“Leaky Bucket” of Kazakhstan’s Power Grid: Losses and Inefficient Distribution of Electric Power

Emil Velinov,Igor Denisov,Zofia Gródek-Szostak,Elena Vechkinzova,Luis Ochoa Siguencia,Yelena Petrenko

doi:10.3390/en13112947

Abstract

This paper aims to determine and explain the main factors for power losses (the so-called “leaky bucket” effect) in Kazakhstan and the reasons for inefficient energy distribution within the country. Energy efficiency in Kazakhstan is much lower compared to more economically developed countries. The differences between energy efficiency in various regions of Kazakhstan are also significant. This article explores the impact of administrative monopoly tariffs on the regional energy efficiency, based on a national study conducted in Kazakhstan in 2017. The purpose of the study was to identify the administrative barriers and their impact on the sustainability of enterprise development. What hinders the distribution of energy resources among different regions is artificial barriers in the energy market and the administrative tariff monopoly for electric power. This leads to the inefficient distribution of resources throughout the country. In addition, it is difficult to leverage low distribution efficiency in the absence of a market. The authors attempt to prove that the magnitude of administrative barriers directly affects the efficiency and competitiveness of business, as well as the final prices of goods and services for the end consumer.

Highlights

Kazakhstan’s energy-oriented economy is the richest and largest among the countries of Central Asia, with the world’s 15th largest proven natural gas and hydrocarbon reserves, and the 9th largest proven oil reserves
We propose an analytical scheme of regional energy efficiency discrepancies based on stochastic boundary production functions and measuring the role of the total factor productivity in regional energy efficiency discrepancies, assuming that the difference in total productivity is the main reason for regional discrepancies
Identification of the presence and size of such administrative barriers, and their impact on the sustainability of enterprise development was the purpose of a national study of production and transaction costs which was conducted in 2017 in Kazakhstan, in which the authors participated personally [23]

Summary

Introduction

Kazakhstan’s energy-oriented economy is the richest and largest among the countries of Central Asia, with the world’s 15th largest proven natural gas and hydrocarbon reserves, and the 9th largest proven oil reserves. 60% of export and 18% of the gross domestic product (GDP) (2015) [1]. Kazakhstan is a large country (9th in the world in terms of area) with a significantly diversified climate, infrastructure, economic structure, and regional differences in terms of the possession of resources. The energy intensity of Kazakhstan’s economy is very high, more than twice the global average. Among the Organization for Economic Cooperation and Development.

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