Europe-Funded BRI 2.0 in Uzbekistan Advancing Due to China-Saudi Collaboration
Uzbekistan is forging ahead with ambitious plans to increase its renewable energy capacity, aiming to generate 40% of its electricity from renewable sources by 2030. This shift towards clean energy is being facilitated by international partnerships and the Belt and Road Initiative (BRI).
Since 2016, lending for BRI projects has seen a decrease due to growing caution towards high-risk financing. However, a noticeable shift globally is towards China co-financing projects with multilateral development banks (MDBs). This collaboration is evident in Uzbekistan's renewable energy sector, where Chinese firms have secured significant contracts.
One of the most notable projects is the Bash-Dzhankeldy wind power project, Central Asia's largest with a capacity of one Gigawatt. This project came online earlier this year and is a flagship of the BRI. The project was built by the state-owned China Energy Engineering Group (CEEC), with state-owned China Southern Power Grid owning a 35% stake. The international companies involved in this project include Masdar, a renewable energy company from the UAE, as the lead developer, and Siemens Gamesa as the supplier of wind turbines.
Another significant project is a 1.1 GW wind project in Egypt, being developed by ACWA Power and minority partner HAU Energy. Funding for this project comes from the EBRD, British and German state institutions, and uses turbines from China's Envision Energy. ACWA Power and Masdar have also won 19 of the 26 projects in Uzbekistan's renewable energy portfolio.
The Silk Road Fund, a BRI's flagship equity vehicle, owns 49% of ACWA Power's RenewCo platform. The project is backed by two syndicated loans arranged by the European Bank for Reconstruction and Development (EBRD), with each loan comprising a USD 150 million loan on the EBRD's own account.
The EBRD appears to be taking steps to reform public procurement, with a "Review of Procurement Policy and Rules" listed as a key policy for review in 2025. Eleven of these projects involve European public finance, mostly through the EBRD, but also the EIB and state funds from Germany, France, and the Netherlands.
Chinese firms have won 14 of the 18 EPC contracts announced in Uzbekistan's renewable energy sector. This dominance is part of Beijing's de-risking strategy, which includes increasing equity participation and tie-ups with foreign firms, a strategy it calls "third-party market cooperation".
Clean energy is not only a priority for Uzbekistan but also a cornerstone of deepening China-Saudi cooperation. Riyadh's "Vision 2030" goal of diversifying its economy through petrodollar investment has been aligned with Beijing's ambition to build a green Belt and Road.
In a positive move towards transparency, nine of the 26 power-purchase agreements for solar and wind projects in Uzbekistan were awarded through transparent auctions. This transparency, coupled with international partnerships and the BRI, is propelling Uzbekistan towards its renewable energy goals.
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