The Republic of Uzbekistan is using renewable energy sources on a large scale in order to fulfill its obligations under the Paris Agreement. Uzbekhydroenergo JSC is engaged in projects in this area with the involvement of foreign investors, international financial institutions and private capital. Mr. Fozil Mahmudov, the First Deputy Chairman of the Board for Investments of Uzbekhydroenergo JSC  tells the correspondent of the magazine about what has already been done, what are the prospects.

- What are the key renewable energy goals adopted by Uzbekistan and how can financial institutions (banks, credit organizations etc.) stimulate renewable energy development?

The development of the use of renewable energy sources (RES) devices in the Republic of Uzbekistan is being carried out to prevent environmental problems, compensate for the demand for fossil energy resources, and in order to help form a new economic sector.

There is an increasing number of people willing to invest in energy efficiency and small-scale RES projects in Uzbekistan. However, the selling price of electricity, and especially the purchase tariff, is reducing the interest in these projects. Therefore, the Ministry of Energy is currently working on a new tariff methodology with Economic Consulting Associates with the technical support of the European Bank for Development & Reconstruction and World Bank.

At the same time, the Asian Development Bank is providing technical support for the development of distributed RES and is currently organizing a pilot project. In addition, a preliminary methodology has been developed by the Ministry of Energy regarding the tariff methodology (attached), and it has been proposed for review. It is planned to use the conclusions obtained at the end of the above-mentioned projects and re-develop the relevant proposals. When the proposals are approved by the inter-departmental agreement, a corresponding draft of the decision will be developed.

It is believed that the adoption of balanced tariff methodology, which is the main factor in the organization of the market environment and the introduction of investments in the sector, will create a safe and efficient environment for the use of RES.

On the basis of public-private partnership, cooperation with international financial institutions is underway for the implementation of RES power station projects. Financial institutions have been providing technical support to ensure transparency of RES power plant tenders. This increases the attractiveness of the investment project and increases the interest and confidence of potential investors.

- In 2018, Uzbekistan ratified the Paris Agreement and adopted a national commitment to reduce GHG emissions per unit of GDP by 10% of the 2010 level by 2030. How can the renewable energy sector accelerate this transition process in Uzbekistan? Please also specify the role of hydropower projects in this?

The commitment within the Paris Agreement ratified by the Republic of Uzbekistan in 2018 is defined as the initial national contribution and at the United Nations Conference on Climate Change held in Glasgow in November 2021, the Republic of Uzbekistan increased this indicator by 35%. The Republic of Uzbekistan has been implementing the use of renewable energy sources on a large scale in order to fulfill its obligations under the Paris Agreement.

It should be noted that during the past period, several investment projects were created anew. Also, even today, construction of large-scale hydrotechnical structures and modernization of existing ones are being carried out at a high pace throughout our country.

As a result of these creative works and reforms implemented in the field, the energy sector, including the hydropower sector, is progressing year by year. If we look at the numbers, due to the projects implemented in the last 5 years, it was ensured that the power generation capacity will be increased from 1,731 MW in 2017 to 2,054 MW in 2021. In 2017-2021, a total of additional 323 MW of new capacities were commissioned. In particular, 13 new modern hydroelectric power stations were built, while 9 existing hydroelectric power stations were fully modernized based on modern requirements. In 2017-2021, a total of additional 244 MW of new capacities were commissioned.

- What are the further steps implemented to accomplish the targets pledged by Uzbekistan in the scope of the Paris Agreement and recent COP26 Conference in Glasgow?

The goal is to increase the share of electricity generated from RES to more than 25 percent by 2030. Increasing the share of RES is carried out at the same time as changing the unified energy system to the level that can accept them. These works, in particular, are being carried out simultaneously with the construction of new power grids and renovation of old ones, digitization of the energy system, construction of flexible energy sources and renewal of the portfolio of old thermal power plants, coordination of regional energy systems of Central Asia, and improvement of professional training of personnel.

According to the "Concept of providing electricity to the Republic of Uzbekistan in 2020-2030" developed and approved by the Ministry of Energy, it is aimed to increase the number of RES power plants on an industrial scale by implementing the construction of 5 GW solar photovoltaic and 3 GW wind power plants.

- What are the major projects carried out as a result of the cooperation between the Government of Uzbekistan and international organizations to accelerate Uzbekistan’s transition towards a greener economy? What are the peculiarities of Uzbekistan’s financial market that international organizations should consider in order to provide efficient support? Is there any cooperation between financial institutions and the Government of Uzbekistan for financing renewable energy projects?

According to the "Regulation on the procedure for allocating compensation from the State budget funds of the Republic of Uzbekistan for the purchase of energy-efficient and energy-saving devices and for covering a part of the interest costs on loans obtained for these purposes" approved by the decision of the Cabinet of Ministers of the Republic of Uzbekistan No. 217 dated April 14, 2021 Compensations are set for installing RESs.

For reference:

According to the information received from enterprises producing renewable energy sources, during the past period of 2019-2020 and 2021 in households, enterprises and social sector objects 2,679 solar photoelectric stations with a capacity of 3,494 kW and 2,476 solar water heaters with a capacity of 6,274 Gcal have been introduced across Uzbekistan.

For diversification of fuel and energy resources and reduction of dependence on fossil energy sources, the target parameters given in the "Concept of providing electricity to the Republic of Uzbekistan in 2020-2030" can be cited as an example. According to these parameters, by 2030 it is planned to form a portfolio of 5 GW solar photovoltaic, 3 GW wind, 2.4 GW atomic, 3.4 GW hydro, and 15 GW coal and gas thermal power plants.

Although the potential of organic waste from agriculture and water management, as well as municipal management is relatively small, it can be developed as an energy resource for bioenergy. In the use of these resources, it is required to carry out a number of works in cooperation with other state organizations. Also, it will be necessary to support the formation of a free entrepreneurship environment and financing of private sector projects, assuming the participation of the private sector in the use of bioenergy resources.

As for the country's hydropower industry, Uzbekhydroenergo JSC plans to develop and implement 19 large projects with a total additional capacity of 857 MW in 2022-2026 – 7 projects with 268 MW in 2022, including 3 new construction and 4 modernization projects; 10 projects with 171 MW in 2023-2024, and 2 projects with 418 MW in 2025-2026.

Under a grant from the Asian Development Bank, the hydropower potential of the republic was analyzed and, in accordance with the provided recommendations, a hydropower development program until 2030 was developed.

Over the past 5 years, a number of promising large investment projects have been implemented. Huge work is underway to implement more than 30 investment projects for the construction of new and modernization of existing HPPs, a lot of work is being done in this direction, industry specialists of local and foreign significance are involved.

We can proudly announce that in 2017-2021 the JSC "Uzbekhydroenergo" increased the number of operating 36 HPPs to 50 due to the commissioning of new large, medium and micro HPPs, and the total hydropower capacity of the country today is about 2,054 MW.

- There seem to be several anticipated large hydropower investment projects in Uzbekistan. Can you mention them and how will Uzbekistan benefit from them?

Over the past 5 years, 13 new hydroelectric power plants have been put into operation in the Republic of Uzbekistan. Another 9 hydroelectric power plants have been modernized.

Until 2030, the authorities intend to increase its capacity by 1.7 times - up to 3 416 MW through the construction of new and modernization of existing HPPs.

In 2020-2022, “Power Machines” will build and modernize six hydroelectric power plants in Uzbekistan with a capacity of 275 MW and a cost of 138.4 million euros. In particular, Moscow and Tashkent are building the second largest hydroelectric power station in the Tashkent region - the Pskem hydroelectric power station.

Based on the decision of the President of the Republic of Uzbekistan No. PQ-44 of December 10, 2021, it is planned to implement 14 prospective projects, 11 of which will be implemented on the basis of the principle of public-private partnership.

From 1991 to 2017, a total of 6 hydroelectric power plants (Akhangaran, Andijan, Gissarak, Tupolang, Ertash, Urgut hydroelectric power plants) with a total capacity of 151 MW were put into operation.

Currently, a total of 8 HPP construction projects are planned to be implemented on the basis of public-private partnership, and their concept projects and technical and economic bases are currently being developed. Discussions are being held with IFC (International Finance Corporation) regarding the development of tender documents by an independent international expert for the implementation of projects on the basis of PPP.

 “Construction of Khojikent pump storage power station in Bostonliq district of Tashkent region” (capacity 200 MW) project is currently being developed by K-Water company (Korea) on the basis of the MoU signed between JSC “Uzbekhydroenergo” and K-Water, and it is expected to be completed by the end of the July. From August, the process of developing the technical feasibility study of the project will begin.

Along with this, promising projects such as "Upper Pskem HPP construction" (capacity 100 MW) on Pskem river in Tashkent region, "Mizut-Kshtut HPP construction" (capacity 75 MW) on Topalang river in Surkhandarya region are planned to be implemented till 2030.

- What measures and actions have been taken in the area of transformation and innovation?

It should be emphasized the acceleration of the transformation processes of Uzbekhydroenergo JSC, which are provided for by the Decree of the President of the Republic of Uzbekistan dated April 8, 2022 No. UP-101 “On regular reforms to create conditions for stable economic growth by improving the business environment and developing the private sector”, increasing the attractiveness of investment environment in the implementation of investment projects, which are considered as priority areas implemented with the participation of the private sector and under the terms of public-private partnership.

- Thank you for the informative interview

FOR REFERENCE:

Orishchuk Roman Nikolaevich (Russia) is Director General of Hydroproject JSC from 2021.

The diversification of the economic activities of Uzbekhydroenergo JSC began with the study of the possibility of launching the production of mini- and medium-sized turbines and units for hydroelectric power plants.

Uzbekhydroenergo JSC's financial reports for 2018-2021 were prepared on the basis of the International Financial Reporting Standards (IFRS) and received positive mark from the international consulting company PwC. Fitch Ratings assigned Uzbekhydroenergo JSC an international credit rating of "B+" ("Positive") in 2020, which was upgraded to "BB-" ("Stable") in October 2021. It is expected to receive “BB” rating in 2022, which indicates a stable financial and economic position of Uzbekhydroenergo JSC and confirms the increase in company's attractiveness to investors and international financial organizations.

The introduction of innovative technologies in Uzbekhydroenergo JSC began with the study of the specifics of the design and operation of hybrid power plants based on renewable energy sources. Hybrid power plants represent the "mix" of hydro, solar and wind generation of electric energy in one station. In our case, it is planned to rebuild hybrid power plant or to modernize (transform) the existing HPP.