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Gulf energy companies are leading the way in one of the world’s newest markets for renewable energy, with Saudi and UAE firms picking up the first contracts to develop solar power projects in Uzbekistan.
The government of the central Asian republic has ambitions to develop up to 5GW of solar power and 3GW of wind power by 2030, helped by international partners such as the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD) and the World Bank’s International Finance Corporation (IFC).
Last year the first significant steps were taken when the government launched a plan for a 100MW plant in the Navoiy region, in what was the country’s first competitively tendered solar power project. Uzbekenergo, the state-owned power utility, received submissions from 23 companies, which Wiebke Schloemer, IFC regional director for Central Asia and Europe, said at the time was proof of “strong investor interest in Uzbekistan.”
On October 4, the UAE’s Masdar Clean Energy was announced as the winner, having submitted a bid priced at 2.7 U.S. cents per kilowatt hour (kWh). That is some way off the lowest prices achieved in other parts of the world, where solar energy can cost well under 2 cents per kWh, but far below the cost of electricity generation based on fossil fuels which typically falls in a range of $0.05 to $0.15 per kWh.
Later that month, Uzbekistan signed a mandate with the IFC to develop up to 900MW of solar power through public-private partnerships (PPPs).
This year there has been further movement. On March 8, Saudi Arabia’s Acwa Power signed an agreement with the Ministry of Energy for the development, financing, construction, operation and maintenance of wind power plants with a capacity of 500-1000MW, worth $550 million to $1.1 billion. It was one of three deals announced at the time between Acwa Power and the ministry, with others including a $1.2 billion scheme to develop a 1.5GW combined cycle gas turbine power plant, and a memorandum of understanding to set up a training centre for Uzbek students and professionals.
It is not only Gulf developers that are winning business though. The Energy Ministry says it also has a deal with France’s Total Eren to develop a 100MW solar power station in the Samarkand region. Nonetheless, Gulf developers appear in a strong position given their experience in nearby markets and track-record of delivering low-cost renewable energy projects.
Acwa Power and Masdar are among a handful of Gulf utility companies which have expanded around the world. Acwa has 56 projects in 11 countries while Masdar is operating in more than 20. An energy investment conference in Tashkent in early March also attracted interest from Kuwait.