What are the main drivers of hydropower development in the country?

Khasan Khasanov: There are a number of main drivers for development in the country. These include meeting the increasing demand for electricity from consumers; making the most efficient use of the country’s hydropower potential; increasing the share of hydropower generation in the country’s energy mix; improving energy security; and also to aid in the development of related industries, such as transportation and industry.

Are there any obstacles for future hydropower growth in the country? How can they be eliminated?

Electricity generation in Uzbekistan is less diversified than other countries in Central Asia, with natural gas the dominant source of energy at over 80% installed capacity, followed by hydropower and coal. The studied hydropower potential of Uzbekistan is estimated at 27.5 billion kWh per year, but currently, only approximately 30% of this potential has been utilized. This potential was actually estimated approximately 30 years ago, and today’s figure is likely to be increased taking into account new potential sites studied in recent years and the expected increase in water volume, as well as cooperation agreements with neighboring countries in the region.

In order to increase hydropower development,  in 2017 President of Uzbekistan Shavkat Mirziyoyev signed a decree forming Uzbekgidroenergo, whose goal was to effectively use Uzbekistan’s hydropower potential, form a unified water and energy resources management system, and consistently increase the share of renewable hydropower resources in the country. On its formation, the industry’s work was critically analyzed and ways to eliminate identified shortcomings and problems were developed, reflected in the “Concept and development of hydropower for 2020-2024” .

To solve existing issues that were limiting development of the industry, the following main areas were identified:

  • Most hydroelectric power plants have an operations life of between 30 to 80 years.  In the years of independence nine new hydroelectric power plants were commissioned, including two in 2019.  However, equipment at existing hydroelectric power plants is outdated and requires extensive modernization. In the first stage of hydro development in the country, the modernization of 14 existing hydroelectric power plants is planned which will include replacement of worn-out and obsolete equipment with modern, high-tech and energy-efficient equipment.
  • To ensure a radical improvement in hydropower and a tangible increase it its share in the energy system, it is necessary to build and commission new larger projects, which can often have a long construction period (up to six years); four new large projects  have been identified for development – hydropower plant 2 at the Tupolang reservoir, the cascade of the Zarchob hydro plants, Nizhnechatkalskaya hydro plant and Pskemskaya hydro plant.
  • For design and survey work, and to ensure the development of quality projects, there is a need to recruit younger generations into the industry, as well as to upgrade survey equipment and licensed software, and re-equip the laboratories of JSC Hydroproject. There are plans to annually recruit capable young people who have graduated from specialized higher educational institutions into the company.
  • Additional comprehensive surveys of the territory of the republic are needed with the involvement of international experts to identify new hydropower sites. The organization is working together with the World Bank and the Asian Development Bank to organize a study of the republic's territories to clarify hydropower potential, with completion for this expected in 2020.
  • There are plans to develop and implement a mechanism of public-private partnership for the construction of micro and small hydropower plants. Implementation of measures for the access of private capital to enterprises, as well as the restructuring and implementation of institutional reforms in the electricity sector, is underway thanks to technical assistance from the World Bank.
  • There is a need to increase the utilization of existing power plants, as well as a need to improve dispatch centers and regional power grids. The optimization of the hydropower plant control system is possible during the modernization period by introducing innovative high-tech kits of an automatic process control system for hydraulic units (ACSUP GA) and an automatic top-level process control system with a modern instrument base, switching, information and software, as well as with the introduction of an automated diagnostic system GTS monitoring (ASDK) with an automated interrogation system equipment (ASO KIA) and information-diagnostic system (IDS). A project is currently running to implement an automated process control system (APCS) at hydropower plants and the creation of the Dispatch Center of JSC Uzbekhydroenergo to organize centralized management of cascades of hydropower plants.
  • It is necessary to financially improve and increase the profitability of enterprises in the industry. For the financial recovery of the structural divisions of  JSC Hydroproject, JSC Gidrospetsstroy, JSC Uzbekhydroenergostroy and JSC Suvsanoatmash plans are: to review the state of fixed assets and if necessary, sell or lease surplus equipment and premises; reduce receivables by applying to the courts for debt collection methods;  prepare a draft regulatory document to write off bad and past due debts; optimize production costs through a more rational use of material resources. Specifically for JSC Gidrospetsstroy there are plans to acquire specialized machinery and equipment for the construction of bridges and tunnels, high-risk facilities and potentially hazardous industries; and introduce special construction technologies used in drilling and blasting operations. For JSC Uzbekhydroenergostroy plans are to improve the material and technical base, form strategic relationships with suppliers, and increase the range of special construction works, and develop and implement new technologies in construction and installation. For JSC Suvsanoatmash" there are plans to construct, reconstruct and maintain hydroelectric power plants.

In which major regions is growth likely to be concentrated?

The construction of large hydropower plants is mainly focused on in the Tashkent region, which has huge hydropower potential. There is also considerable potential for the construction of small hydropower plants in the Andijan, Samarkand and Kashkadarya regions.

The hydropower projects proposed for development have different capacities – are other permits required for smaller stations compared to larger projects?

The requirements for the construction of hydropower plants of various capacities are all the same, except for environmental assessment.

Are there opportunities for even larger hydropower plants in the country?

The water resources of Uzbekistan are not as large compared with other countries in the region, like Tajikistan or Kyrgyzstan. There are not many large rivers in the country, therefore recent attention has been paid to the construction of small hydropower plants that correspond to the pressure and flow of river water. Experts have however identified rivers where hydropower production capacity can be increased.

The construction of the following hydropower plants has been identified, wahc with capacity exceeding 70MW: Nizhnechatkal hydroelectric power station on the Chatkal river in the Bostanlyk district of Tashkent region (76MW); Pskem hydroelectric station on the Pskem river in the Bostanlyk district of Tashkent region (400MW); Mullalakskaya hydroelectric power station on the Pskem river in the Bostanlyk district of Tashkent region (240MW) and Verkhnepskemskaya hydroelectric station on the Pskem river in the Bostanlyk district of Tashkent region (200MW)

Is there a possibility for pumped storage development?

In accordance with the President’s decree for the further development of hydropower for 2017-2021, construction of the 200MW Khodjikent pumped storage station in the Bostanlyk district of Tashkent region was identified.

What environmental assessments need to be done before a hydropower plant is approved?

In accordance with the Regulation on State Ecological Expertise, approved by the resolution of the Cabinet of Ministers of the Republic of Uzbekistan, hydroelectric projects with power capacity of 30MW or less belong to the III category of the environmental impact (low risk) and projects over 30MW to the I category of the environmental impact (higher risk). For projects related to the I category, it is necessary to conduct an environmental impact assessment (EIA), and for projects related to the III category , it is sufficient to prepare and environmental impact statement (EIS), which is coordinated with the State Committee of the Republic of Uzbekistan on ecology and environmental protection . 

Does the development of hydropower plants in the country comply with any international standards, such as the protocol for assessing the sustainability of hydropower from the International Hydropower Association?

On September 27, 2018, the Republic of Uzbekistan ratified the Paris Agreement on Climate Change dated 12.12.2015, and in this regard, it adheres to international standards for carbon dioxide emissions into the atmosphere.  

Also JSC Uzbekgidroenergo actively participates in the meetings of the International Hydropower Association, in particular the delegation of Uzbekgidroenergo headed by chairman A.Sanginova took part in the World Hydropower Congress organized by the IHA, which was held 14-16 May this year in the city of Paris.

Who will finance the development of new hydropower?

The majority of investment projects of  JSC Uzbekhydroenergo are financed from credit funds of foreign government financial organizations (IFRS) and International financial institutions (IFIs). These organizations adhere to international standards when selecting and financing investment projects.

Is there any policy that would attract international investment in the country's hydropower sector?

The Republic of Uzbekistan does not have separate policies to attract international investment in the hydropower sector, but it has adopted a series of legal documents to stimulate the attraction of foreign investments in particular: The Law of the Republic of Uzbekistan dated 12.24.1998 , No. 719-I "Investment activity" (new edition) ; Law of the Republic of Uzbekistan dated April 30 , 1998 No. 611-I “Guarantees and measures to protect the rights of foreign investors”; Law of the Republic of Uzbekistan dated April 30 , 1998 , No. 609-I “Foreign Investments” ; The Law of the Republic of Uzbekistan dated 10.05.2019 No. ZRU-537 "Public-private partnership"; Resolution of the Cabinet of Ministers dated 02.08.2005 No. 180 “Measures to implement the Decree of the President of the Republic of Uzbekistan“

Additional measures to stimulate the attraction of direct private foreign investments  include: Decree of the President of the Republic of Uzbekistan dated 10.04.2012 No. UP-4434 “Additional measures to stimulate the attraction of foreign direct investment”; Decree of the President of the Republic of Uzbekistan dated 11/14/2018. No. UP-5577 “ Additional measures to improve state regulation in the field of construction”; Decree of the President of the Republic of Uzbekistan dated December 20 , 2018 No. PP-3857 “Measures to increase the efficiency of preparation and implementation of projects with the participation of international financial institutions and foreign government financial organizations”;  Decree of the President of the Republic of Uzbekistan dated April 29 , 2019 No. PP-4300 “Measures to further improve the mechanisms for attracting foreign direct investment in the economy of the republic”. 

On January 1, 2007, the Law on Arbitration Courts entered into force in the republic, which served as the legal basis for the creation, functioning and activities of arbitration courts, both permanent and temporary. Thus, at present, along with the existing means of protecting the rights and guarantees of the activities of foreign investors, by agreement of the parties, arbitration courts can be created in the republic with the involvement of independent experts acceptable to both parties.

At the same time, the Ministry of Justice is entrusted with the task of ensuring the protection of the rights and legitimate interests of foreign investors and enterprises with foreign investments. For these purposes, the Office for Legal Protection of Foreign Investments and Enterprises with Foreign Investments has been created in the structure of the Ministry of Justice.

What local participation is expected in hydropower development ? Is there a fixed percentage if international firms win a tender?

There are no restrictions on the participation of international firms in the construction of hydropower plants. However, during the construction of hydropower plants, in order to reduce imports and the cost of construction work, it is advisable to purchase goods produced in the Republic of Uzbekistan .

Will new hydropower projects be public or do you encourage private development?

The state of the Republic of Uzbekistan pays great attention to attracting private investment in various sectors. The “Concept for the development of hydropower for 2020-2024” sets the task of creating conditions for public-private partnerships with the aim of interacting with business structures and attracting private investment for the construction of hydropower plants .

However, in accordance with of Article 10 of the Law on electricity (№ZRU-225 from 30.09.2009) hydroelectric power plants connected to the power grid are state-owned.