Saudi Arabia Group Supports Renewables, Hydrogen Projects in Uzbekistan

A Saudi Arabian energy group has signed agreements with officials from Uzbekistan to help the latter country increase its use of renewable energy resources and develop production of green hydrogen.

ACWA Power, which develops power generation and other industrial projects, and Uzkimyosanoat (UKS), the national holding company for chemicals in Uzbekistan, announced the deals during the EBRD 2023 Annual Meeting and Business Forum in Samarkand, Uzbekistan, held May 16 through May 18. Officials said the projects are part of Uzbekistan's strategy to decarbonize at least 35% of its energy sector by 2030.

The green hydrogen projects will be built in two phases, with renewable energy replacing natural gas in the production of hydrogen. The second agreement signed this week finalized financing for the Karatau wind farm, also known as the Nukus Wind Project. The wind farm, which Saudi Arabia-based ACWA Power in December 2021 agreed to build, represents an investment of $120 million. The National Electric Grid of Uzbekistan (NEGU) has an exclusive 25-year contract to buy electricity from the wind farm.

Financial Support

The European Bank for Reconstruction and Development (EBRD) is supporting the Karatau project with a $19.3 million loan to ACWA Power. The wind farm is sited in the Republic of Karakalpakstan in western Uzbekistan. The EBRD now has helped finance about 2.7 GW of renewable energy generation projects in Uzbekistan.

We are excited about the limitless possibilities this agreement brings, positioning UKS as a key player in the emerging green fertilizers economy," said Timur Mukhammedjanov, chairman of the board for UKS. It is a testament to our commitment to innovation, environmental stewardship, and building a prosperous, low-carbon future for our citizens and the world."

This signing represents a significant step towards achieving our ambitious renewable energy targets," said Sarvar Khamidov, deputy minister of the Ministry of Investment, Industry and Trade of the Republic of Uzbekistan. Green hydrogen holds immense potential to transform our energy landscape, attract investment, and foster innovation, positioning Uzbekistan as a regional leader in the green economy."

A First in Central Asia

ACWA Power on May 19 said the agreement with UKS to produce green hydrogen is the first of its kind in Central Asia. The first phase, representing a $100 million investment, will be located in the Tashkent region. The first phase has a goal to produce 3,000 metric tons of green hydrogen each year for Uzbekistan's chemical industry. Officials said the use of renewable energy to produce that volume of hydrogen will reduce natural gas consumption by 20.4 million cubic meters annually.

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The second, much-larger phase, representing an investment of $4 billion, will increase green hydrogen production to 120,000 metric tons each year, utilizing more than 2.6 GW of renewable energy power generation capacity. Officials said it will reduce natural gas consumption by 830 million cubic meters, and cut emissions of carbon dioxide (CO2) by 20 million metric tons.

Decarbonization Strategy

Marco Arcelli, CEO of ACWA Power, said his group wanted to be involved in the Uzbek government's commitment to decarbonization, as his company supports the country's move to diversify its power generation sector.

We enable sustainable growth of communities around the world by providing competitive power and water desalination solutions, and in green hydrogen, we are the first mover in the industry with our participation in the Neom Green Hydrogen Project with Air Products and Neom," said Arcelli, referring to ACWA's work with Neom, another Saudi Arabia-based company. Our team has done a magnificent job to launch our second project in Uzbekistan together with Uzkimyosanoat and the Uzbek government to make the chemical industry in Uzbekistan a world leader in decarbonization."

Arcelli said the financial close of the 100-MW Karatau wind project means ACWA Power will now have about 5 GW of power generation capacity in Uzbekistan. The Karatau farm is expected to enter commercial operation in February 2025.

We are proud to support ACWA Power ... and this 100-MW wind farm," said Nandita Parshad, managing director of EBRD's Sustainable Infrastructure Group. The region of the Aral Sea is rejuvenating its economy capitalizing on its wind and solar resources. This is the first project under the EBRD's auction advisory program." Parshad said the auction program is designed to help deliver 2 GW of wind power through competitive bidding processes. It sets a record-low price for wind energy and will deliver more than 178,000 tonnes of CO2 emissions savings annually."

-Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).

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