Will wind take off in crash-hit central Asia?

The Covid-19 pandemic has been a powerful reminder of how global the wind industry now is. But some regions are still largely mysterious to westerners.

Richard Heap
March 19, 2020
Will wind take off in crash-hit central Asia?

The Covid-19 pandemic has been a powerful reminder of how global the wind industry now is. But some regions are still largely mysterious to westerners.

One of the most mysterious is the bloc of five central Asian ex-Soviet states: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. The area has long relied on oil and gas sales, but its largest nations Uzbekistan (population: 32million) and Kazakhstan (18million) are looking to grow in renewables.

This is a trend that could be exacerbated by the oil price war between Saudi Arabia and Russia, which has driven crude oil down to $25 a barrel. This crash is set to bring about a major downturn in central Asian economies in much the same way as the 2014 oil price crash did. And Covid-19 will worsen this pain.

Growth in Kazakhstan

Kazakhstan has some of the world’s largest oil and gas reserves but has also made the most progress on wind energy investment in central Asia.

Exact figures are tough to find, but the International Renewable Energy Agency has reported that there was 130MW of wind farms in operation at the end of 2018; and a further 500MW of wind and solar capacity was added in 2019.

The Kazakh government has given support for 1.1GW of wind and solar projects in three auctions over the last two years and is aiming to reach 1.6GW of installed renewables capacity by the end of 2020.

The country has also been boosting its economic prospects with privatisation, and last year came 28th in the World Bank’s Doing Business 2019 report. This could open the way for its neighbouring ‘stans’ in central Asia to do likewise.

For example, its growing business-friendliness opened the way for investments in projects including in a 100MW wind farm that is poised to be the largest in central Asia, which gained funds from the Asian Infrastructure Investment Bank in December. But western investors shouldn’t get too excited as infrastructure investments in the region are still dominated by China.

The other promising central Asian market for renewables firms is Uzbekistan. This is partly due to its size: its population is 11million more than Kyrgyzstan, Tajikistan and Turkmenistan combined. But the country has recently opened up to investment from foreign countries – and the wind sector is already seeing a sizeable share of this.

Unlocking the other 'stans'

At present, there is less than 1MW of installed wind capacity in Uzbekistan. But this month, Saudi Arabian developer ACWA Power announced that it has signed a deal with the energy ministry to develop 500MW-1GW of wind farms worth up to $1.1bn.

This follows the enactment of a law in mid-2019 that commits the government to get 21% of the country’s energy needs from renewables by 2031.

The three smaller ‘stans’ have wind potential too, although Kyrgyzstan and Tajikistan also have large mountainous areas that work best for hydro. GE won a deal last March to refurbish Tajikistan’s Qairokkum hydro plant, for example.

There is no doubt that the proximity of these countries to China will ensure any western firms looking to enter will face tough competition from Chinese rivals. China’s Belt & Road Initiative shows how it sees central Asia as a key region for future strategic investment. But the ACWA and GE deals show this isn’t a closed market, and the region may look to be less reliant on China.

The oil price war may also increase their need for investment.

These countries have undergone significant economic changes in recent years, although the oil price war will likely slow that. This means that there should be opportunities for private firms to help them to improve their ageing energy infrastructure and improve grid reliability.

These countries’ budgets will come under huge strain if oil and gas prices stay low. But Kazakhstan and Uzbekistan are leading the way, and trying to show investors that central Asia can offer a stable investment environment.

One of their biggest obstacles may be their ‘difficult’ neighbours: Afghanistan, Iran and Russia. But wind has moved into most parts of the world, including regions with political and economic upheaval. It can in central Asia too.

NEWS IN BRIEF

COVID-19: LM AND SGRE SHUT SPANISH PLANTS

LM Wind Power has stopped production at its blade plants in Castellon and Ponferrada in Spain as the nation fights the coronavirus pandemic. This follows the temporary closure of a Siemens Gamesa plant in Madrid after an employee tested positive for the virus. Read more

COVID-19: DUTCH CONTINUE 700MW AUCTION

The Dutch government is set to proceed with its 700MW Hollandse Kust V zero-subsidy offshore auction despite the Covid-19 pandemic, the Netherlands Enterprise Agency has said. The tender is due to take place next month.

CHINA ENERGY AND EDF FORM €1BN TIE-UP

China Energy Investment Corporation and EDF have formed a €1bn joint venture to develop and operate two offshore wind farms, the 302MW Dongtai 4 and 200MW Dongtai 5, in Chinese waters. The former completed in 2019 and the latter is due in early 2021. Read more

AMAZON INVESTS IN 122MW SWEDISH SCHEME

Amazon has announced that it is investing in a 122MW onshore wind farm in Västernorrland in Sweden, as well as three solar farms totalling 175MW. The wind farm is due to be commissioned in 2022. Read more

GOOD ENERGY AGREES 25MW PPA WITH ØRSTED

Good Energy has agreed a deal with Ørsted to buy 12% of the output from the 210MW offshore wind farm Westermost Rough in UK waters for three years. This extends the partnership between the two companies. Read more

BROOKFIELD CONCLUDES TERRAFORM BUYOUT

Brookfield Renewable Partners has concluded a merger agreement with TerraForm Power. Brookfield is set to buy the 38% of TerraForm Power that it doesn't currently own, taking its ownership to 100%. Read more

ALLETE BUYS 300MW OKLAHOMA PROJECT

Allete Clean Energy has bought the 300MW Caddo wind project in Oklahoma from Apex Clean Energy, which is due to be operational by the end of 2021. The deal includes PPAs with three corporates in the Fortune 500. Read more

NEW YORK AWARDS 145MW TERRA-GEN SUPPORT

Terra-Gen has won support for its 145MW Prattsburgh wind farm from US state New York. The state has also given backing to three wind repowering projects totalling 43MW by TerraForm Power. Read more

JOHN LAING EXITS 100MW TEXAS SCHEME

John Laing has agreed to sell its stake in the 100MW Buckthorn wind farm near Dallas, Texas, to an affiliate of Capital Power Corporation. The deal is due to concluded in the second quarter of 2020.

RPMI RAILPEN BUYS 90% OF SCOTTISH PROJECT

The £30bn UK railway pensions manager RPMI Railpen has bought 90% of the 46MW Carraig Gheal wind farm in Scotland from GreenPower. Read more

The Covid-19 pandemic has been a powerful reminder of how global the wind industry now is. But some regions are still largely mysterious to westerners.

One of the most mysterious is the bloc of five central Asian ex-Soviet states: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. The area has long relied on oil and gas sales, but its largest nations Uzbekistan (population: 32million) and Kazakhstan (18million) are looking to grow in renewables.

This is a trend that could be exacerbated by the oil price war between Saudi Arabia and Russia, which has driven crude oil down to $25 a barrel. This crash is set to bring about a major downturn in central Asian economies in much the same way as the 2014 oil price crash did. And Covid-19 will worsen this pain.

Growth in Kazakhstan

Kazakhstan has some of the world’s largest oil and gas reserves but has also made the most progress on wind energy investment in central Asia.

Exact figures are tough to find, but the International Renewable Energy Agency has reported that there was 130MW of wind farms in operation at the end of 2018; and a further 500MW of wind and solar capacity was added in 2019.

The Kazakh government has given support for 1.1GW of wind and solar projects in three auctions over the last two years and is aiming to reach 1.6GW of installed renewables capacity by the end of 2020.

The country has also been boosting its economic prospects with privatisation, and last year came 28th in the World Bank’s Doing Business 2019 report. This could open the way for its neighbouring ‘stans’ in central Asia to do likewise.

For example, its growing business-friendliness opened the way for investments in projects including in a 100MW wind farm that is poised to be the largest in central Asia, which gained funds from the Asian Infrastructure Investment Bank in December. But western investors shouldn’t get too excited as infrastructure investments in the region are still dominated by China.

The other promising central Asian market for renewables firms is Uzbekistan. This is partly due to its size: its population is 11million more than Kyrgyzstan, Tajikistan and Turkmenistan combined. But the country has recently opened up to investment from foreign countries – and the wind sector is already seeing a sizeable share of this.

Unlocking the other 'stans'

At present, there is less than 1MW of installed wind capacity in Uzbekistan. But this month, Saudi Arabian developer ACWA Power announced that it has signed a deal with the energy ministry to develop 500MW-1GW of wind farms worth up to $1.1bn.

This follows the enactment of a law in mid-2019 that commits the government to get 21% of the country’s energy needs from renewables by 2031.

The three smaller ‘stans’ have wind potential too, although Kyrgyzstan and Tajikistan also have large mountainous areas that work best for hydro. GE won a deal last March to refurbish Tajikistan’s Qairokkum hydro plant, for example.

There is no doubt that the proximity of these countries to China will ensure any western firms looking to enter will face tough competition from Chinese rivals. China’s Belt & Road Initiative shows how it sees central Asia as a key region for future strategic investment. But the ACWA and GE deals show this isn’t a closed market, and the region may look to be less reliant on China.

The oil price war may also increase their need for investment.

These countries have undergone significant economic changes in recent years, although the oil price war will likely slow that. This means that there should be opportunities for private firms to help them to improve their ageing energy infrastructure and improve grid reliability.

These countries’ budgets will come under huge strain if oil and gas prices stay low. But Kazakhstan and Uzbekistan are leading the way, and trying to show investors that central Asia can offer a stable investment environment.

One of their biggest obstacles may be their ‘difficult’ neighbours: Afghanistan, Iran and Russia. But wind has moved into most parts of the world, including regions with political and economic upheaval. It can in central Asia too.

NEWS IN BRIEF

COVID-19: LM AND SGRE SHUT SPANISH PLANTS

LM Wind Power has stopped production at its blade plants in Castellon and Ponferrada in Spain as the nation fights the coronavirus pandemic. This follows the temporary closure of a Siemens Gamesa plant in Madrid after an employee tested positive for the virus. Read more

COVID-19: DUTCH CONTINUE 700MW AUCTION

The Dutch government is set to proceed with its 700MW Hollandse Kust V zero-subsidy offshore auction despite the Covid-19 pandemic, the Netherlands Enterprise Agency has said. The tender is due to take place next month.

CHINA ENERGY AND EDF FORM €1BN TIE-UP

China Energy Investment Corporation and EDF have formed a €1bn joint venture to develop and operate two offshore wind farms, the 302MW Dongtai 4 and 200MW Dongtai 5, in Chinese waters. The former completed in 2019 and the latter is due in early 2021. Read more

AMAZON INVESTS IN 122MW SWEDISH SCHEME

Amazon has announced that it is investing in a 122MW onshore wind farm in Västernorrland in Sweden, as well as three solar farms totalling 175MW. The wind farm is due to be commissioned in 2022. Read more

GOOD ENERGY AGREES 25MW PPA WITH ØRSTED

Good Energy has agreed a deal with Ørsted to buy 12% of the output from the 210MW offshore wind farm Westermost Rough in UK waters for three years. This extends the partnership between the two companies. Read more

BROOKFIELD CONCLUDES TERRAFORM BUYOUT

Brookfield Renewable Partners has concluded a merger agreement with TerraForm Power. Brookfield is set to buy the 38% of TerraForm Power that it doesn't currently own, taking its ownership to 100%. Read more

ALLETE BUYS 300MW OKLAHOMA PROJECT

Allete Clean Energy has bought the 300MW Caddo wind project in Oklahoma from Apex Clean Energy, which is due to be operational by the end of 2021. The deal includes PPAs with three corporates in the Fortune 500. Read more

NEW YORK AWARDS 145MW TERRA-GEN SUPPORT

Terra-Gen has won support for its 145MW Prattsburgh wind farm from US state New York. The state has also given backing to three wind repowering projects totalling 43MW by TerraForm Power. Read more

JOHN LAING EXITS 100MW TEXAS SCHEME

John Laing has agreed to sell its stake in the 100MW Buckthorn wind farm near Dallas, Texas, to an affiliate of Capital Power Corporation. The deal is due to concluded in the second quarter of 2020.

RPMI RAILPEN BUYS 90% OF SCOTTISH PROJECT

The £30bn UK railway pensions manager RPMI Railpen has bought 90% of the 46MW Carraig Gheal wind farm in Scotland from GreenPower. Read more

The Covid-19 pandemic has been a powerful reminder of how global the wind industry now is. But some regions are still largely mysterious to westerners.

One of the most mysterious is the bloc of five central Asian ex-Soviet states: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. The area has long relied on oil and gas sales, but its largest nations Uzbekistan (population: 32million) and Kazakhstan (18million) are looking to grow in renewables.

This is a trend that could be exacerbated by the oil price war between Saudi Arabia and Russia, which has driven crude oil down to $25 a barrel. This crash is set to bring about a major downturn in central Asian economies in much the same way as the 2014 oil price crash did. And Covid-19 will worsen this pain.

Growth in Kazakhstan

Kazakhstan has some of the world’s largest oil and gas reserves but has also made the most progress on wind energy investment in central Asia.

Exact figures are tough to find, but the International Renewable Energy Agency has reported that there was 130MW of wind farms in operation at the end of 2018; and a further 500MW of wind and solar capacity was added in 2019.

The Kazakh government has given support for 1.1GW of wind and solar projects in three auctions over the last two years and is aiming to reach 1.6GW of installed renewables capacity by the end of 2020.

The country has also been boosting its economic prospects with privatisation, and last year came 28th in the World Bank’s Doing Business 2019 report. This could open the way for its neighbouring ‘stans’ in central Asia to do likewise.

For example, its growing business-friendliness opened the way for investments in projects including in a 100MW wind farm that is poised to be the largest in central Asia, which gained funds from the Asian Infrastructure Investment Bank in December. But western investors shouldn’t get too excited as infrastructure investments in the region are still dominated by China.

The other promising central Asian market for renewables firms is Uzbekistan. This is partly due to its size: its population is 11million more than Kyrgyzstan, Tajikistan and Turkmenistan combined. But the country has recently opened up to investment from foreign countries – and the wind sector is already seeing a sizeable share of this.

Unlocking the other 'stans'

At present, there is less than 1MW of installed wind capacity in Uzbekistan. But this month, Saudi Arabian developer ACWA Power announced that it has signed a deal with the energy ministry to develop 500MW-1GW of wind farms worth up to $1.1bn.

This follows the enactment of a law in mid-2019 that commits the government to get 21% of the country’s energy needs from renewables by 2031.

The three smaller ‘stans’ have wind potential too, although Kyrgyzstan and Tajikistan also have large mountainous areas that work best for hydro. GE won a deal last March to refurbish Tajikistan’s Qairokkum hydro plant, for example.

There is no doubt that the proximity of these countries to China will ensure any western firms looking to enter will face tough competition from Chinese rivals. China’s Belt & Road Initiative shows how it sees central Asia as a key region for future strategic investment. But the ACWA and GE deals show this isn’t a closed market, and the region may look to be less reliant on China.

The oil price war may also increase their need for investment.

These countries have undergone significant economic changes in recent years, although the oil price war will likely slow that. This means that there should be opportunities for private firms to help them to improve their ageing energy infrastructure and improve grid reliability.

These countries’ budgets will come under huge strain if oil and gas prices stay low. But Kazakhstan and Uzbekistan are leading the way, and trying to show investors that central Asia can offer a stable investment environment.

One of their biggest obstacles may be their ‘difficult’ neighbours: Afghanistan, Iran and Russia. But wind has moved into most parts of the world, including regions with political and economic upheaval. It can in central Asia too.

NEWS IN BRIEF

COVID-19: LM AND SGRE SHUT SPANISH PLANTS

LM Wind Power has stopped production at its blade plants in Castellon and Ponferrada in Spain as the nation fights the coronavirus pandemic. This follows the temporary closure of a Siemens Gamesa plant in Madrid after an employee tested positive for the virus. Read more

COVID-19: DUTCH CONTINUE 700MW AUCTION

The Dutch government is set to proceed with its 700MW Hollandse Kust V zero-subsidy offshore auction despite the Covid-19 pandemic, the Netherlands Enterprise Agency has said. The tender is due to take place next month.

CHINA ENERGY AND EDF FORM €1BN TIE-UP

China Energy Investment Corporation and EDF have formed a €1bn joint venture to develop and operate two offshore wind farms, the 302MW Dongtai 4 and 200MW Dongtai 5, in Chinese waters. The former completed in 2019 and the latter is due in early 2021. Read more

AMAZON INVESTS IN 122MW SWEDISH SCHEME

Amazon has announced that it is investing in a 122MW onshore wind farm in Västernorrland in Sweden, as well as three solar farms totalling 175MW. The wind farm is due to be commissioned in 2022. Read more

GOOD ENERGY AGREES 25MW PPA WITH ØRSTED

Good Energy has agreed a deal with Ørsted to buy 12% of the output from the 210MW offshore wind farm Westermost Rough in UK waters for three years. This extends the partnership between the two companies. Read more

BROOKFIELD CONCLUDES TERRAFORM BUYOUT

Brookfield Renewable Partners has concluded a merger agreement with TerraForm Power. Brookfield is set to buy the 38% of TerraForm Power that it doesn't currently own, taking its ownership to 100%. Read more

ALLETE BUYS 300MW OKLAHOMA PROJECT

Allete Clean Energy has bought the 300MW Caddo wind project in Oklahoma from Apex Clean Energy, which is due to be operational by the end of 2021. The deal includes PPAs with three corporates in the Fortune 500. Read more

NEW YORK AWARDS 145MW TERRA-GEN SUPPORT

Terra-Gen has won support for its 145MW Prattsburgh wind farm from US state New York. The state has also given backing to three wind repowering projects totalling 43MW by TerraForm Power. Read more

JOHN LAING EXITS 100MW TEXAS SCHEME

John Laing has agreed to sell its stake in the 100MW Buckthorn wind farm near Dallas, Texas, to an affiliate of Capital Power Corporation. The deal is due to concluded in the second quarter of 2020.

RPMI RAILPEN BUYS 90% OF SCOTTISH PROJECT

The £30bn UK railway pensions manager RPMI Railpen has bought 90% of the 46MW Carraig Gheal wind farm in Scotland from GreenPower. Read more

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