Uzbekistan : Digitize to Decarbonize—Power Transmission Grid Enhancement

Energy / Electricity transmission and distribution

Uzbekistan is an energy-rich country, with positive economic growth outlook and a considerably high-energy demand forecast for the main demand centers. Thus, the development of the power sector is a prerequisite for achieving economic development in the country's regions and for meeting the growing demand of reliable electricity supply by industrial, commercial, and residential consumers. Since the mid-half of 2010, electricity demand has grown by around 4%-5% per annum, with the government forecasting growth of around 6%-7% per annum in the period to 2030.

In response, the government set ambitious targets to increase power supply capacity to meet growing demand and to allow the phase out of old and inefficient thermal plants, with the new generation capacity to be developed by the private sector. The targets include the construction of a 7-gigawatt solar photovoltaic and 5 gigawatts of wind capacity over the course of the decade -- and the government is currently working on updating its long-term strategic document to reflect these new targets.

Uzbekistan's power transmission network was largely developed during the Soviet era, with most of the transmission lines and substations constructed 30-50 years ago. Presently, the substations are equipped with protection and monitoring equipment from the 1960s to 1970s, of which spare parts are no longer available. Failure to adequately replace and rehabilitate this infrastructure can lead to worsening supply reliability, increased incidence of system outages, higher losses, and inability to meet growing demand and evacuate power from newly constructed renewable power plants.

At present, analog instruments and manual hourly recording measure the loading of transformers, and incoming and outgoing transmission lines. Disturbance events are also recorded by hand. Communication with the control center is done by the power line carrier and the national telecommunication network. For example, the Uzbekistan grid system took a long time to detect faults and recover from the regional blackout in the early 2022, compared with its neighboring countries, because of the absence of modern digital system and the supervisory control and data acquisition (SCADA) system.

Uzbekistan's power transmission system is owned and maintained by JSC NEGU, which will serve as the project's executing agency. JSC NEGU also functions as the single buyer of electricity from all power generators and the reseller to the distribution companies. With increasing private sector participation in the power generation, particularly renewable energy, robust creditworthiness of JSC NEGU and a sustainable market structure are needed to guarantee the successful operation of private power projects. The government has been rigorously pursuing reform policies to address these, including (i) the creation of an autonomous tariff commission, (ii) the adoption of a new cost-reflective tariff methodology, (iii) increased revenue collections through a nationwide advance metering program, and (iv) a stronger financial management system for JSC NEGU. Among others, the project will support power grid modernization through the introduction of state-of-the-art infrastructure and monitoring equipment. In doing so, it will improve JSC NEGU's financial position through reduced losses of energy, reduction in outages, and enhanced ability to meet growing demands within various regions of Uzbekistan. In addition, the reform components of the project tailored for JSC NEGU will complement ongoing policy-level intervention and strengthen JSC NEGU's institutional capacity.

Adoption of comprehensive measures aimed at deepening structural transformations, modernization, and diversification of key sectors of the economy.

Ensured access to modern, affordable, and reliable energy supply for 100% of the population and key sectors of the economy.

Power transmission system reliability improved.

Transmission lines rehabilitated and equipped with climate-resilient technologies