Uzbekistan Secures $300 Million in Loans for Power Grid Upgrades

Uzbekistan has secured $300 million in loans from the World Bank and the Asian Development Bank (ADB) to modernize 60 electrical substations across the country. The upgrades aim to reduce power outages and electricity losses while making it easier to connect new solar and wind power plants to the grid. Electricity demand is growing as Uzbekistan’s cities and industries expand. Much of the country’s power grid was built decades ago, and aging equipment and overloaded substations contribute to electricity losses and supply disruptions. On October 27, the World Bank approved a $100 million loan. The ADB had previously approved a $200 million loan, with the agreement signed on October 15. The Uzbek government will contribute another $71 million, bringing the total program cost to $371 million. Substations direct electricity through the grid and adjust voltage before it reaches consumers. The funding will be used to replace outdated equipment and install digital control systems that allow operators to monitor electricity loads and detect faults more quickly. Uzbekistan plans to increase its installed capacity from solar, wind, and other renewable energy sources to 25 gigawatts (GW) by 2030. The substation upgrades are expected to allow the grid to accommodate at least 3.3 GW of additional renewable energy capacity. The World Bank expects annual electricity losses at the modernized substations to decline by 20 million kilowatt-hours by 2031. That is roughly equivalent to the annual electricity consumption of several thousand households. The bank also estimates that improved electricity supplies could help create or support 11,700 jobs over the five years after the upgraded facilities enter service. The state-owned National Electric Grid of Uzbekistan will carry out the program, which also includes improvements in maintenance, financial oversight, and cybersecurity. With the ADB as lead lender, the two banks have agreed to coordinate their assessments and oversight to reduce duplication and administrative costs. Since 2010, the ADB has provided Uzbekistan with more than $3.4 billion in financing and guarantees for the energy sector. In 2023, the bank separately approved $200 million to digitalize 26 distribution substations. For residents and businesses, the main measure of success will be whether electricity supplies become more reliable and power losses fall.