Key Takeaways

Uzbekistan, located in Central and West Asia, has an arid and continental climate with large variations in temperatures within days and between seasons. Winters can be cold, with average monthly temperatures of -1°C to 3°C between December and February.

For many of the 3 million residents of the capital city Tashkent, keeping warm during the cold season is difficult because of the aging centralized heating system—developed between 1960s and 1970s to serve a population of 1 million. During milder winters, they are unable to regulate their apartments’ heating, which often leads to uncomfortably warm spaces, prompting residents to open windows, resulting in energy wastage. In colder winters, they find it hard to increase the heat, exacerbating the struggle to stay warm.

Close to 40% of the heat produced is lost due to the heating infrastructure and outdated systems. This hinders the city's ability to meet the growing demand for heating, impacts the quality of life of Tashkent’s residents, and creates inefficiencies in the heating supply chain.

A $1.5 Billion Revamped Heating System

In the heart of the city, an ambitious initiative is reshaping the city's heating landscape. A $1.5 billion project that aims to improve the quality and reliability of the supply of heat to consumers, enhance energy efficiency, reduce water consumption and leakages, and lower emissions of carbon dioxide is underway.

It resulted from an Asian Development Bank (ADB) transaction advisory support to the Tashkent City Municipality between 2019 and 2022 through which an innovative form of public–private partnership (PPP) to modernize Tashkent's district heating system was developed.

The revamped heating system will shift from an open system to a closed one. The move is one of the first of this kind in Central Asia’s communal systems. District heating systems were originally designed as open systems for hot water supply, but these brought about accelerated wear and tear of heat transportation and distribution networks, and inefficient use of energy. The new system is being rolled out in the districts of Sergeli and Bektemir as a pilot phase since 2022. New boiler houses using efficient and climate-friendly technologies, such as pre-insulated pipes circulating in a closed system are replacing obsolete networks.

  • Photo: Asian Development Bank

    Fossil fuels account for 75% of Asia's energy and the region accounts for more than half of global consumption.

  • Photo: Asian Development Bank

    The adverse impact of climate change requires an urgent just transition to clean energy.

Additionally, the PPP structure adopted for the project is that of an affermage, where the private partner is responsible for operating and maintaining infrastructure, but not for financing the investment. The private partner does not receive a fixed fee for its services. Rather, it retains part of the user charges with a portion of the receipts going to the procuring authority as owner of the assets.

ADB also advised on the establishment of the Tashkent District Heating Infrastructure Fund, which receives the portion of revenues going to the Tashkent City Municipality, as well as other government funding. This entity manages the financing of the investment of the assets.

Supporting Stakeholders in the Management of PPPs

“Tashkent’s revamped heating system will ensure residents live more comfortably during winter and contribute to making the city more sustainable. The municipality is also benefiting from ADB’s assistance that provides critical technical, commercial, and financial capacity to us and our stakeholders in the management of this complex long-term PPP contract,” says Tashkent City Municipality Head of PPP Department Israilov Jahongir.

ADB’s transaction advisory as well as ongoing technical assistance support to build capacity for the management of the PPP contract is being provided through the Asia Pacific Project Preparation Facility (AP3F), a multidonor trust fund providing technical support for the preparation of sustainable and inclusive PPP projects to fill infrastructure gaps in Asia and the Pacific.

“ADB is honored to support the Tashkent City Municipality in its heat supply modernization journey. Our contribution in supporting a competitive bid with a bankable structure demonstrates our knowledge and honest broker role. Tashkent residents and businesses can enjoy cleaner, reliable, and cheaper energy for their daily lives and work,” said Head of ADB’s Office of Markets Development and Public–Private Partnerships (OMDP) Cleo Kawawaki. “This initiative supports the Government of Uzbekistan's objective of energy efficiency. It will make Tashkent more environmentally sustainable and will also contribute to long-term economic benefits.”

With modern equipment from leading manufacturers that makes optimal use of natural gas and technology simultaneously generating heat and electricity, the initiative, when fully implemented, is expected expected to reduce network heat losses by over 40%, minimize breakages, curb water leakage by over 60%, and lower electricity consumption by more than 15%.

Empowering Tashkent’s Residents through Sustainable Practices

Residents of the city, who are consumers of the heat generated, play an integral role in the success of the project.

The project is changing how people think about energy use—heat meters are being installed, which measure energy by usage. This presents a marked shift from the previous system, where heat tariff was based on the square meter of area heated. Under the new system, billing is shifting from being area based to actual consumption.

“With better control over heating, residents are starting to pay more attention to how much energy they use. This newfound awareness encourages users to adopt more sustainable practices and reduce wastage,” explains project lead and Director at ADB’s OMDP M. Azim Hashimi. “This paradigm shift can be considered a game changer in efficient use of heating because it is a bottom-up approach, where the change in habits is expected to come from the users themselves and not merely imposed on them.”

“From technical due diligence in 2018, to project signing in 2021, and to current operations, stakeholders have remained truly committed to deliver on project objectives. As the saying goes: ‘the best infrastructure is one we don’t need to build.’ Unlike other cities, the Tashkent City Municipality hasn’t decommissioned its Soviet-era centralized heating system, but envisaged an ambitious PPP to modernize and retrofit it in view to providing reliable and affordable heating and hot water services to inhabitants and businesses,” said Veolia Development Director for Central Asia Chahine Boutouila. “Veolia is proud to be part of this transformation journey.”

ADB's initiative in Tashkent represents a major stride in reshaping the city's heating infrastructure. It dovetails with the government's aim to shorten the transition period to a closed heat supply system from 10 years to 5 that would result in earlier-than-anticipated energy savings and yield an expected $500 million in savings.

By 2032, the whole of Tashkent city is expected to enjoy its revamped heating system.