Uzbekistan’s Ministry of Energy is set to implement its Electricity Sector Transformation and Resilient Transmission Project after securing over $400 million in loans from financial institutions.
The World Bank’s Board of Executive Directors have voted in favour of providing Uzbekistan with up to $380 million in loans which will be issued through the International Development Association. Uzbekistan will also leverage a $43 million loan secured from the Green Climate Fund under the Sustainable Renewables Risk Mitigation Initiative Facility in addition to a $4 million grant issued by the financial institution.
The grid reinforcement and modernisation project, prepared with a $350,000 grant from Europe and Central Asia Regional Capacity Development Trust Fund and a $500,000 grant from the Programme for Asia Connectivity and Trade, will help expand the country’s portfolio of renewable energy capacity to decarbonise the energy sector.
Up to 1,500 MW of renewables capacity is expected to be integrated with the grid as part of the project. The project will help increase the participation of the private sector in the country’s renewable energy market.
The government of Uzbekistan is also working with the European Bank for Reconstruction and Development, the Asian Development Bank, and the International Finance Corporation to source funding for the project. Emphasis will be put on expanding the electricity transmission network and the capacity the lines are able to transport to ensure an increasing amount of renewable energy capacity is delivered to regions with low generation capabilities. With the country’s energy demand expected to increase from 61TWh in 2018 to 100TWh by 2030, increasing the amount of energy capacity on the country’s grid network will help prevent power outages and ensure grid reliability.
The project will help:
- Modernise outdated electricity infrastructure by financing part of National Electric Grids of Uzbekistan (NEGU)’s investment programme:
- Rehabilitation, upgrade, and expansion of 22 existing obsolete high-voltage substations and construction of a new 500 kV transmission substation and associated transmission lines in 11 regions of Uzbekistan.
- Introduce modern digital and telecoms technologies and solutions to improve monitoring, control, and operation of the power transmission system:
- A new Supervisory Control and Data Acquisition (SCADA) and Energy Management System for NEGU’s central and regional dispatch centres – to replace outdated systems
- Support NEGU’s transformation – new business processes, financial, operational, and commercial performance, digitization, and institutional capacity:
- Operations and planning functions, corporate governance, and cybersecurity
- New foundations for the transition to a competitive electricity market in Uzbekistan via market reforms;
- Develop the regional electricity trade in Central Asia by rehabilitating and expanding transmission infrastructure connecting Uzbekistan with Afghanistan, Kazakhstan and Tajikistan’s electricity systems;
- Accelerate the energy transition and ability by the Uzbek utility to attract private investments into the energy sector.
Mr Alisher Sultanov, Minister of Energy of Uzbekistan, said: “Uzbekistan has been working closely with the World Bank and other international institutions to open up the country’s electricity sector to private investment. This project, and the confidence of its backers in Uzbekistan, is testament to the reforms our country has implemented to date. This latest financing will help us reach our goal of 25% of energy consumption deriving from renewable sources by 2030. It will also be a key component of Uzbekistan’s ambitious, wider strategy to develop environmentally friendly renewable sources of energy to meet our growing electricity demand.”
In line with the Nationally Determined Contribution under the United Nations Framework Convention on Climate Change, Uzbekistan is committed to policy goals to improve energy efficiency and increase renewable energy’s share of the country’s energy mix. Uzbekistan is proud to be playing a leading role in developing green energy in the region.