Indian Council of World Affairs

While nuclear power holds the potential to mitigate numerous significant challenges, such as power shortages and gas rationing that Kazakhstan endures, it simultaneously raises concerns characterised by a complex nuclear legacy and the potential geopolitics of finding a strategic partner for the establishment of its inaugural nuclear power plant. 

Introduction 

On 27–28 November 2024, the Russian President paid a two-day state visit to Kazakhstan to enhance the strategic partnership and alliance between the two countries across various sectors and participate in the scheduled session of the Collective Security Treaty Organisation. During his visit, Kazakhstan’s inaugural civil nuclear power facility was also the subject of considerable attention, especially from the Russian side. In his article in the Kazakhstan newspaper, Putin also stated that Rosatom, the state nuclear corporation of Russia, is “prepared for new large-scale projects” and has already been involved in some projects in Kazakhstan.[i] However, the US has also expressed its readiness to participate in constructing a nuclear power plant (NPP) in Kazakhstan. It has been stated that the US possesses the most advanced NPP technologies and is anticipating an open tender that will enable American companies to participate.[ii] This interest from Russia and the US could shift the geopolitical landscape in the region, with implications for energy security and international relations.

On October 6, Kazakhstan held a referendum to construct its inaugural NPP, a significant milestone in its energy policy. More than 71% of voters approved the referendum to construct NPP, indicating significant public support for this decision. President Kassym-Jomart Tokayev first announced the referendum plan in his State of the Nation address in September 2023. In his speech, he emphasised that Kazakhstan, the world’s largest uranium producer, is uniquely positioned to develop nuclear power-producing facilities. He stressed that nuclear energy ‘can predominantly meet the swiftly escalating demands of our economy.’[iii] The Ulken hamlet, situated on the banks of Lake Balkhash in the Almaty region, has been sanctioned as the site for constructing Kazakhstan's NPP.[iv] The move towards nuclear energy is a strategic response to the increasing demand for power generation, a comprehensive plan to reduce reliance on fossil fuels, diversify the energy portfolio, and mitigate CO₂ emissions in the long run. 

Nuclear is a critical component of Kazakhstan, a country that served as a testing site for the Soviet Union’s nuclear initiatives. Due to this, a significant number of individuals in Kazakhstan have encountered congenital disabilities and cancer associated with nuclear testing, and the vicinity continues to pose substantial radiation risks. Consequently, a segment of the Kazakh population has expressed dissent, citing these health risks and the potential environmental impact of an NPP. This dissent underscores the complexity of the issue. However, Kazakhstan’s President considered the referendum result in favour of civil nuclear energy and a pivotal milestone in the country’s political evolution. Kazakhstan, as the foremost global producer of uranium, is strategically poised to leverage its extensive resources to transition to sustainable energy solutions. 

Kazakhstan Energy Transition: Challenges and Opportunities 

Kazakhstan has been a prominent supplier of uranium for more than 50 years. In 2009, it became the leading uranium producer globally, representing over 28% of total production. By 2022, this proportion had escalated to 43%, a significant increase highlighting its growing impact. With 12% of the world’s uranium reserves, Kazakhstan produced approximately 21,112 tonnes of uranium in 2023, indicating significant advancement and reinforcing its position as a global leader in uranium production. 

However, Kazakhstan, a significant energy producer in the Commonwealth of Independent States, relies heavily on coal for its electricity needs. From July 2023 to June 2024, coal was the primary source of electricity, making roughly two-thirds of the total supply,[v] whereas natural gas accounted for one-fifth of the total energy supply. This dependence on coal and natural gas highlights the preeminence of fossil fuels in Kazakhstan's energy sector. It also highlights the considerable potential for growth in renewable energy, constituting merely 1.6% of the overall supply. [vi] This underutilised potential presents a promising opportunity for Kazakhstan to address its energy imbalance. Over the next decade, a 57% increase in electricity demand is expected. The Ministry of Energy projects that by 2035, electricity consumption in Kazakhstan will reach 152.4 billion kWh.[vii] Kazakhstan must implement additional production capacities to meet the growing demand throughout the next decade.  

In this context, Nuclear energy, with its significant role in diversifying the country’s energy sources, provides a reassuring path to a comprehensive approach to energy sustainability. It presents a unique opportunity for Kazakhstan to balance its domestic energy consumption with its export goals, especially in increasing electricity demand and the imperative transition towards a lower carbon footprint. 

However, the renewable energy sector in Kazakhstan is on the rise, with 146 operational renewable facilities and a production share of approximately 6%.[viii] This growth is a positive step towards diversifying the country’s energy sources. However, it is essential to note that renewable energy sources, due to their reliance on natural and climatic factors, cannot function as a dependable primary electricity generation method, making their operation uncertain. Global practices indicate that constructing an NPP may be viable for replacing decommissioned power capacity and ensuring Kazakhstan’s energy independence. Establishing the NPP will address energy and environmental issues while creating new opportunities for scientific research and educational initiatives. It will be a pivotal advancement in enhancing energy autonomy in Kazakhstan, substantially impacting the national economy and playing a crucial role in executing the country’s Carbon Neutrality Strategy by 2060. 

Challenges in Finding Strategic Partners 

Establishing and managing a nuclear power facility necessitates advanced technological capabilities, specialised engineering expertise, and rigorous safety measures—domains in which Kazakhstan possesses limited expertise. Kazakhstan lacks the infrastructure and necessary expertise to safely manage nuclear waste, resulting in unresolved issues regarding radioactive waste disposal. The economic viability of Kazakhstan’s nuclear project also raises concerns due to its high cost, estimated to be between $10 and $15 billion. [ix]

However, President Tokayev has preferred an international consortium as a prospective model for the NPP development project. Within an international consortium, the principal concern of nuclear financing is the management of risks related to potential overruns in initial financial outlays or construction schedules and distributing such overruns among different categories of investors. The experience of the Olkiluoto 3 (OL3) nuclear reactor in Finland, which faced significant challenges, including a cost escalation from an initial estimate of €3 billion to over €11 billion, contractual conflicts, and an arbitration lawsuit that endured for nearly a decade, provides valuable lessons for Kazakhstan.[x] Consequently, high construction costs and long-term financial sustainability are critical points that must be addressed when finding strategic partners for the country’s inaugural NPP. 

Kazakhstan considers China (CNNC), Russia (Rosatom), South Korea (KHNP), and France (EDF) as potential suppliers of nuclear technologies for its NPP. [xi] On 5 November, during his visit to Paris, President Tokayev announced that Kazakhstan is considering supporting the French nuclear industry. He emphasised that Kazakhstan’s proposal to build an NPP could open new avenues for collaboration with France. Kazakhstan is committed to maintaining its reputation as a dependable partner for the French nuclear industry.[xii] In October, during his visit to Seoul, Kazakhstan’s Energy Minister, Almassadam Satkaliyev, held talks with South Korean companies regarding their potential participation in the international consortium.[xiii] However, the potential of South Korea and France could be limited by geopolitical factors, shifting internal political dynamics, and high construction costs, which remain challenges to address. 

However, if Kazakhstan chooses sole contractors as one of the options, Russia and China will have an opportunity to take the lead, especially in lobbying to be the sole contractors with various leverages. China, in particular, is positioning itself as a strong contender, offering cheaper construction costs than France and South Korea. Its involvement could significantly enhance the project’s financial viability and strengthen Kazakhstan’s trade and investment ties with China. However, Russia possesses significant leverage due to Kazakhstan’s dependence on its oil export infrastructure, electricity supply and traditional linkages. President Putin’s recent visit to Kazakhstan, amidst regional geopolitical turbulence, could be seen as a personal endorsement for Rosatom to be the sole builder of Kazakhstan’s first NPP. At a press conference during his state visit to Astana, Putin stated, "We paid significant attention to this matter during the negotiations, both in closed-door negotiations and extended talks. If Kazakhstan implements its projects in the nuclear power sphere, then, as any client, it has the right to choose the most reasonable technological solutions and financial schemes from its perspective. Kazakhstani colleagues are familiar with this activity; they are not starting from scratch. They are well aware of what they want to achieve, how much they are willing to pay and what they expect to obtain in the end".[xiv]

Given President Tokayev’s inclination towards an international consortium, President Putin remarked that Kazakhstan is open to utilising technological solutions from third-party nations or collaborating with their specialists, which is also a feasible option. He further noted that Rosatom has experience working with international partners.[xv] The US has also indicated its readiness to participate. President Tokayev will face the task of balancing the interests of all stakeholders, particularly the U.S.-China-Russia troika, within the framework of an international consortium. The differing geopolitical and economic interests of these countries could pose significant challenges. At the same time, selecting a sole contractor to build Kazakhstan’s first NPP could also pose a challenge in addressing the public sentiment. However, Kazakhstan has established an intergovernmental commission that considers vendor proposals competitively. 

Conclusion 

Kazakhstan’s energy structure is poised for a substantial transformation, necessitating the development of new large-scale generating capacity, modernisation, and diversification.  Incorporating new ecologically sustainable electricity sources and advancing renewable energy sources are promising steps. The construction of the NPP, in particular, is a significant initiative, as it has the potential to diversify the energy sector and significantly alleviate Kazakhstan’s electric power shortage. 

However, Kazakhstan stands at a critical juncture in its nuclear programme, where the need for expertise, enormous resources, and financing are paramount. The pressing need for expertise and funding is the key to successfully implementing the NPP. The primary challenge lies in reconciling technical considerations and commercial interests with the complex geopolitics of energy supply, particularly when selecting reactor vendors from countries that show interest in constructing Kazakhstan’s inaugural NPP. Therefore, Kazakhstan must negotiate advantageous financing terms. 

Kazakhstan is currently in the process of evaluating various companies to identify potential suppliers of nuclear technology. A decision, expected by the following year, will mark a crucial turning point in the country’s energy policy. The path chosen by Kazakhstan—embracing the future by establishing an international consortium or adhering to legacy by selecting a sole contractor—will significantly shape the country’s energy landscape. Moreover, in either case, it will demonstrate Russia’s persistent influence over the region’s energy infrastructure and more significant geopolitical interest.

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*Dr. Punit Gaur, Research Fellow, Indian Council of World Affairs, New Delhi.
Disclaimer: The views expressed are personal.

Endnotes

[i] Nazgul Zharbulova (2024), “Russia is ready to construct nuclear power plant in Kazakhstan, Putin says,” Kursiv Media, November 29, 2024, https://kz.kursiv.media/en/2024-11-29/engk-nknk-russia-is-ready-to-construct-nuclear-power-plant-in-kazakhstan-putin-says/. Accessed December 2, 2024.

[ii] The Times of Central Asia (2024), "US Ready to Participate in Construction of Nuclear Power Plant in Kazakhstan", October 8, 2024, https://timesca.com/us-ready-to-participate-in-construction-of-nuclear-power-plant-in-kazakhstan/. Accessed  November 29, 2024.

[iii] Nikkei Asia (2023), "Kazakhstan to hold referendum on nuclear plant construction", September 1, 2023, https://asia.nikkei.com/Politics/Kazakhstan-to-hold-referendum-on-nuclear-plant-construction. Accessed  November 25, 2024.

[iv] Nuclear Engineering International (2023), "Kazakhstan confirms site for first NPP", August 22, 2023, https://www.neimagazine.com/news/kazakhstan-confirms-site-for-first-npp-11090297/?cf-view.Accessed November 20, 2024.

[v] LowCarbonPower, "Electricity in Kazakhstan in 2023/2024", https://lowcarbonpower.org/region/Kazakhstan.  Accessed  November 27, 2024.

[vi] UNECE (2024), "Energy Policy Brief : Kazakhstan", https://unece.org/sites/default/files/2024-09/kazakhstans-policy-brief%20%287%29.pdf.  Accessed  November 25, 2024.

[vii] The Astana Times (2024), "KazAtomExpo Exhibition Discusses Kazakhstan's Potential Nuclear Power Plant",  August 29, 2024, https://astanatimes.com/2024/08/kazatomexpo-exhibition-discusses-kazakhstans-potential-nuclear-power-plant/.  Accessed  November 22, 2024.

[viii] The Astana Times (2024), “Kazakhstan’s Renewable Energy Sector Gains Momentum with 146 Facilities in Operation”,  March 5, 2024, https://astanatimes.com/2024/03/kazakhstans-renewable-energy-sector-gains-momentum-with-146-facilities-in-operation/. Accessed  November 20, 2024.

[ix] Reuters (2024), "Kazakhstan votes in favour of nuclear power plant construction, exit poll shows",  October 7, 2024, https://www.reuters.com/world/asia-pacific/kazakhstan-votes-whether-build-first-nuclear-plant-2024-10-06/#:~:text=The%20cabinet%20estimates%20that%20a,and%20come%20with%20less%20risk. Accessed  November 22, 2024.

[x] DW (2023), "Finland's much-delayed nuclear plant launches", December 3, 2023, https://www.dw.com/en/finlands-much-delayed-nuclear-plant-launches/a-61108015. Accessed November 15, 2024.

[xi] Interfax (2024), "Kazakhstan exploring possible establishment of int'l consortium for building NPP", October 31, 2024, https://interfax.com/newsroom/top-stories/107220/. Accessed November 20, 2024.   

[xii] The Astana Times (2024), "Kazakhstan’s Nuclear Plant Decision Might Deepen Strategic Partnership with France, Tokayev Told Le Figaro", November 5, 2024, https://astanatimes.com/2024/11/kazakhstans-nuclear-plant-decision-might-deepen-strategic-partnership-with-france-tokayev-told-le-figaro/. Accessed November 18, 2024.   

[xiii] Interfax(2024), "Kazakhstan discussing South Korean companies' possible participation in constructing NPP",  October 28, 2024, https://interfax.com/newsroom/top-stories/107086/. Accessed  November 24, 2024.     

[xiv] Nazgul Zharbulova (2024), “Russia is ready to construct nuclear power plant in Kazakhstan, Putin says,” Kursiv Media, November 29, 2024, https://kz.kursiv.media/en/2024-11-29/engk-nknk-russia-is-ready-to-construct-nuclear-power-plant-in-kazakhstan-putin-says/.  Accessed December 2, 2024.

[xv] Ibid