Japanese corporation Sumitomo Corporation, the Japan Bank for International Cooperation (JBIC), and other institutions will lead $1.45 billion for power plant and battery energy storage system projects in Uzbekistan, the Nikkei Asia saidin a story.
The project involves ACWA Power from Saudi Arabia, as well as Japanese companies Shikoku Electric Power and Chubu Electric Power, which have signed project financing deals with a group of banks, including JBIC, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Islamic Development Bank.
Reportedly, JBIC will provide $635 million in a loan, becoming the largest participant among the financing organizations. The remainder will be financed by Sumitomo Mitsui Banking Corporation and Norinchukin Bank.
The private portion of the financing will be secured by export credit insurance not tied to contracts, provided by the Japan Export and Investment Insurance Agency (NEXI).
In 2024, Uzbekistan and JBIC signed a three-year cooperation program providing for the possibility of non-sovereign (non-state) financing of projects by Japanese companies in the country.
The Asian Development Bank, in turn, organized a financing package totaling $140 million, including $70 million from its own resources, $10 million from the Asian Private Infrastructure Development Fund managed by the ADB, and $60 million in syndicated loans, where the ADB acts as the lead lender.
To increase investment attractiveness and reduce risks, the ADB will also provide up to $85 million in credit guarantees securing price payment obligations.
"These guarantees, supported by the Government of Uzbekistan, played a key role in mobilizing more than $1.2 billion in private and partner capital," the ADB said in a statement.
The Asian Development Bank also acts as a coordinator on environmental and social issues. It is expected to ensure that the projects comply with "the highest standards of environmental protection and community engagement." "Thanks to the financing and risk mitigation measures, the ADB's participation makes this project one of the largest clean energy deals in the region," the bank said.
About the project
The project involves the construction, ownership, and operation of PV plants with a total capacity of 1000 MW, equivalent to the annual power consumption of approximately 600,000 households, as well as energy storage systems with a total capacity of 1336 MWh in the Samarkand and Bukhara regions of Uzbekistan.
This project is one of the largest combined solar generation and energy storage initiative in the country's history. The completion of the first project, "ACWA Power Sazagan Solar 1," is expected in 2027, and Sazagan Solar 2 in 2028.
After that, all the power produced will be sold to the National Electric Networks of Uzbekistan under a 25-year power purchase contract.
ACWA Power's share in the project will be 51%, Sumitomo's approximately 20.2%, and Yonden and Chubu's 14.4% each.
Importance of renewables for Uzbekistan
Uzbekistan traditionally relied on gas-fired generation for about 80% of its domestic power demand, possessing significant reserves of natural gas. However, population and economic growth are increasing the strain on the energy system and requiring a reduction in dependence on gas.
The government has set a goal of increasing the share of renewable energy sources to 54% of the total power generation capacity by 2030 and is actively promoting the construction of solar power plants.
Battery energy storage systems are expected to become a key element in stabilizing the power grid, providing storage for surplus energy and balancing supply and demand. ACWA Power is one of the largest energy companies in Saudi Arabia, specializing in projects in the fields of renewable energy, water supply, and energy storage. It operates in more than 10 countries, including Uzbekistan, where it is one of the largest foreign investors in the energy sector.
