Central Asia Looks West as It Rewires Its Energy System
Central Asia is emerging from the shadow of Russia and Moscow’s grip on its economy and energy supply.
In recent years, several regional and European projects, as well as China’s inroads into the Central Asian economies, have the potential to make Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan less dependent on Russia in their energy systems.
Power connections and transmission projects, a program to establish Central Asia’s first-ever regional electricity market, and hydropower projects in these countries are reducing dependence on Russia, as noted by the foreign intelligence service of Ukraine, SZRU.
There is much work to do to enhance regional power system connectivity, while Central Asia will also need to balance its energy security against growing Chinese investments and influence in the region.
Central Asia remains wary of criticizing Russia and its war in Ukraine and chooses not to antagonize Moscow. Russia has long held huge economic, trade, and energy influence in the region.
Yet, Central Asian nations have recently resolved border disputes among themselves, allowing for better regional cooperation and energy connectivity.
Moreover, the countries have opened up to cooperation and financial support from the World Bank and the European Union to boost regional power systems development.
The World Bank last month approved the10-year Regional Electricity Market Interconnectivity and Trade (REMIT) Program, which will be implemented across three phases to boost energy connectivity in Central Asia.
REMIT will establish Central Asia’s first-ever regional electricity market, increase electricity trade, expand transmission capacity, and lay the groundwork for large-scale renewable energy integration, the World Bank said.
Related: Devon and Coterra to Create Shale Giant in $58-Billion Merger Deal
The program will support hydropower in the Kyrgyz Republic and Tajikistan, thermal power in Kazakhstan, Turkmenistan, and Uzbekistan, and the growing solar and wind potential across all Central Asia countries.
Through its 10-year span, the program aims to increase Central Asia’s electricity trade to at least 15,000 GWh annually – enough to meet the yearly needs of millions of people across Central Asia, while more than tripling transmission capacity to 16 GW and enabling up to 9 GW of clean energy resources.
The REMIT Program has total indicative financing of $1.018 billion across three phases.
“By 2050, stronger electricity connectivity and trade could generate up to $15 billion in economic benefits for the region,” said Najy Benhassine, World Bank Regional Director for Central Asia.
Last year, the EU and Central Asia elevated their cooperation to a strategic partnership, with the EU committing a $14-billion (12 billion euros) Global Gateway investment package to strengthen Central Asia-Europe transport links and deepen cooperation on critical raw materials, digital connectivity, water, and energy.
According to Szymon Kardas, Senior Policy Fellow at the European Council on Foreign Relations (ECFR), an international think tank, “Clean energy presents the most promising area for EU collaboration.”
Central Asian nations need technology to tap into the full potential of its rich reserves of fossil fuels and rare earth minerals—resources the EU needs, Kardas says.
“Historically influenced by Russia and currently heavily dependent on China, its countries are eager to strengthen their ties with Europe,” the expert noted.
China has indeed stepped up investments in the Central Asian countries in recent years. Beijing has signed a flurry of deals to create joint ventures and make corporate takeovers in Central Asia, with a particular focus on the mining sector in Kazakhstan.
China has also significantly boosted its presence in Uzbekistan, where Chinese firms currently account for more than a quarter of all foreign companies or joint ventures operating in the country. The number of Chinese-Uzbek joint ventures and Chinese companies has more than doubled over the past two years, per official Uzbek statistics, with China well ahead of Russia in the top spot of foreign-participation companies.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com