Clean energy set to power GCC-Central Asia trade growth

July 26, 2023, 1:37 PM

The Saudi Crown Prince meets with President Shavkat Mirziyoyev of Uzbekistan on the sidelines of the GCC-Central Asia summit in Jeddah

Both sides commit to deeper relations based on renewable energy
Uzbekistan and Kazakhstan lead way with solar and wind projects
Healthcare, education and transport links also highlighted

Leaders from the GCC and countries in Central Asia, known as the C5 bloc, have pledged to boost trade, with clean energy expected to be at the heart of the relationship.

The pledge was made at a summit held last week in Jeddah, which built on a meeting last September between foreign ministers from both regions when the GCC-Central Asia Strategic Dialogue was launched.

Latest figures show the value of GCC exports to Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan surpassed $2 billion, while imports totalled more than $1 billion.

Electrical machinery and appliances constituted a major part of goods exported to Central Asia, while GCC imports were dominated by copper and its by-products, as well as gold, precious metals and stones and iron and steel.

A joint post-summit statement issued on Friday said both sides were committed to “pushing for” deeper relations in developing green and renewable energy sources and technologies, supporting investment opportunities and increasing trade.

It added that work would continue to ensure the flexibility of supply chains, transportation and communication, and food, energy and water security.

The summit follows the investment of billions of dollars by Gulf-based firms such as the UAE’s Masdar and Taqa and Saudi’s Acwa Power into clean energy projects in Central Asia, in particular Uzbekistan and Kazakhstan.

Last month, both Masdar and Acwa Power signed roadmaps for developing a 1 gigawatt (GW) wind power plant with a battery energy storage system in Kazakhstan to support the country’s goal of achieving half its energy mix from renewables by 2050.

In April, Masdar reached financial close on three solar power projects in Uzbekistan with a combined capacity of around 900 MW.

Earlier this year, Acwa Power unveiled $2.5 billion deals with the National Electric Grid of Uzbekistan and Uzbekistan’s Ministry of Investment, Industry and Trade to include three solar projects and three battery energy storage systems on top of plans for three wind power plants announced in December.

Acwa Power CEO Marco Arcelli said Central Asia is the company’s second-largest market in terms of investments.

Uzbekistan, which has an average of 330 sunny days a year, is looking to generate 35 percent of its electricity from renewable sources by 2030. Kazakhstan aims to become carbon neutral by 2060 and is targeting renewable electricity generation of 50 percent by 2050.

Analysts at Middle East Briefing, part of Dezan Shira & Associates foreign investment practice, said both regions aspire to be leaders in renewable energy.

“These are countries that are among the world’s most resource-rich in conventional energy, especially oil and gas… the GCC and Central Asia could contribute significantly to energy security globally,” analysts wrote in a research note.

“The intent appears to be there for this new engagement. There is an obvious political commitment. There also appears to be clear determination for this effort to move on a fast track,” it added.

Last week’s summit was chaired by Saudi Crown Prince Mohammed and was attended by many leaders of the GCC and Central Asian countries, as well as Jassem Mohamed Albudaiwi, secretary general of the GCC.

The Saudi Crown Prince said he looked forward to opening “new horizons to take advantage of the available opportunities for joint cooperation in all fields”.

Trade between the GCC and the C5 bloc exceeded $3 billion in 2021

According to the summit statement, leaders stressed the importance of strengthening cooperation and attracting more investments to tackle climate change, while also urging improvements to transport links between the two regions.

Healthcare and education were also highlighted as sectors for further collaboration between GCC and Central Asian countries.

Khalid Al-Falih, the Saudi minister of investment, expressed optimism about the outcomes of the summit, saying Saudi firms are keen to follow the lead of Acwa Power.

He highlighted investment by Dr Sulaiman Al-Habib Medical Group in the healthcare sector in Uzbekistan, by Fawaz Alhokair Group in the tourism sector in Kazakhstan, the launch of new flights by Flynas to Central Asia nations and agricultural investment by Al-Rajhi International Group in Uzbekistan.

Dubai International Chamber is also targeting growth in Central Asia and concluded a trade mission to Uzbekistan, Kazakhstan and Kyrgyzstan in March.

Since then, SA Group Dubai, which provides branded generic medicines and food supplements, secured a preliminary deal to export pharmaceutical products.

Presight, the Abu Dhabi big data analytics company, has also signed a deal with in Kazakhstan to bring advanced digital technologies to the city of Astana, focusing on smart traffic, utility and energy management.