Uzbekistan is expected to have one of the fastest growing storage markets in the world in the coming years, with the nation’s government having set a target of 4.2GW of storage by 2030 – attractive PPAs are luring investors, with Middle Eastern finance in particular driving significant growth
Uzbekistan will be one of the energy storage markets to watch in the coming years. It has been forecast that the country will be home to the fifth fastest-growing energy storage market in the world over the period 2024 to 2027, with its battery storage capacity alone expected to soar from 0.6GWh to 5.9GWh over the three-year time-scale. Meanwhile in terms of gigawatt capacity, the Uzbek government’s target is to reach 4.2GW by 2030.
The net result is that the country is set to be home to some of the world’s biggest energy storage projects in the coming years. In May last year, Voltalia signed two new energy storage partnership agreements for the 126MW Sarimay solar power plant in Uzbekistan. The agreements mean that, as well as the addition of 50MW / 100MWh of battery storage to the solar plant, a 500MW / 1000 MWh battery complex will also be created. The country’s ability to guarantee revenues for battery storage projects is proving pivotal in attracting investment. Upon the signing of the Sarimay agreements, Sébastien Clerc, then CEO of Voltalia, commented: “By offering long-term sales contracts for major national and international storage projects, Uzbekistan offers the opportunity to accelerate Voltalia’s battery storage strategy, without being exposed to fluctuations of the electricity market prices.”
Meanwhile, earlier this year, Voltalia signed a power purchase agreement for the 526MW Artemisya project in Uzbekistan, a hybrid scheme consisting of 126MW of solar, 300MW of wind and 100 megawatts/200 megawatt-hours of battery storage. The PPA extends for 25 years for solar and wind energy and 15 years for storage.
ACWA Power to develop 2GWh of BESS in Uzbekistan
One of the biggest contributors to the battery storage boom in Uzbekistan in the coming years will be ACWA Power. In November last year, the company signed a binding implementation agreement (IA) with the Ministry of Energy (MoE) of Uzbekistan to develop up to 2GWh of standalone battery energy storage systems (BESS) capacity across the country.
The heavy involvement of Riyadh-headquartered ACWA Power in Uzbekistan’s energy transition comes against a backdrop of Saudi Arabia signing an implementation programme to strengthen cooperation in the field of renewable energy with the Republics of Azerbaijan, Kazakhstan and Uzbekistan. Under the agreement with the Uzbek MoE, ACWA Power receives contractual priority for 2 GWh of new BESS capacity in Uzbekistan, allowing the company to offer competitive tariffs. The agreement is valid for two years and may be extended by mutual consent. Both parties will collaborate on feasibility studies to identify optimal locations for BESS projects. Raad Al Saady, vice chairman and managing director of ACWA Power, said: “This agreement marks a key milestone in the evolution of our ongoing partnership with Uzbekistan. Crucially, as the largest investor in Uzbekistan’s energy sector, with over 13 GW of projects under development, this new agreement represents our shared vision for a sustainable future for all.” ACWA Power’s investment in Uzbekistan is partly financed by a $240 million Islamic equity bridge loan (EBL) from the International Finance Corporation (IFC). The IFC financing will support the construction and operation of a number of projects, including 1GW of solar PV and 668MW of battery energy storage.
Meanwhile, in September last year, ACWA Power – which has a market cap of around $50 billion – signed a joint development agreement with Japan’s Sumitomo Corporation to develop major renewable energy generation and storage projects in Uzbekistan. The projects include Sazagan 1 and 2 located in Samarkand – each consists of 500MW of solar and 334MW of battery energy storage. Uzbekistan now represents ACWA Power’s second-largest market in terms of investment.
It is estimated that, by 2027, Uzbekistan will have the 12th biggest BESS market in the world by installed capacity (source: elements.visualcapitalist.com)
Uzbekistan is leaning heavily on Middle Eastern finance to fund its energy transition. Last year, in another Middle East-financed deal, the World Bank Group, Abu Dhabi Future Energy Company PJSC (Masdar), and the Government of Uzbekistan agreed a financing deal to fund a 250MW solar photovoltaic plant with a 63MW battery energy storage system (BESS). The project aims to expand clean and reliable electricity access to approximately 75,000 households. The financing includes a loan of up to $53 million from the IFC [International Finance Corporation] and loans for up to $106 million from the Asian Development Bank (ADB), Dutch Entrepreneurial Development Bank (FMO) and Japan International Cooperation Agency (JICA). The financing will support the construction and operation of the new plant. IFC will also provide interest rate swaps – derivative contracts where two parties agree to exchange interest rate cash flows over a specified period – for the entire debt amount, allowing the project to effectively manage interest rate risks. The solar power plant project will be implemented through a project company Nur Bukhara Solar PV LLC FE owned by Masdar, which is responsible for developing, financing, building, owning, operating, and maintaining the solar plant and BESS. The project company is committed to selling electricity to the state-owned National Electric Grid of Uzbekistan under a 25-year power purchase agreement for the project, including a 10-year operating term for the BESS component, signed by these two entities.
Uzbekistan has big plans to expand its energy storage capacity in the coming years and, with significant backing form Middle Eastern finance, the country looks well-placed to achieve its goals.
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