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12 March 2020

Uzbekistan goes big on wind

By Andries Wantenaar

ACWA Power has announced three new strategic agreements with Uzbekistan’s Energy Ministry; an Implementation Agreement for a mammoth wind farm of up to 1,000 MW; a 25-year PPA and Investment Agreement for a 1,500 MW natural gas plant; and a memorandum of understanding (MOU) to establish a training center for Uzbek students and professionals.

The wind farm Implementation Agreement is worth between $550 million and $1 billion depending on its eventual size, and covers ACWA Power’s development, financing, construction, and O&M of the project.

The 1,500 MW Combined Cycle Gas-Turbine plant will cost $1.2 billion, will be located in the Sirdarya region, and will follow the ‘Build, Own, Operate, Transfer’ pattern, with ACWA Power again taking the leading role in construction, engineering, and operation of the plant. The gas plant’s 25-year PPA is exclusively with JSC National Electric Grids, and its high efficiency rate of 60% will be twice that of Uzbekistan’s existing natural gas plants.

The MoU for a training center is between ACWA Power, the Ministry of Energy, and Air Products & Chemicals, and has the end goal of fostering a local supply chain in Uzbekistan for the chemicals and utility sectors.

ACWA Power is a Saudi Arabian company founded in 2004, dealing in desalination and generation projects, both traditional and renewable. Today it has 40 power plants operational or in advanced development, mostly in the Middle East, including three wind farms and thirteen gas plants. All told, it has 31 GW of capacity installed and desalinates 5.3 million cubic meters of water each day.

Prime Minister Abdullah Aripov spoke positively of the project and ACWA Power’s track record, adding “Our collaboration with ACWA Power will enable the government to benefit from the strong private sector participation which we believe is vital for Uzbekistan’s ongoing transformation and growth”

Thanks to the administration of President Shavkat Mirziyoev, who came to power in 2016, Uzbekistan’s energy sector had a shakeup in 2019 with a shift towards private enterprises and renewables. The former national electricity utility Uzbekenergo was privatized by a presidential decree of 27th March 2019, being replaced by three Joint Stock Companies.

JSC National Electric Grids of Uzbekistan is one of those, handling the development and operation of electric grids and acting as the main national power purchaser; the other two are JSC Thermal Power Plants and JSC Regional Electric Grids, which manages the distribution and sale of energy to final consumers.

2019 also saw the establishment of the Ministry of Energy, and plans are being made for digitalization of the energy sector, to automate ERP and SCADA systems. The reforms have also included tax breaks for power generators, including on installation of energy generation equipment. While JSC National Electric Grids is the main national offtaker and JSC Regional Electric Grids distributes power to consumers, provisions have also been made under the Renewable Energy Law for both territorial electricity networks and final consumers to conduct PPAs directly with renewable energy projects, so long as they are granted the appropriate consents.

In 2019 JSC National Electric Grids (also referred to as National Power Networks) received a $150 million loan from the World Bank to modernize and upgrade its substations. The year prior, Tajikistan and Uzbekistan agreed to once more supply energy to each other, after a 9-year hiatus.

Uzbekistan’s GDP growth has been in the 5% to 6% range for the past two years, and the Energy Ministry expects national electricity demand to double by 2030. By then, it also wants to increase renewables to 25% of power generation. At present, gas makes up 76% of generation, fuel oil 7%, and coal 6%. Uzbekistan’s first wind turbine was installed in 2017, a 750 kW pilot, courtesy of Goldwind; and its first solar pilot project of 130 kW was installed in 2015. The country has a few active solar plants and several wind and solar projects under development in the 50 MW to 200 MW size range. Along with wind and solar, the country has also been investing in natural gas and hydroelectric plants.