Kazakhstan: Shokpar 100MW Wind Power Project

OBJECTIVE

To support Kazakhstan’s energy transition through the expansion of wind installed capacity.

DESCRIPTION

The Project will develop, construct, and operate a 100-megawatt (MW) wind power plant. The Project will be located in an adjacent plot to the Zhanatas Wind Power Plant (PD000225-PSI-KAZ) in the Sarysu district of Zhambyl Region, Kazakhstan, and connect to the same substation.

The Project will be co-developed by China Power International Holding Ltd. (CPIH) and Visor International DMCC (Visor). CPIH is a subsidiary of the State Power Investment Corporation Limited, a Chinese state-owned power utility. Visor is established by a group of Kazakhstani bankers and entrepreneurs and is a leading investment company with a special focus on the Central Asia and Commonwealth of Independent States markets.

ENVIRONMENTAL AND SOCIAL INFORMATION

Environment and Social Policy and Categorization. The Project will be co-financed with EBRD, and the Project’s environmental and social (ES) risks and impacts have been assessed in accordance with the EBRD’s Environmental and Social Policy (EBRD’s ESP) and related Performance Requirements (PRs). To provide for a harmonized approach to addressing the ES risks and impacts of the Project, and as permitted under AIIB‘s Environmental and Social Policy (AIIB’s ESP), EBRD’s ESP and PRs will apply to the Project in lieu of AIIB‘s ESP. AIIB has reviewed the EBRD’s ESP and PRs and is satisfied that: (i) they are consistent with AIIB’s Articles of Agreement and materially consistent with the provisions of AIIB’s ESP, including AIIB’s Environmental and Social Exclusion List (ESEL), and the relevant ES Standards (ESS), and (ii) the monitoring procedures that are in place are appropriate for the Project.

The Project involves the design, construction, financing and operation a wind energy plant in Zhambyl region in Southern Kazakhstan. The Project includes installation of wind turbines with the total capacity of 100 MW, construction of 7.6 km 220 kV double-circuit overhead line, an electrical switchgear with two transformers, and expansion of the 220 kV substation. The technical conditions for grid connection have been approved by KEGOC, national grid operator.

As this Project is an expansion of Zhanatas WPP, with similar impacts, EBRD has categorized Shokpar WPP as Category B which is equivalent to Category B if AIIB’s ESP were applicable.

ES Instruments. An Environmental Impact Assessment (EIA) in line with national regulations was prepared and approved and the construction activities commenced in June 2022, with the expected scheduled commissioning in January 2024. EBRD and AIIB have conducted an Environmental and Social Due Diligence (ESDD) including: (i) the review of proposed site settings and associated environmental and social risks as well as any legacy issues, considering cumulative impacts and associated facilities (transmission lines and roads), (ii) biodiversity risk analysis, especially for birds, bats and flora, (iii) overall land acquisition and use for the wind turbines, (iv) the review of the current operations and status of previous Environmental and Social Action Plan (ESAP) implementation, and (v) a review of the Project's supply chain arrangements, including an external labor audit. Based on the ESDD results, a site specific ESAP, Non-Technical Summary (NTS), and a Stakeholder Engagement Plan (SEP) were prepared.

Environmental Aspects. The Project is an extension of the Zhanatas Wind Farm, located in Sarysu district of Zhambyl region, south Kazakhstan. Shokpar WPP will add an extra 22 turbines (100 MWe) to the same location in the adjacent land plot and will utilize much of the same infrastructure including the same Opornaya substation via a 220 kV transmission line. The Project is expected to generate direct and indirect adverse impacts on biodiversity during construction, operation, maintenance, and decommissioning, as manifested through dust emissions, habitat fragmentation, noise, solid waste, wastewater, etc. The major potential impacts include bird and bat collision-related fatalities, noise, and shadow flickering during the operational phase. In addition, the location of the operational turbines may represent a barrier to migratory species.

The Project is part of Kazakhstan’s wind energy development that involves other WPPs in the same region, and it can cause cumulative impacts. Shokpar WPP will adopt a practice of adaptive management in which the implementation of mitigation and management measures are responsive to changing conditions and the results of monitoring throughout the Project’s lifecycle. The mitigation strategy will be commensurate with the project risks and impacts, including the cumulative impacts, so that the provisions of PR6 “Biodiversity Conservation and Sustainable Management of Living Natural Resources” are met and will take a risk-averse approach that explicitly identifies and accommodates uncertainty about the outcomes of mitigation measures.

Adverse impacts can also result from associated facilities, particularly overhead transmission lines and access roads. Overall environmental impacts associated with the extension of the existing WPP are site-specific and readily assessed based on the ESDD and can be mitigated via ESAP implementation and provision of adequate management resources to address identified ES impacts.

Biodiversity. The ESDD included a biodiversity risk analysis based on EBRD’s PR 6 and, similar to the Zhanatas Wind Farm, the results confirmed that the wind farm is not located in any ES sensitive areas, and there are no protected or designated nature reserves within a 30 km radius of the Project. The birds’ main migratory pathways are found within about 25-30 km north of the Project area. The area's ecological value is considered to be relatively low with the vegetation and animals typical for the waterless zones of the steppe. The potential risk of collision and/or electrocution impacts from the turbines and power lines is not likely to be very significant as long as mitigation measures for collision and electrocution impacts, such as a Biodiversity Management and Monitoring Plan and the collision risk modeling, are incorporated in the ESAP and Project design.

Climate Change Risks and Opportunities. The Project site is located in a continental zone with large daily and annual air temperature fluctuations (-8°C and -32°C during winter and 34°C to 45°C during summer). Temperatures in Kazakhstan are projected to rise at a faster rate than the global average and faster than most other Asian nations and has a potential warming of 5.3°C by the 2090s. Climate change is expected to cause droughts, land degradation, desertification, and associated events such as dust storms.

The turbines to be installed in the Project can withstand high temperatures and they will be equipped with cold type temperature package to withstand low temperatures during winters. The ESAP requires the client to monitor ice build-up on the wind turbines and consider anti-icing measures.

The Project contributes to Kazakhstan’s National Determined Contribution (NDC) to reduce GHG emissions and increase the uptake of renewable energy. Based on the activity type (wind power generation), AIIB's entire financing for the Project can be counted as climate mitigation finance. Additionally, the Project contributes to adaptation finance since WPPs consume almost no water, and when added to the grid, they displace water intensive thermal power production. It is aligned with national adaptation/resilience pathway under the 2030 Water Resource Management Strategy as it will support country’s water conservation efforts. In water scarce contexts such as in Kazakhstan, the displaced energy and associated water consumption are material for the climate resilience of the country through avoided water consumption (analogous to avoided GHG emissions).

Social aspects. The Project Developer has completed the land acquisition process for the plots under wind turbine generators (WTGs) and reached easement agreements for the land leases under the 220kV transmission power line route through voluntary negotiations with the landowners. The Project has been prepared in accordance with national regulations and is not expected to cause physical or economic displacement in the form of loss of livelihood. Currently, the Project area is mainly used for grazing nomadic animals (horses, sheep, goats). The Project would have a minimal impact as these activities can be continued on the adjacent available land. Community and livelihood impacts were also analyzed, and it has been identified that they are mainly associated with increased traffic during construction and visual effects, which are considered negligible. Social, labor, and safety aspects during construction and operation were analyzed.

Several recommendations were presented to the EPC contractor to strengthen its institutional capacity to manage ES risks during the construction and operational phases and deliver the Project in line with EBRD's PRs. Moreover in order to enhance women’s access to economic opportunities, the client with the cooperation of stakeholders aims to carry out a number of tasks, including establishment of training and internship program for high school and university students, cooperate/partner with local educational providers to improve the perception and awareness of the employment and entrepreneurship opportunities for young women and men in the renewable energy sector; and contribute to the development of a vocational guidance and employment programs in order to increase the number of women entrants in vocational educational programs. In order to mitigate the adverse impacts of Gender-Based Violence (GBV), Shokpar will develop a worker Code of Conduct, including GBV mitigation measures, and require its contractors to apply the Code, with penalties leading up to dismissal.

Gender Aspects. To support women’s access to economic opportunities in the renewables energy sector in Kazakhstan, Shokpar, with the assistance of the EBRD Gender and Inclusion team and in coordination with other stakeholders, plans to (i) establish a training/cooperation program and provide training and internship opportunities as well as career advice to not less than 25 female high school and university students over the period of the loan and contribute to the Renewable Energy Internship/Apprenticeship Programme (REIAP) that will be established by the EBRD; (ii) cooperate/partner with local educational providers to improve the perception and awareness of the employment and entrepreneurship opportunities for young women and men in the renewable energy sector; and (iii) contribute to the development of a vocational guidance and employment programs in order to increase the number of women entrants in vocational educational programs.

As part of EBRD's PR 10 “Information Disclosure and Stakeholder Engagement”, the Project used different engagement methods based on gender, age, and ethnicity aspects. As part of the actions to mitigate Gender-Based Violence (GBV) defined by the ESAP, Shokpar will develop a worker Code of Conduct, including GBV mitigation measures, and requires it to contractors to enforce the Code, with penalties leading up to dismissal. The EPC Contractor needs to consult with local authorities and community leaders so that the project managers are aware of incidents and can take appropriate action if the issue arises.

Cultural Heritage. During the EIA process, the presence of archaeological/cultural heritage objects was identified within the Project allocated land plots. The archaeological survey of the Project area confirmed the presence of two cultural heritage objects, namely (i) Aktogay Burial Ground (dated appr. IV-I cent. BC) and (ii) an ancient settlement Syzdykbaeva (est. ~40sq.m; dated appr. IV-I cent. BC). Following the local legislative requirements, the Project Company submitted the findings of the archaeology survey report to obtain a formal Archaeological Expertise conclusion. The archaeological finds have been collected from both sites and are currently temporarily stored at LLC Archaeological Expertise awaiting the Ministry of Culture and Sport’s decision regarding to which museum the findings should be delivered for collection and exhibition. In July 2020, the Project Company received a formal expertise conclusion stating that the cultural objects identified during the survey are not culturally and/or historically significant, and therefore, the area is not restricted for further development activities.

Shokpar and the EPC Contractor and those of its subcontractors that are engaged in activities on-site must develop a clear Chance Find procedure provide for relevant personnel among contractors to be trained in its use. This document will establish the procedure for actions in case of discovering objects that are classified as having archaeological importance. Such discoveries of suspected archaeological value must be immediately reported to the construction managers and the social/environmental manager who must then report the findings to the relevant authorities.

Labor and Working Conditions and Supply Chain. The Project will be co-financed with EBRD and AIIB will follow the approach as that adopted by the EBRD in addressing potential issues arising from labor and working conditions in the supply chain. Enhanced supply chain due diligence has been conducted in order to assess the working conditions and labor risks at the selected production facility, where the wind turbines are being assembled by Shokpar’s supplier. In addition to the labor audit at the facility level, a risk screening of the core/primary suppliers to Shokpar's supplier was conducted to review potential issues relating to labor and working conditions at the potential supplier/vendor level. The findings of the labor audit and supplier risk screening will inform the corrective actions on the improvement of the supplier management and traceability system for the Project and will be included in the Project's ESAP, supplemented by Shokpar's and its supplier's commitments on labor and working conditions in their supply chains.

Stakeholder Engagement, Consultation and Information Disclosure. Stakeholder engagement confirmed support for the Project and limited concern about its potential impacts. Shokpar has engaged with stakeholders to provide inputs into the Project design. Key issues/concerns raised by local communities during public hearings included the issue of noise as a result of construction activities; another aspect was the expectations from local residents for job opportunities during the construction phase of the Project. To facilitate a meaningful consultation process with Project stakeholders, including affected people and third parties, project summary information in English, Kazakh and Russian is disclosed on EBRD’s website (KAZREF II - Shokpar Wind (ebrd.com)). An NTS and SEP in English, Kazakh, and Russian is disclosed by the Borrower on its website. In addition to those documents, the ESAP in English has been disclosed on AIIB’s website (Kazakhstan: Shokpar 100MW Wind Power Project - Projects - AIIB).

Community and Occupational Health and Safety, Labor and Employment Conditions. As part of the ESAP, the mitigation of community health and safety risks will be defined in the Construction Environmental and Social Management and Monitoring Plan (C-ESMMP) to be prepared before the financial close. This will cover labor and working conditions of contractors and sub-contractors and management of infectious diseases, including COVID-19.

Project Grievance Redress Mechanism (GRM). A Project-level GRM has been established by Shokpar. It will disseminate information about the GRM at the Project level for stakeholders including local communities and Project-affected people (PAPs) in accordance with EBRD’s PR10 “Information Disclosure and Stakeholder Engagement” requirements. The information on the Project-level GRM and EBRD’s independent accountability mechanism will be disclosed in Russian/Kazakh in a timely and appropriate manner. The EPC Contractor will also be required to log in all complaints on site. Access to the project-level GRM will be free of cost.

Monitoring and Supervision Arrangements. Monitoring and supervision missions will be carried out annually. Site visits to verify implementation of ESAP will be carried out jointly by the lender group. ES monitoring reports will be prepared annually by Shokpar based on an agreed format.