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Main Legal Barriers to the Development of Small-Scale Renewable Energy in Kazakhstan

Photo credit: Qazaq Green

Author: Nurlan Kubenov

Kazakhstan, endowed with vast fossil fuel resources, has historically relied on coal, oil, and gas to power its economy. However, in recent years, the country has demonstrated a growing commitment to diversify its energy mix and reduce its carbon footprint by promoting renewable energy sources. Large-scale renewable projects, such as wind farms and solar power plants, have received increasing attention and support through renewable energy auctions and international investment.

Despite this progress, small-scale renewable energy such as rooftop solar panels, small wind turbines, and biomass systems remains significantly underdeveloped. These decentralised energy solutions have the potential to bring electricity to remote areas, reduce transmission losses, enhance energy security, and engage local communities in the energy transition. However, a host of legal and regulatory barriers continues to hinder their growth.

This article examines the primary legal challenges that obstruct the development of small-scale renewable energy in Kazakhstan and proposes ways to address these issues to foster a more inclusive and sustainable energy landscape.

Complicated Permitting Procedures

Small-scale projects are often subject to the same permitting requirements as large-scale renewable energy projects. These procedures include obtaining:

Time consuming procedure for land use rights obtainment;
Burdensome grid connection approvals procedures.

For small RE producers, especially individuals or small businesses, navigating these complex bureaucratic procedures is time-consuming, costly, and often discouraging. Moreover, the centralised nature of the permitting process means that local governments have limited autonomy to streamline or facilitate approvals.

In many countries with successful small-scale renewable energy markets, such as Germany or the Netherlands, simplified or exempted permitting procedures are provided for small installations. Kazakhstan could benefit from adopting similar practices by:

Introducing “light-touch” regulations for RE systems below a certain threshold;
Creating a one-stop-shop platform for small-scale RE energy producers;
Digitising application and approval processes to reduce administrative burden.

Insufficient Net Metering and Grid Access Regulations

Net metering is a crucial mechanism that allows small-scale energy producers to feed excess electricity back into the grid and receive credit for it. Although Kazakhstan introduced a net-metering-like provision under the 2019 amendments to the renewable energy law, implementation has been limited and inconsistent.

The primary issues include:

Underdeveloped technical requirements for grid interconnection;
Deficiencies in the methodology for compensating excess energy;
Limited readiness among grid operators to integrate decentralised generation.

In addition, many utility companies continue to operate in a monopolistic manner, often perceiving small producers as a threat rather than complementary contributors to the energy mix.
To address these challenges, policy efforts may focus on:

Improve technical rules for grid connection;
Establish a fair net metering framework with clear compensation schemes.

Limited Financial Incentives and Support Mechanisms

The current financial landscape in Kazakhstan offers limited incentives for small-scale renewable energy adoption. While large projects may benefit from auction tariffs, investment preferences, and auction-based procurement, small producers have few opportunities to access similar support.
Barriers include:

High upfront costs of equipment (especially solar PV systems);
Lack of affordable financing options;
Absence of targeted subsidies or tax incentives for households or small businesses.

International experience suggests that grants, tax deductions, low-interest loans, and leasing programs are effective in making small-scale renewable energy financially viable. To encourage wider adoption, Kazakhstan may consider introducing:

Government-backed loan schemes for rooftop solar or small wind installations;
Tax credits or VAT exemptions on renewable energy equipment;
Dedicated funds or green bonds to support residential and rural renewable projects.

Gaps in Awareness and Capacity for Small-Scale Renewable Deployment

A less visible but equally significant barrier lies in the weak institutional capacity and awareness at the local level. Municipalities, local governments, and community organisations often lack the knowledge, training, and resources to support small-scale renewable energy deployment.
This results in:

Limited promotion of renewable energy options among the public;
Low levels of trust and participation in decentralised energy projects;
Inadequate enforcement of regulations and standards.

Furthermore, educational and professional training on renewable technologies, especially targeted at small systems, remains underdeveloped.
Strengthening local capacity could involve:

Conducting awareness campaigns and demonstration projects;
Offering technical training for installers, electricians, and engineers;
Empowering local governments with regulatory tools and funding to support small-scale renewable energy.

Legal Ambiguity Around Ownership and Operation Models

Kazakhstan’s legal system does not provide sufficient flexibility for innovative ownership and operation models, such as:

Energy cooperatives;
Community-owned solar farms;
Peer-to-peer electricity trading.

Current laws primarily recognise traditional producer-consumer relationships and do not account for collective ownership or decentralised energy sharing models.

This stifles innovation and prevents communities from investing jointly in renewable projects.

Updating the legal framework to support new business models would be a key enabler of small-scale renewable energy growth. This could include:

Introducing energy cooperatives;
Improving regulation of shared ownership and revenue distribution for microgrids;
Introducing regulatory sandboxes to test new technologies and models.

Conclusion

Kazakhstan has made commendable progress in advancing renewable energy, but much of this progress has been concentrated on large-scale projects. The full potential of small-scale renewable energy in terms of energy access, job creation, community resilience, and environmental sustainability remains largely untapped.

The primary legal barriers include:

Burdensome permitting processes for small RE;
Weak net metering and grid access policies;
Inadequate financial incentives for small RE;
Low awareness and capacity at the local level;
Legal rigidity around ownership models.

Addressing these barriers will require a coordinated effort among policymakers, regulators, energy companies, local authorities, and civil society. By enacting legal reforms tailored to the unique needs of small-scale renewable energy, Kazakhstan can unlock a more inclusive, diversified, and sustainable energy future: one that benefits not just corporations, but communities and individuals across the country.

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