Local experts and international developers discuss the challenges of entering the renewable energy market in Central Asia

Central Asia has a unique renewable energy potential, having the capacity to develop solar, wind and hydropower projects. With ambitious renewable energy targets set in both Uzbekistan and Kazakhstan, the sector is attracting great interest among international investors.

Central Asia has a unique renewable energy potential, having the capacity to develop solar, wind and hydropower projects. With ambitious renewable energy targets set in both Uzbekistan and Kazakhstan, the sector is attracting great interest among international investors.

As mentioned by Sardor Koshnazarov CEO of Investa and renowned expert on the region in an exclusive interview with EnerLoop by Invest In Network, Uzbekistan seems to be the leader in renewable energy investments in recent years as many projects are and will be implemented. implemented in the future. With its 35 million inhabitants and its economic growth, the country is certainly a market with solid fundamentals. Energy demand is strong and is expected to increase in the future. Renewable energy projects have been financed mainly by multilateral financial institutions, demonstrating the safety and financial return of investments.

At the same time, international developers face certain challenges when entering the market.

Extreme competition in the market could be difficult for international investors, according to the head of PPPDA’s energy and transport division Khasan Khasanov.

“In almost every project that was tendered, the ‘hegemony’ of Middle Eastern companies was evident. The aggressive approach and lowest price proposals of Middle Eastern companies East create difficulties for other companies to defeat their competitors.The problem may be related to the country’s energy security and geopolitics, and, of course, PPPDA is working to solve it.Together with ministries and departments, we are looking for ways to solve the problem of a possible future oligopoly in the renewable energy market in Uzbekistan. Market diversification is a top priority,” Khasanov added.

The legislative environment in Uzbekistan needs to be more flexible and conducive when it comes to the principles of financing projects on the basis of limited recourse, said Umid Aripdjanov, partner at law firm Centil. “There should be no restrictions for lenders to benefit from the advantages of direct agreements with public partners and state authorities, the right to exercise a step-in and step-out with respect to a project company or the right to replace it,” he said.

Ms. Anna Kim, Project Manager at the Delegation of German Economy in Central Asia, mentioned that a common obstacle to investments in Kazakhstan is economic instability which could be linked to insufficient financial guarantees.

Mr. Neil Young, CEO and Managing Director of Elixir Energy, mentioned that general sovereign risks that relate to the region and affect any FDI will also be relevant for renewable energy projects. Eurasia-specific geopolitical factors will also overshadow investor sentiment. However, the latter can be both positive and potentially negative.

On the other hand, the main obstacle that foreign companies often face when entering Central Asia is the lack of knowledge of the market, i.e. the main market players, stakeholders and the structure of the market. market as it is.

International companies, renewable energy developers, investors, independent power producers, EPCs and engineering firms, as well as consultants and technology providers are invited to join the upcoming Energy Week Central Asia & Mongolia 2022 (April 26-28, Uzbekistan), which is a unique platform bringing together public and private sectors from Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Mongolia and providing our international participants with new business opportunities.

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