By 2030, Uzbekistan plans to export 10-15 billion kWh of electricity to Europe

In the modern history of the Republic of Uzbekistan, starting from 2016, as in all sectors of the economy, fundamental reforms have also been carried out in the energy sector. The essence of the reforms in the energy industry lies in deep structural transformations, modernization, and diversification.

An important step in this direction was the creation of the Ministry of Energy of the Republic of Uzbekistan in 2019. The Ministry of Energy and its subordinate organizations carry out state regulation of processes related to the production, transmission, distribution, and consumption of electrical and thermal energy, coal, as well as the extraction, processing, transportation, distribution, sale, and use of oil, gas, and their derivatives.

In 2019, the single state company "Uzbekenergo," which had previously monopolized the management of the country's energy sector, was divided into three separate structures responsible for the production, transportation, distribution, and sale of electrical energy.

Management of thermal power plants and electricity-generating stations that produce both electrical and thermal energy under the new conditions is carried out by the joint-stock company "Thermal Power Stations".

The functions of operating and developing the main electrical networks, transmitting electricity across the republic's main grids and through interstate transit, as well as exporting and importing electricity, have been assigned to JSC "National Electric Networks of Uzbekistan". This company also acts as a single buyer of electricity from producers, including those with private capital. JSC "National Electric Networks of Uzbekistan" was established based on the dissolved enterprises "Uzbek Electric Networks" and "Energosotish."

The third structure, JSC "Regional Electric Networks", manages enterprises of territorial electric grids responsible for distributing and selling electricity to end consumers.

The Agency for the Development of Nuclear Energy also operates within the structure of the Ministry of Energy.

As of October 1, 2024, the Ministry of Energy of Uzbekistan oversees 9 thermal, 9 solar, and 7 wind power plants with a total capacity of 11,954 MW.

In the autumn of 2024, Uzbekistan began the construction of the first nuclear power plant in Central Asia in cooperation with the Russian state corporation Rosatom. The project envisions a plant with a capacity of 330 MW, utilizing six reactors of 55 MW each. The first unit is scheduled to be operational by the end of 2029, with the full commissioning of all units planned by 2033.

In 2019, Uzbekistan adopted two key laws: “On Public-Private Partnership” and “On the Use of Renewable Energy Sources”. The latter law introduced a series of incentives and preferences for renewable energy producers, enabling significant foreign direct investment from leading international companies into the country’s energy sector.

Uzbekistan has committed to a course of expanding alternative energy sources and transitioning to a green economy, which are expected to play a crucial role in the future development of the domestic energy sector. According to the International Solar Energy Institute of Uzbekistan, the technical potential for electricity production from solar energy in the country exceeds 3000 TWh per year, far surpassing the projected electricity demand by 2050.

International experts estimate Uzbekistan's wind energy potential at 500 GW, while other renewable energy sources, such as low-enthalpy geothermal waters, could provide up to 1 GW, and biomass potential is estimated at 15–17 GW.

By 2026, Uzbekistan aims to increase the total capacity of solar and wind power plants to 8 GW. Achieving this target will enable the generation of 22.7 billion kWh of electricity annually from solar and wind sources, saving 8.8 billion cubic meters of natural gas and preventing 9.1 million tons of greenhouse gas emissions from burning this gas.

A mechanism has been developed and implemented to allow both legal entities and individuals to sell surplus electricity generated for their own needs using renewable energy sources.

Overall, Uzbekistan plans to increase the share of “green energy” in the total energy production to 40% by 2030. As of early 2024, the share of renewable energy sources (RES) in total production stood at 10%.

Parallel to the Ministry of Energy, JSC "Uzbekhydroenergo" operates in Uzbekistan, which also engages in the construction of hydroelectric power plants, construction and repair of hydraulic structures, supply of energy equipment, and provision of services in the energy sector. JSC "Uzbekhydroenergo" also owns and manages the hydroelectric assets it has built.

JSC "Uzbekhydroenergo" consolidates all hydroelectric power plants in the republic that were previously part of JSC "Uzbekenergo," as well as those subordinated to the "Uzsuvenergo" association of the Ministry of Agriculture and Water Resources of the Republic of Uzbekistan.

Over the past six years, the number of hydroelectric power plants in Uzbekistan has increased from 37 in 2017 to 58. After the launch of a number of hydroelectric power plants, their number will reach 71.

In accordance with the "Development Strategy of Uzbekistan for 2022–2026," 15 new hydroelectric power plants with a total capacity of 868 MW will be built by 2026. Additionally, five existing hydroelectric power plants will be modernized. As a result, by 2026, the total capacity of all hydroelectric power plants in the country will reach 2,920 MW.

The "Concept for Ensuring the Republic of Uzbekistan with Electric Energy for 2020–2030" was developed and approved in April 2020. The strategic goal of the Concept is to provide the population and economy of Uzbekistan with electricity at competitive prices and to develop a balanced energy sector.

The Concept for 2020–2030 provides for an increase in capacities from 12.9 GW to 29.3 GW and electricity production from 63.6 billion kWh to 120.8 billion kWh; a reduction in natural gas consumption in the energy sector from 16.5 billion cubic meters to 12.1 billion cubic meters; and a reduction in electricity transmission losses to 2.35% and distribution losses to 6.5% (1.85 times lower than the 2019 level).

Priority measures include the modernization and reconstruction of existing power plants, as well as the construction of new ones using energy-efficient electricity production technologies; improvement of electricity metering systems; development of renewable energy sources, especially solar energy; and legal reforms to improve tariff policies and ensure the transition to the wholesale market.

In Uzbekistan, the active growth of the economy and improvement in the population's living standards have led to an increase in electricity demand by 1.6 times over the past five years. Today, it has already reached 86 billion kWh per year, which is generally met by domestic capacities.

Therefore, the country pays special attention to a significant increase in electricity production. Over the past five years, 56 new generation facilities have either been commissioned or are under construction. The total capacity of these power plants is about 30,000 MW. Investments of $25 billion have been attracted to implement these projects.

A significant portion of the new power plants is based on renewable energy sources. The new thermal power plants that have been built and are under construction are also aimed at reducing emissions, as they will replace morally and physically obsolete energy blocks that have been in operation for over 40 or even 50 years.

In line with the "Uzbekistan-2030" strategy, systemic reforms are also being carried out in the energy sector. For example, a course has been set to establish an independent energy market regulator. The presence of such a regulator accelerates the reform process and increases trust in the transparency of all processes in the energy sector among foreign investors.

According to the Presidential Decree of the Republic of Uzbekistan "On Measures to Implement the Next Stage of Reforms in the Energy Sector" dated September 28, 2023, the Agency for the Development and Regulation of the Energy Market was established, which was entrusted with the functions of an energy regulator.

According to this Decree, by 2026, a free wholesale electricity market is planned to be introduced, which will be formed based on supply and demand. At the same time, it is necessary to develop a regulatory framework, create market infrastructure, digitize the energy system down to the grassroots level, and implement an intelligent real-time management system (SCADA) that eliminates human factors.

To address this issue, the creation of energy storage stations will help. The first two projects of the Agency for the Development and Regulation of the Energy Market are set to be commissioned in December 2024, with each station having a capacity of 150 MW.

In July 2024, Uzbekistan adopted a new law "On Electric Power Industry," which regulates all issues related to the creation of market infrastructure. Several documents were developed, including rules for wholesale and retail electricity markets, as well as licensing regulations.

In recent years, a number of government decisions have been made aimed at radically reducing the energy intensity of economic sectors and increasing their energy efficiency. For Uzbekistan, this is extremely important, as the specific heat consumption in the country is 390 kWh/m², compared to, for example, 95 kWh/m² in the Netherlands. Therefore, a Target Program has been approved to reduce the energy intensity of the economy by 1.5 times by 2030, achieving a ratio of 0.09.

Ministries and agencies have developed target parameters for resource savings. Specifically, during 2022–2026, it is planned to save a total of 4 billion kWh of electricity, 3.9 billion cubic meters of natural gas, and 21,000 tons of petroleum products.

To meet the growing needs of the rapidly developing economy and population, electricity production must be increased to 120 billion kWh by 2030. The construction of new capacities and full modernization of networks will require investments of $52 billion.

However, Uzbekistan plans to increase electricity production to 135 billion kWh by 2030 and export 10 to 15 billion kWh to Europe. To achieve this, high-voltage direct current (HVDC) transmission lines with a length of 2,500 km will be built. The proposed energy corridor route includes laying a cable under the Caspian Sea through Azerbaijan and Georgia and then under the Black Sea to Romania.

Fundamental reforms are currently being carried out in Uzbekistan's electricity production sector. These reforms aim not only to fully and reliably meet the energy needs of the economy and population but also to create the necessary conditions for exporting electricity to European countries.

Odil Olimjonov,
Prof., PhD in Economics,
Center for Economic Research and Reforms