental and health benefits to the people of Almaty while addressing their needs for heating. Kazakhstan urgently needs decarbonization, and ADB financing will assist the country in achieving this transition.”

About 70% of Kazakhstan’s electricity is produced from coal while energy-related activity, including heat and electricity production, accounts for more than 80% of its total greenhouse gas emissions. Coal-fired CHPs are major sources of air pollutants such as carbon dioxide and particulate matter. Studies estimate the average mortality risk attributable to air pollution to be about 16,000 cases per year.

The project, a joint effort of ADB sovereign and non-sovereign teams, will also provide secondary reserve generation capacity to balance the intermittency of renewable energy generation and manage peak loads. This will allow Kazakhstan’s power system operator to integrate more renewable energy into the country’s power mix, helping to meet the government’s climate targets.

In February 2023, President Kassym-Jomart Tokayev approved Kazakhstan’s long-term decarbonization strategy which aims to achieve carbon neutrality by 2060. In May 2023, ADB launched a new 5-year strategy for Kazakhstan focused on addressing the impacts of climate change and decarbonizing the economy.

The project is part of the Green Kazakhstan, 2021–2025 national project to create a favorable living environment for the population and improve environmental conditions in the country.

As guided by its 2021 Energy Policy, ADB requires natural gas-based power projects to employ the best available technologies and only supports natural gas projects under specific circumstances and in accordance with strict criteria.

These include ensuring overall emission reductions; the absence of cleaner options that are technically, economically, and financially viable for providing the same energy services; and the project’s alignment with the country’s nationally determined contribution under the Paris Agreement.

Established in 2006, ALES is a major supplier of electricity and heat to Almaty City and the Almaty region. Samruk-Energy is a Kazakhstan state-owned holding company with vertically integrated subsidiaries and joint ventures engaged in power and heat generation as well as transmission and distribution. Samruk-Energy is the largest power sector company in Kazakhstan.