BAKU, Azerbaijan, December 23. Uzbekistan continues to emerge as a high-potential market for private investors, given its transition to liberalized and competitive energy markets, excellent renewable energy potential, solid cross-border infrastructure, and the previous success of private companies in large-scale renewable energy projects, Trend reports via Asian Development Bank (ADB).
According to the bank, total investment needs in energy infrastructure of Uzbekistan are estimated at $17 billion– $36 billion. Approximately 60–70 percent of the total investment is needed for power generation, driven largely by the investment size of a planned nuclear power plant.
Uzbekistan’s current energy mix is heavily dominated by natural gas. Nearly 90 percent of the country’s electricity is generated by natural gas.
The government aims to modernize old power plants to satisfy rising demand with new and more efficient units. At the same time, Uzbekistan has a vast renewable energy potential of around 600 gigawatts (GW), mainly in solar photovoltaic (PV) and wind energy.
Uzbekistan is one of the leading producers of natural gas in the Eurasia region, with an annual production volume of 53–57 billion cubic meters per annum, and total proven reserves of 1.2 trillion cubic meter - the 23-rd largest global reserve, accounting for around 1 percent of the world’s natural gas.
Multiple foreign investors are involved in gas exploration and production in Uzbekistan’s large domestic market and in some of its gas transit and export infrastructure. The country has taken initial steps toward liberalizing its energy market. Following the unbundling of the vertically integrated state-owned companies (Uzbekenergo and Uzbekneftegaz), in 2019, the next steps should be directed toward the establishment of competitive wholesale and retail energy markets to gradually reduce the state monopoly.
Final energy demand in Uzbekistan is projected to grow from almost 30 million tons of oil equivalent (toe) in 2018 to 40–45 million toe by 2030, depending on the adoption of energy efficiency measures across three forecast scenarios. Despite the development of renewable and nuclear energy, natural gas will remain the key source of overall energy supply.
The share of renewable energy in the power generation mix could reach up to 39 percent across hydropower, wind, and solar PV energy by 2030. Given that the government also plans to commission a large-scale nuclear power plant in 2028, the share of natural gas could decline to 45 percent.
To reach its policy goals, priority energy technologies for Uzbekistan are gas-fired power plants, and solar and wind energy in the generation sector. The government should also address the high losses and overall poor technical condition of its aging midstream infrastructure, considering that the majority of greenhouse gases (GHGs) in Uzbekistan originate from the natural gas sector. Uzbekistan also has great “blue” hydrogen potential; however, in the short term, improved energy efficiency-mainly in the industrial and residential sectors-should be prioritized.
