Turkmenistan may be the only country that provided free electricity for such a long time and it continues to provide highly subsidized cheap electricity with the lowest electricity prices in the world at 2.5 TMT per 100 kWh, or 0.007 $/kWh. The utilities, including electricity, gas and water, were set to be free of charge by the first president of Turkmenistan S. Niyazov back in 1993 and later extended until 2030. The free utilities were one of the most known facts about Turkmenistan in the world, when Turkmenistan had been hailed as the place where you do not have to pay the utility bills. The free provision of the utilities was abolished starting from January, 2019, stating the development of the “free market relations in the national economy” and the rationalization of costs. Even after the introduction of utility prices, an average Turkmen can expect to pay 50 TMT in a year, or $14 (official exchange rate 1 USD = 3.5 TMT). Paying utility bills is one of the first culture shocks of Turkmen immigrants when they move to a new country.
Figure 1. Electricity consumption per capita and electricity price in Central Asian countries.
Source: IEA, 2019
Some segments of the population take pride in the low cost of utilities in Turkmenistan. The introduction of pricing in 2019 was seen as an unpopular move by international experts, though the word “unpopular” does not have the same meaning in Turkmenistan as in other more democratic countries. The everyday person in Turkmenistan is thankful to the government for the subsidized utilities and whenever a Turkmen is discontent with the state’s actions, he quickly reminds himself “at least we don’t have to pay utility bills and life’s easy”.
Unfortunately, free utilities do have costs associated with them.
First of all, free utilities take away the incentives to conserve energy. The marginal cost of using more energy is so low compared to the emotional cost of saving energy, so the concept of conserving energy is ridiculed in the country. It is a completely rational way of life – using more energy makes life much easier and there is no reason to use less of it. However, given the carbon intensity of electricity in Turkmenistan, the environment suffers as a consequence of unlimited use of electricity and natural gas.
Second, the generation of electricity and natural gas production is not free, even though the fuel is available underground for free. The government has to pay for the natural gas and power infrastructure, such as production, storage, transmission, transformation units.
A market-based pricing of utilities would make bills higher, giving Turkmens a reason to conscientiously use energy. It would also increase government’s revenue, which ideally should be returned back to the people in the form of investments in education, healthcare and economic development. Increased bills and payments to the government would also give the people increased agency over their own expenses and the expenses of the state, pushing people to demand better public services.
Incentives for rooftop solar PVs
The increased utility bills would also give people in Turkmenistan incentives to invest in their own power production with rooftop solar PV panels. Solar PV panels installed on a house roof can produce electricity from sunshine and Turkmenistan is blessed with plenty of sunny days in a year. In a world with realistic utility bills, a person with rooftop solar PV panels would not have to buy electricity from the utility provider but use own electricity and even sell the electricity back to the grid. For example, in the law On Renewable Energy Sources approved in 2021 Article 19, it is mentioned that the price of electricity paid to the power producer (e.g., an individual with rooftop solar PVs) must be set by the utility provider. In other words, Turkmenistan now has an official framework for paying individual households for producing electricity and feeding it into the grid. With such good solar resources (Figure 2) and the ever falling prices of solar PV panels (Figure 3), the levelized cost of producing electricity with rooftop solar PV would be economically attractive in Turkmenistan if the electricity pricing was market-based.
Figure 2. Global horizontal solar irradiation in Turkmenistan. Source: globalsolaratlas.info
Increased penetration of solar PVs would also help alleviate the load on the power grid, especially on hot summer days. The electricity production profile from the sun would perfectly match the use of air conditioning patterns. This would decrease the chances of power cuts during extra hot days and subsequently decrease the chances of people being stranded without A/C and having a heat stroke. Last, but not least, an increased installation of solar PVs by the public would also contribute towards the nationally determined targets to reduce greenhouse gas emissions.
Figure 3. The historical price of solar modules [$/Watt]. Source: ourworldindata.com
In conclusion, living in a country with rich hydrocarbon resources and paying little for energy bills is a good point of pride but it has its major downsides. Not only does it take away the incentives to conserve energy and invest in residential solar PV panels, it actively incentivizes us to be wasteful.
A substantial progress can be made in Turkmenistan if the government revised the energy subsidies and introduced more market-based prices for the utilities. The public should understand that the increased revenues of the government should benefit the people, either indirectly, by increased investments in public services, or directly, by increasing the salaries of the people, given that every teacher, bank teller, pilot, accountant, etc. is employed by the government. The low-income households could continue receiving subsidized utilities. Increased energy bills will give everyone better control over their energy usage and their energy expenditures.