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2020, August 3 NU now

Impact of COVID-19 on Kazakhstan's Electricity Industry: Opinion of NU researchers

2020, August 3

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GSPP PhD student Daulet Akhmetov and GSPP Associate Professor Peter Howie published the article “COVID-19 and the Power Industry Response: the Case of Kazakhstan” in the International Association of Energy Economics’ “Energy Forum”.  The article discusses the Kazakhstani energy sector’s response to the COVID-19 pandemic.  The “Energy Forum” is a quarterly newsletter of the International Association of Energy Economics that covers timely thematic energy matters such as COVID-19, renewable energy, continental energy issues in China, India, Russia, electricity, natural gas and nuclear matters.

Similar to all industries, the power industry has been affected by the COVID-19 pandemic globally..  While the short-term effects of COVID-19 pandemic have had minimal supply-side effects with no reports on related power supply disruptions, the sector has experienced major demand-side effects through rapid contraction of economic activities.  Additionally, the coronavirus pandemic may have substantial long-term impacts on the development of the world’s power industry because of the reassessment of traditional concepts such as of the role of government in the power sector, energy security, climate change, and energy saving. In the article “Coronavirus and the Power Industry Response: the Case of Kazakhstan” published in the International Association of Energy Economics’ Energy Forum, Daulet Akhmetov and Peter Howie, from Nazarbayev University’s Graduate School of Public Policy, examine the Kazakhstani power industry’s response to the COVID-19 pandemic.  The authors provide interesting insights about a power industry operating within the new global challenges.  They also highlight how the COVID-19 pandemic has both short- and long-term impacts on the country’s power industry.

One of the distinctive short-term features of Kazakhstan’s power industry response to the coronavirus outbreak is the need to address simultaneously two critical priorities of power infrastructure: 1) to ensure the safety of its employees; and 2) to provide reliable energy supply to all customers.  Although modern electronic systems of operation and control could potentially decrease the level of physical presence in the power industry, Kazakhstan’s existing technologies are dominated by those of Soviet-designed coal-fired generation.  Currently, low levels of digitalization prevent remote working practices by the majority of Kazakhstan’s power industry workers. Therefore, virus-related shutdowns due to workforce contagion represent a major threat to reliable electricity supply and need be avoided at all costs during the COVID-19 pandemic. In the context of the coronavirus pandemic,  it is essential that policymakers and society recognize electricity as a “public necessity”.  About a half of the world’s population has been lockdowned at one time or another due to the pandemic.  Maintaining social order during prolonged periods of mandated lockdown or self-isolation requires a reliable supply of electricity. Such a reliable supply of electricity will be essential in making Kazakhstan’s COVID-19 response successful.   Digital infrastructure – with reliable power – makes the public healthcare battle possible, facilitates emergency communication, and allows for socially-distant interactions and entertainment.

The long-term impacts of the COVID-19 pandemic for Kazakhstan’s power industry depend upon assumptions of the public health capacity to control the spread of the coronavirus, government measures to stimulate economic activity, public support of quarantine measure, and global economic response.  The increased importance of electricity supply during an emergency, such as the coronavirus outbreak, and recognition by society and government of electricity as “public necessity” may result in delays with Kazakhstan’s planned privatization of its power sector. As a result, Kazakhstan’s electricity sector could remain under strict government price regulation or there could be an increased role of the government to maintain control over prices and disconnections by the energy supplier. 

The authors conclude that Kazakhstan’s power industry needs to be ready for a fast transformation to meet the new requirements of the post-COVID-19 world.

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