Uzbekistan looks at alternative energy sources

By bne IntelliNews October 19, 2011

Clare Nuttall in Almaty -

With its oil and gas reserves diminishing, Tashkent is starting to explore alternatives to fossil fuels.

Russia's Lukoil and the Asian Development Bank (ADB) are considering building one of the world's largest solar power plants in Uzbekistan. The plant would have initial capacity of 100 megawatts, rising later to 1 gigawatt.

Lukoil is already active in Uzbekistan's oil and gas sector, where it is planning to invest up to $500m to develop new projects; the plans for the solar sector are at an earlier stage. An ADB spokesperson tells bne that currently, "ADB has only had very preliminary discussions with Lukoil on the project. ADB is not even at the stage of being mandated to undertake any due diligence on the project."

Into thin air

The Tashkent-based think-tank the Center for Economic Research (CER) forecasts that if current consumption rates continue, Uzbekistan will only have sufficient gas for the next 28-30 years. If exports to China increase as expected in 2012, Uzbekistan's gas reserves could be used up even more quickly.

Oil reserves are expected to run out in just 10-12 years at current consumption rates, and coal in 40-50 years. To maintain energy stability, from 2030 Uzbekistan will have to substitute at least 12m-13m tonnes of oil equivalent a year with alternative energy sources. "The problem of scarcity of hydrocarbon resources will grow after 2020 and will pose a threat to the country's energy security and its economic security as a whole by 2030," says a report from the CER. "According to the pessimistic scenario, after 2020 Uzbekistan's production of natural gas will stop growing, which based on rising domestic consumption will require a cut in exports by 10bn cubic meters in 2030 as compared with 2020."

Happily, the CER points out, "the stock of renewable energy sources in Uzbekistan is three times as large as the stock of hydrocarbons."

The ADB plans to set up a Solar Energy Institute in Uzbekistan by 2013, to develop solar power projects. There is also potential for hydropower, geothermal and biomass energy in Uzbekistan, as well as for alternative fossil fuels such as liquefied natural gas.

However, for these to be used, changes to both the law and to feed-in tariffs will have to be made. Uzbekistan's national electricity grid has extremely low feed-in tariffs thanks to the country's cheap and readily available fossil fuels. Unless these are changed, solar energy, which is relatively expensive, will not be economically viable.

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