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Uzbekistan draws in billions of GCC energy investments

Tashkent, the capital of Uzbekistan,has many attractions but business is fast becoming a major one for the Gulf Unsplash/axp-photography
Tashkent, the capital of Uzbekistan, has many attractions but business is fast becoming a major one for the Gulf
  • Uzbekistan aims for 35% renewable energy by 2030
  • Acwa, Taqa and Masdar invest in country’s energy sector
  • Trade with Dubai doubles to $500m in 2022

Uzbekistan’s energy sector is attracting billions of dollars from the Gulf as the former Soviet republic looks to generate 35 percent of its electricity from renewable sources by 2030. 

The central Asian country has an average of 330 sunny days a year and the potential for solar energy is huge, prompting companies such as Saudi-based Acwa Power and UAE giant Masdar to agree significant investments.

Acwa Power’s latest $2.5 billion deals with the National Electric Grid of Uzbekistan and Uzbekistan’s Ministry of Investment, Industry and Trade include the development of three solar projects with a total capacity of 1.4gw and three battery energy storage systems, offering 1.5gwh of additional capacity. 

The agreements follow the company’s announcement in December that it will build three wind power plants in the country.

Other GCC-based companies such as Masdar, Taqa and Mubadala have also committed to invest in Uzbekistan’s energy sector.

According to the International Renewable Energy Agency, almost half of all new renewables capacity in 2022 was added in Asia.

Investment opportunities

Dubai International Chamber – established to strengthen relations with international corporations and investors – also picked Tashkent, the Uzbek capital, to launch the first of a new phase of trade missions called New Horizons this week.

Acwa Power also recently signed agreements to develop a green hydrogen facility and a green ammonia pilot project in the Republic, making Uzbekistan its second largest market after Saudi Arabia.

The projects will play an instrumental role in achieving Uzbekistan’s ambitious targets to transition to a low-carbon economy as well as diversify its energy sources. 

The country also plans to develop 15,000mw of renewables to help offset 16 million tonnes of CO2 emissions a year.

By incorporating battery energy storage systems into the grid, Uzbekistan will soon have the largest storage facilities in the region, which will play a crucial role in stabilising the supply while promoting renewable energy. 

Acwa Uzbekistan signingAcwa Power
Acwa Power’s Mohammad Abunayyan and Uzbekistan’s Laziz Kudratov at the signing of agreements for solar power and battery storage projects

“Our expertise in green hydrogen, green ammonia, and clean energy has greatly strengthened our collaboration with the government of Uzbekistan,” Mohammad Abunayyan, chairman of Acwa Power, said.

“Our latest venture into battery energy storage systems is a significant step forward in our partnership and a clear demonstration of our commitment to transform the energy landscape in the republic.

“With our total investment commitments of $7.5 billion in energy projects, we are determined to remain a key partner in achieving Uzbekistan’s energy diversification goals.”

The plants are expected to become commercially operational between the third quarter of 2025 and 2026.

Globally, the Tadawul-listed company’s portfolio comprises 68 projects with an investment value of more than $68 billion.

In September Mubadala Investment Company and Abu Dhabi National Energy Company, better known as Taqa, signed agreements to invest in the privatisation of two gas-fired power generation plants in Uzbekistan, with the completion of the transaction expected during the second half of 2023.

UAE-based clean energy giant Masdar also said it has achieved financial close on the 500mw Zarafshan wind project, the largest renewables project in Central Asia. 

Trade reforms

In August Saudi Arabia and Uzbekistan signed investment agreements worth more than $12 billion to explore opportunities in sectors including aviation, livestock, agriculture, sports, education, science, media, energy and technology.

Late last year Tashkent hosted the Uzbekistan-Saudi Arabia Business Forum as the volume of bilateral trade increased to $95 million in the first half of 2022, compared to just $17 million in the whole of 2021.

“Uzbekistan and Saudi Arabia have rich natural resources and huge industrial potential,” Jamshid Khodjayev, minister of investments and foreign trade, said.

“We can create joint ventures in both Uzbekistan and Saudi Arabia, aimed at the production of high-value-added products with further export to regional and European markets.”

Despite the fallout from the war in Ukraine, Uzbekistan’s GDP was expected to grow by 5.3 percent in 2022, according to the World Bank.

It was upbeat about the medium term outlook as ongoing economic reforms are expected to continue to invigorate private sector led growth.

Uzbekistan, with a population of 32 million is the largest among central Asian countries, has pursued an ambitious initial set of trade and price liberalisation reforms in recent years.

But further changes are needed to continue to spur productivity and job creation, the World Bank added in a research note. 

Uzbekistan’s trade with Dubai is also soaring and it doubled in 2022 to exceed $500 million.

Last week Dubai International Chamber said it hosted 150 meetings between Dubai and Uzbek-based companies as part of its New Horizons trade mission, which aims to support plans to double Dubai foreign trade to $7 trillion over the next decade.

Mohammad Lootah, president and CEO of Dubai Chambers, said Central Asia has “huge growth potential for bilateral trade”.

“Uzbekistan is one of our key strategic partners in this region,” he said. “We believe that together we can unlock great trade and investment opportunities.” 

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