Sun-drenched Uzbekistan on the verge of a renewables boom

Sun-drenched Uzbekistan on the verge of a renewables boom
The 100-MW Nur Navoi Solar Power Plant provides enough power for 31,000 households. / Clare Nuttall
By Clare Nuttall in Navoi and Tashkent July 4, 2022

International investors are vying to build new solar and wind farms in Uzbekistan as the country tries to reduce emissions while also supplying power to its growing population.

The first of these was the Nur Navoi Solar Power Plant. Located a half-hour drive into the steppe outside the city of Navoi, central Uzbekistan, the 100-MW plant provides enough power for 31,000 households and reduces emissions by around 150,000 tonnes per year (tpy) of CO2.

Abu Dhabi-based Masdar signed a power purchase agreement (PPA) for Nur Navoi back in November 2019, when Uzbekistan was just beginning its shift to renewables, and the plant was completed in 2021. Today, row after row of solar panels stretch out over the dry, dusty land. They are designed to withstand extremes of temperatures, both hot and cold essential in this area, where temperatures can get as high as 50C in summer and plunge below zero in winter. 

First Deputy Energy Minister Azim Akhmedkhadjaev told the Uzbekistan Energy Forum in Tashkent on June 23 that Uzbekistan plans to reduce emissions of greenhouse gases (GHGs) per unit of GDP by 35% compared to the 2010 level by 2030 under its commitments made at COP26 in Glasgow in 2021, mainly by improving renewable energy capacity to 12 GW combined volume of photovoltaic (PV) stations and wind plants. Since Masdar signed the first solar PPA in 2019, a growing number of new projects are now underway or in the tender process.

Uzbekistan has over 300 sunny days a year, making it well suited for solar power. The country is also looking to develop its wind resources. “In general the country has very good wind potential, of which around 99% is in the west and northwest of the country, that is, in the Navoi and Bukhara oblasts and the Republic of Karakalpakstan,” Deputy Minister of Energy Sherzod Khodjaev told the forum. 

But Uzbekistan isn’t only investing into renewables capacity. The new renewables projects are complemented by modernised gas power plants, taking advantage of Uzbekistan’s large gas resources. 

Not far from the Nur Navoi Solar Power Plant is one example, the recently modernised Navoi Thermal Power Station. The solar power plant is connected to the same power transmission line that runs south to the town of Kharshi, and compensates for any electricity shortfall on the rare days when it isn’t sunny, explained Abdulla Otabaev, head of the renewable energy sources (RES) department at the Ministry of Energy, during a visit to the two power plants. The modernisation also reduced emissions from the Navoi Thermal Power Station. 

Targets set

Industry representatives say the investments made and planned so far have put the country on track to meet its targets of raising the share of renewables generation to 25% by 2026 and achieving net zero carbon by 2050. 

According to Akhmedkhadjaev, the share of renewable energy generation in Uzbekistan is currently around 10%, mainly due to its hydropower capacity. By 2026, the objective is to increase that to 25%, or around 11 GW, of which 8 GW will be solar and wind and a further 2.9 GW hydropower. Meeting this target would save 3bn cubic metres of natural gas a year, he told a meeting of Shanghai Cooperation Organization (SCO) energy ministers in Tashkent on June 24. 

At the meeting, Akhmedkhadjaev talked of the need to overhaul the entire energy industry, as Uzbekistan has to "simultaneously meet the challenges of increasing generation and increasing the share of renewable energy in it.” 

“We need to constantly increase generation on the one hand and tackle climate change on the other. Climate change is already real for every country, and the challenge for all humanity is to find acceptable solutions to ensure transition to clean, sustainable green energy,” said the deputy minister. 

Uzbekistan is one of just a handful of countries in emerging Europe where the population is increasing rather than decreasing. Uzbeks say with some pride that their county is adding another 600,000 people every year. This is evident in the building boom across the country, where new family homes, apartment blocks, shops, cafes and other facilities are under construction. The growing population and concurrent robust economic growth Uzbekistan continued growing even through the pandemic mean energy demand is steadily rising too.

The county’s generally warm, sunny climate is a boon for the emerging solar industry. Yet Uzbekistan, one of the hottest countries of the former Soviet Union, is already experiencing the damaging effects of climate change. Away from the air-conditioned flats and offices in central Tashkent, agricultural workers labour in the fields in temperatures that in late June were already in the low forties. Their produce huge heaps of watermelons and other summer fruits and vegetables was piled by the roadside for sale. Cows, goats and the occasional camel sheltered under trees from the scorching sun. 

Central Asia has already experienced the catastrophic drying up of the Aral Sea, as the rivers that fed it were diverted into irrigation. Now meteorologists say the region is experiencing hotter, drier and more unpredictable weather. Accelerated glacier melt in the high Tian Shan mountains is putting at risk the water supplies Uzbekistan and its neighbours rely on for both irrigation and hydropower. 

Tashkent’s commitment to reducing emissions is thus not only a matter of doing its global duty but of national preservation too. 

There is also the economic aspect. While renewables were once a costly investment, with oil and gas prices now soaring, they are increasingly seen as a cheap and stable form of energy. 

“Renewables continue to be the cheapest source of energy even with COVID supply chain disruptions that caused a perfect storm in the solar industry … and [the prices are] very stable. With all the geopolitical turmoil and fossil fuel volatility, we see the price for gas can go up very quickly, while the price of renewables, especially in a place like Uzbekistan, remains stable,” Aida Sitdikova, director and head of energy Eurasia, at the European Bank for Reconstruction and Development (EBRD) Sustainable Infrastructure Group, told the Uzbekistan Energy Forum. 

Moreover, replacing some of the gas Uzbekistan burns to produce electricity and heat with renewable energy frees up its gas resources to produce fuels, plastics and other higher value products. 

Investors incoming 

When construction of Nur Navoi started in January 2021, this was first of many projects in Uzbekistan. According to Otabaev, interest in developing renewable energy projects in Uzbekistan has been very strong, with dozens of companies from around the world competing in tenders. International development banks the Asian Development Bank, EBRD and World Bank, including through its private sector arm the IFC, have extended both funding and other support for Uzbek projects. 

Masdar alone has several other projects in the works: it has signed agreements to develop two more PV projects with a combined capacity of 440 MW, and has won a tender for a 457-MW PV project in Uzbekistan. It will also develop, build and operate Central Asia’s largest wind farm, at 500 MW, in the Zarafshan region.

Another Middle Eastern company, Saudi Arabian renewable energy company ACWA Power, expects to have a total of 2,600 MW of solar and wind generation capacity under construction by the end of 2022 and to have signed PPAs for a further 1,400 MW. 

Rohit Gokhale, ACWA’s executive vice president – business development, Africa & CIS, told journalists on the sidelines of the Uzbekistan Energy Forum on June 23 that Uzbekistan has become a priority country for ACWA. “For us Uzbekistan is a focus and a strategic country. We identified the potential in this country, and we been developing our relationship with the Ministry of Energy since 2019,” Gokhale said. “We have seen a lot of positive developments with the reforms happening in the country … We feel that it’s the right environment for what we look for.” 

Gokhale cited Uzbekistan’s strong economic growth as well as the solar and wind resources as contributing to ACWA’s decision to invest. 

Among ACWA’s projects underway in Uzbekistan are Central Asia’s largest wind farm – a 1,500-MW wind power project in Karakalpakstan. The project is expected to meet the electricity needs of approximately 4mn households and offset approximately 2.5mn tpy of carbon dioxide.

Issues to resolve 

Still, there are some issues to resolve for the sector to fully forge ahead. Bakhrom Umarbekov, director of special projects at Uzbekistan’s energy ministry, said that while Uzbekistan is viewed as moving fast on renewables, “to me personally it is not that fast, because we are a little bit late with the reforms. We were hoping that the new draft of law on electricity would be passed last year and the market regulator would be created, but [the regulator] is still not created and the law has not been passed yet.” 

The law, Umarbekov says, is important because it “would allow us to put the burden of planning this sector from the government to the private sector and then the boom would be much faster.” 

This also has implications for Uzbekistan’s public finances. “We cannot let so many projects in solar and wind happen right now because, first, these [public-private partnership] PPP deals create certain indirect guarantees on the shoulders of the government and already the rating agencies are watching them,” Umarbekov said. “Second, we need to be creating not just solar and wind resources but also backup power sources like combined cycle gas turbine power stations, and they are also not cheap.” 

In conclusion, he stressed, “We can’t take more PPP on our shoulders. That’s why we need to be very fast with reforms.”

Many ways to save energy

While the focus at present is on solar and wind, Uzbekistan already has hydropower capacity it currently accounts for most of the country’s renewable capacity and is also looking at other ways to reduce emissions while ensuring energy needs are met. 

Alongside the development of solar and wind projects, new hydropower projects are being launched and existing hydropower plants (HPPs) modernised. Among them is a joint project between Uzbekistan and Tajikistan to build new HPPs on the Zerafshan river, after relations between the two neighbouring countries improved significantly.

As well as renewables, Uzbekistan’s low-carbon pathway includes a focus on grid strengthening and the addition of selective new gas capacity. The government has increased its support for households that want to install solar panels on their roofs, offering interest-free loans as well as 30% subsidies and tax incentives.

Earlier in June, Mirziyoyev ordered a ramping up of renewable energy development, with steps such as a new scheme of support for citizens and businesses installing renewable energy devices, and a network of solar power plants on the grounds of all the country's universities. 

At the same time, Tashkent wants to increase energy efficiency. This goes all the way from modernising power stations and the electricity grid to teaching children how to save energy at home. Akhmedkhadjaev talks of bringing user ethics to kindergarten levels. “The new generation must understand people must save energy,” he says.

Finally, both the Uzbek government and companies active in the country are looking to develop green hydrogen. 

According to Akhmedkhadjaev, Tashkent is already setting goals to develop hydrogen energy. “Construction of infrastructure for hydrogen is part of measures to achieve energy efficiency and security … Development of hydrogen in Uzbekistan is very perspective,” he told the conference.

ACWA’s Gokhale said that his company sees potential in green hydrogen. “Green hydrogen is in its infancy, but we are working with the energy ministry in this space,” he told journalists. 

That would add yet another strand to the country’s efforts to shift away from electricity generation by thermal power stations though unlike many emerging European countries it does not have an overwhelming dependence on coal to overcome as it moves forward with its green transition.

bneGREEN

Dismiss