Renewable energy became a consistent focal point in energy dialogues among countries in the region this year. The Caspian and Central Asian regions stand as reservoirs of untapped green energy potential, an opportunity that has garnered increasing global attention from both the public and private sectors, in 2023. Azerbaijan, Uzbekistan, and Kazakhstan were particularly keen on steering discussions towards a sustainable green energy future. This year saw a remarkable uptick in region-based cooperation. For example, on January 6, the Ministers of Energy of Kazakhstan, Kyrgyzstan, and Uzbekistan signed an agreement on constructing the Kambar-Ata-1 hydropower plant in Kyrgyzstan, a power plant that will be the biggest of its kind, capable of supplying electricity to the three countries. Global partners, too, have shown increasing interest in the rising renewable energy sector in the region, with the U.S., the EU, the Gulf, and China playing a particularly active role over the last year. 

The West’s Commitment to a Green Energy Future

The U.S. has emphasized its interest and commitment to the region's energy landscape, with USAID focusing on renewable energy. USAID continues actively engaging with Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan to address energy security priorities. This comprehensive initiative focuses on three key objectives: national market liberalization reforms, clean energy initiatives, and regional power market enhancements. Specific projects in each country include smart metering systems and renewable energy auctions in Kazakhstan, energy sector reform in the Kyrgyz Republic, power system modeling in Tajikistan, renewable energy opportunities in Turkmenistan, and regulatory agency development in Uzbekistan. The initiative fosters regional collaboration through clean energy forums and supports training and gender initiatives for a sustainable and inclusive energy sector.

Though the U.S. continues to target and help implement the renewable energy sector, the European Union (EU) has also made strides to support a green energy future. The EU Support to Sustainable Energy Connectivity (SECCA) in Central Asia is a EUR 6.8 million program aimed at promoting a sustainable energy future in the Central Asian region in line with the EU best practices, tackling climate change issues by optimizing energy efficiency and renewable energy development. The SECCA project takes a country-specific approach by developing detailed work plans for each country.

In addition, the European Bank for Reconstruction and Development (EBRD) has committed to aiding the transition to renewables in Uzbekistan and Kazakhstan. In less than four years EBRD has financed 2.7 gigawatts of renewables in Uzbekistan. At the CPC Caspian Energy Security Conference in London, Aida Sitdikova, EBRD’s Director of Energy Eurasia, Middle East, and Africa at spoke to the importance of this transition to the region: “We don’t see these two as mutually exclusive. We actually think that the energy transition is supportive of energy security.”

Piquing Interest from the Gulf 

Several Gulf-based renewable energy companies have been especially proactive in the Caspian region in the last few years. Namely, UAE-based Masdar and Saudi Arabia-based ACWA Power have been among the leading energy companies investing in developing the region’s promising renewable energy potential. In early 2023, Masdar started developing a 200MW solar photovoltaic (PV) plant in Kyrgyzstan and signed an agreement to construct three solar PV power plants in Uzbekistan. Similarly, in late 2022, ACWA Power signed a power purchase agreement to construct Central Asia’s largest wind plants and storage facilities in Uzbekistan. In the past, the UAE and Saudi Arabia have had limited interactions with the region due to their reliance on their well-established traditional energy industry. However, as new opportunities have arisen as part of the global green transition, Gulf countries have started building broader connections with Central Asia in order to work towards the ambitious goal of achieving net-zero emissions.

The Gulf Cooperation Council (GCC) nations—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE—are actively building diplomatic and economic connections with Central Asia. A recent summit in Saudi Arabia emphasized the GCC's interest in investing in Central Asia's energy sector. Major investments from Saudi Arabia's ACWA Power and the UAE's Masdar in Kazakhstan and Uzbekistan. 

The GCC country to which the Caspian Region has seen the largest amount of investment has been the UAE. Renewable energy companies such as Masdar, Mubadala Investment Company PJSC, and Abu Dhabi National Oil Company (ADNOC) have steadily mounted their presence in the region, and recently their engagement has only increased. As the UAE hosted the COP28 Summit in December, its commitment to decarbonization is evident through high production by Masdar and substantial investment in the Caspian region's green energy sectors. These efforts align with the Caspian's goal of contributing to global decarbonization. At the end of the UAE’s COP28, Azerbaijan was announced as the host of the COP29 Summit in 2024, highlighting the region’s desire to play a larger role in global carbon emission reduction. 

The UAE and Emirati companies have demonstrated keen interest in Azerbaijan as a partner for cooperation in many fields, especially renewable energy. In January 2023 State Owned Oil Company of the Azerbaijan Republic (SOCAR) and Masdar agreed to jointly enact several offshore wind and green hydrogen projects in Azerbaijan, with the capacity to produce 2 GW of power, along with smaller solar and onshore wind projects. SOCAR and Masdar also agreed to develop agreements on 1 GW of solar photovoltaic (PV) projects and 1 GW of onshore wind. One month later, Masdar opened a flagship office in Baku in February 2023. Masdar already has several established green energy projects in Azerbaijan, such as the Garadagh solar plant (which has a capacity of 230 MW) and the Janub Thermal Power Plant (which has a capacity of 780 MW), co-financed by the Abu Dhabi Fund for Development. ADNOC has also ramped up its active presence in Azerbaijan’s energy sector. In August 2023, ADNOC signed a deal with SOCAR and French TotalEnergies, where it acquired a 30% stake in the Absheron gas field, making it so that TotalEnergies and ADNOC both now own a 35% stake in the field. 

China’s Promises 

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During Premier Li Qiang's visit to Kyrgyzstan on October 25, and following discussions between Chairman Akylbek Japarov and Premier Li Qiang, the Kyrgyz Ministry of Energy signed deals with two Chinese companies for the construction of wind power plants with a combined capacity of up to 3 GW and the establishment of solar power plants. The deals followed goals set in August during a Kyrgyz-Chinese business forum, where the focus on renewables resulted in agreements worth over $1 billion.

China has also signed deals with Uzbekistan to accelerate the shift towards green development. The collaboration focuses on upgrading power transmission networks for renewable energy sources and includes plans for advancing this field's scientific and technical infrastructure. The coming years will prove whether these commitments will bear fruit. 

Though this year has clearly emphasized green energy as a critical piece of the region’s energy future, tangible progress in transitioning towards renewable energy has mainly remained conceptual. While laying the groundwork for a sustainable future is crucial, the next pivotal step demands the implementation of projects that yield substantial results. Global partners from the West, China, and the Middle East have expressed interest, creating ample opportunity for the region to begin taking substantive steps towards green energy. In this transition, mobilizing investments to meet the targets and improvements in the policy and regulatory environments will prove critical. These policies should streamline regulatory processes and offer attractive incentives for private companies with the financial capacity to invest in and execute renewable energy projects.

Russia's war on Ukraine has compounded the urgency to diversify energy resources and heightened awareness of the world’s energy resource vulnerability and the need to reduce dependence on Russian oil and gas. Though the region has and will continue to serve as a critical energy resource hub, the world is increasingly looking to transition into a green energy future. This year has shown an increased interest in the region’s green energy potential, and the Caspian and Central Asian countries now have an opportunity to strategically position themselves ahead of the international curve as a critical source of renewable energy in the coming years.

Credit: Samantha Fanger