Renewables Gain Traction in Central Asia

After a slow start, interest in renewables in Central Asia and the south Caucasus is gaining momentum as new wind and solar projects take shape and more wait to be unveiled. So far, it is not the large Western players who are taking the lead but big-ticket investors from the Mideast Gulf, led by Abu Dhabi’s Masdar, a subsidiary of the giant Mubadala investment group (NC Apr.15'21). Countries in the region that have relied heavily on oil and gas revenues over the past 30 years have woken up to the need to embrace cleaner energy. Some have set ambitious long-term targets that analysts say they may struggle to meet. Kazakhstan, for example, says it will increase the share of renewables in domestic electricity generation to 10% by 2030 and 50% by 2050, while its neighbor Uzbekistan has set its sights even higher by aiming for renewables to account for 25% of its total energy mix by 2030, replacing mostly gas and oil. In the south Caucasus, Azerbaijan is targeting 30% renewables for power generation by 2030, which in theory would free up more gas for export. Kazakhstan, Central Asia's oil powerhouse with production in excess of 1.8 million barrels per day and three of the world's largest oil fields, was the first country in the region to embrace the energy transition. In 2008, it teamed up with the European Bank for Reconstruction and Development (EBRD) to unveil a "sustainable energy action plan" designed to diversify away from oil, gas and coal, and make proper use of its abundance of sun and wind (NC Apr.8'21). The EBRD, which is backing away from funding fossil fuel projects in general, has financed several wind and solar schemes in Kazakhstan in recent years, as well as helping the government auction off smaller projects, mostly to local operators. Last year, the bank provided a $25 million loan toward the construction of a 100 megawatt wind farm at Zhanatas in the southern Zhambyl region overseen by a subsidiary of the China State Power Investment Corp. alongside Kazakh investment group Visor Investment. Also chipping in are the Asian Infrastructure Investment Bank and the Industrial & Commercial Bank of China. One of the largest lenders to projects in the former Soviet Union since it was established in the early 1990s, the EBRD is also bankrolling Uzbekistan's renewables push. At the end of last year, the bank pledged loans of up to $45 million to fund a solar photovoltaic power plant in the Samarkand region, which will have a capacity of up to 100 MW and will be built by Total Eren, a renewables affiliate of the French oil major. Together with the World's Bank's International Finance Corp. and the Asia Development Bank, the EBRD has committed funding of up to $60 million to another solar project in Uzbekistan, in the industrial heartland of Navoi, which will also have a 100 MW capacity and is being overseen by Masdar. Inspired by its parent Mubadala, which is chaired by Abu Dhabi's Crown Prince Sheikh Mohammed bin Zayed al-Nahyan, Masdar is making a big splash in Central Asia, with Uzbekistan a primary focus. In a boost to the close political ties between Abu Dhabi and Tashkent, Mubadala forged a strategic alliance with the government over two years ago, pledging major investments in oil, gas and renewables. The full impact of that alliance is now being felt. Earlier this month, Masdar signed a deal with the government to super-size the capacity of the Zarafshan wind farm, also in Navoi the region, from 500 MW to 1.5 gigawatts. Attending the signing was Masdar's chairman, Sultan al-Jaber, who is also the United Arab Emirate's climate change supremo, minister for industry and advanced technology and chief executive of state oil company Abu Dhabi National Oil Co. At an estimated cost of around $600 million, the Zarafshan wind farm is due to come into operation by 2024 and is underpinned by a long-term power purchase agreement with Uzbekistan's national electric grid. According to Masdar, at its initial capacity of 500 MW, the project will provide electricity for at least 500,000 homes and displace 1.1 million metric tons a year of carbon dioxide. Masdar is also targeting renewables projects in Kazakhstan, where it entered into a strategic alliance last month with sovereign wealth fund Samruk-Kazyna to pursue joint opportunities. On the other side of the Caspian in Azerbaijan, Masdar recently finalized an agreement to finance, build and operate a 230 MW utility-scale solar PV project some 75 kilometers southwest of Baku. The project, which has a price tag of around $200 million, is set for completion in 2023 and is due to save around 110 million cubic meters of gas per year. Paul Sampson, London