What are the difficulties faced by investors of small hydropower plants in Kyrgyzstan

The green agenda is becoming a key topic for many countries, and Kyrgyzstan is no exception. In an interview with the publication 24.kg President of the Association of Small Hydropower Plants of Kyrgyzstan Elvira Borombayeva told what conditions and legislative changes are needed to develop hydropower in the republic:

— What steps, in your opinion, should the government and the private sector take to accelerate the development of renewable energy sources?

— Energy needs are growing daily, this is due to the increase in population and the development of technology. It is important to expand the production and use of renewable energy sources to ensure a cleaner future for the next generations. The task before the state is ambitious, and for the private sector, the key factor remains the political will of the country’s leadership and the improvement of the regulatory framework. Now there is a will — over the past three years we have seen positive developments. We have been heard, we have held many negotiations with the Cabinet, and most of our proposals have been accepted.

In 2021, at the International Renewable Energy Development Forum in Bishkek, we outlined our requirements for the conditions that are necessary for the development of the sector. Now these conditions are being implemented. In 2022, the Law “On Renewable Energy Sources” was adopted, which changed the terms of granting benefits and introduced new preferences and guarantees for the sector. New terms such as “microgeneration” have appeared in the document.

But despite the progress, there are still a number of issues that need to be addressed. Among the relevant ones is the transformation of land plots related to the water fund. We propose to give it to the district administrations to save time and resources. In addition, we expect the creation of a working group to develop mechanisms for indexing electricity tariffs in national currency to foreign currencies.

In the legal framework governing our activities, there are moments that are difficult to perceive not only by local businesses, but also by foreign partners. Therefore, for the rapid growth of the sector, it is necessary to simplify regulation, especially given our deficit of 3 billion kilowatts. We need government support not only to meet domestic demand, but also to export. To achieve this, we need clear and transparent rules.

To date, more than 130 applications for the construction of renewable energy facilities have been submitted to the Green Energy Fund under the Cabinet of Ministers, which confirms the business’s willingness to invest. Small hydropower can also provide a significant share of new capacities in the regions and show the potential of the private sector to achieve these goals.

— What changes in legislation and interaction with government agencies will make the renewable energy sector more attractive to investors?

— To achieve our goals, we need “long” money, simplified rules and minimization of state participation in the form of bureaucratic barriers. We are ready for dialogue and are confident that it is quite possible to triple the generation of renewable energy sources by 2030. Moreover, if the necessary conditions are created, this result can be achieved even earlier. However, stable and understandable rules, clear legislative regulation and fewer changes in the regulatory framework play a key role here.

We often come across regulations of the Ministry of Energy that complicate the situation. So, a few months ago one of them was canceled, which led to confusion. We would like to see more interaction with the Ministry of Energy, especially given that we are an organized sector. Every new regulation and resolution concerning our work affects us and, unfortunately, reduces the confidence of financial institutions and potential investors.

I think it is important to build a synchronous and balanced policy, where the state and the private sector will work closely together to achieve common goals.

— What difficulties does an investor who wants to build a hydroelectric power station in Kyrgyzstan face?

— Now the main problem is the starting position. If we compare with European countries, then there the investor comes to a certain government agency, reports the approximate parameters of the future facility — the number of megawatts or kilowatts — and receives ready-made documents, including a feasibility study and a land plot. These sites are prepared in advance, regardless of the type of renewable energy, whether it is hydropower, solar or wind energy. All the necessary data is collected there and there is technical support. Engineers can professionally evaluate the site and correctly design the territory for the successful implementation of the renewable energy project.

Steps have also been taken in this direction in Kyrgyzstan, a Green Energy Fund has been created, but it lacks sufficient technical base and qualified specialists who could deal with these tasks. As a result, the investor has to look for a land plot on his own, which greatly complicates the process. The idea of a “single window” may have been good, but so far it remains unrealized in practice.

Today, investors who want to start a project are forced to look for land themselves and go through competitive procedures. It takes a lot of time and resources: they choose a location, determine the coordinates for the project, and then risk that another company may win the competition. The Ministry of Energy could perform these functions through one of its departments without creating a new intermediary body.

— What can you offer to improve the interaction between the state and the private sector in the field of renewable energy?

— I propose to create a permanent working group or council under the government in order to establish interaction between the state and business in the field of renewable energy. This would help us better coordinate efforts and make more effective decisions.

The council could include representatives of the Presidential Administration, the Ministry of Energy, business associations and companies in the field of renewable energy, experts. It would simplify communication and make the decision-making process more open. This is important in order to avoid situations where new rules are introduced without discussion with the business, which leads to misunderstandings and unnecessary difficulties.

I think council meetings could be held once a quarter, and more often if necessary. At them we could discuss new initiatives, for example, changes in tariffs, even before their implementation. This would help to identify potential problems in advance and adjust the rules so that they do not interfere with the development of the industry. It is also important to record all offers and make them available to market participants in order to build trust and reduce bureaucracy.

In addition, we could work together to develop plans for the development of renewable energy infrastructure, take into account current energy needs and allocate zones for projects. To do this, it is useful to hold seminars and forums where businesses and government agencies will be able to exchange ideas and find partners.

Another step is the creation of a single information platform with data on all renewable energy projects. This would allow market participants to get up-to-date statistics and track changes in real time. It would also be possible to post instructions and requirements for investors and developers on the platform to facilitate the launch of their projects.

For example, in Europe, coordination councils help to involve the private sector in strategic decisions, which creates a predictable and stable environment for investment. In Asia, accelerated renewable energy support programs are being implemented, including tax incentives and subsidies, and close interaction with business to coordinate initiatives.

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