World Bank provides $150M loan for Uzbekistan’s small hydropower expansion

The World Bank has approved a $150 million concessional loan to support Uzbekistan in launching a new initiative to develop its small hydropower (SHP) sector and improve electricity supply across the country. The project will involve private sector participation, engaging local small hydropower developers (SHPPs) and financial institutions.

Uzbekistan’s electricity demand is forecasted to double by 2030, exceeding 120 billion kilowatt-hours. Despite progress in electricity generation, about 10 percent of demand remains unmet, causing power disruptions, especially in rural and underserved areas, due to limitations in transmission and distribution infrastructure.

Small hydropower plants (SHPPs), with capacities ranging from 100 kW to 5 MW and built on existing irrigation canals, can enhance distributed electricity generation in underserved regions, offering a dependable solution to strengthen energy access and promote regional development.

SHPPs are cost-effective and require minimal upkeep, utilizing Uzbekistan’s irrigation canal network to harness water resources, making them an appealing investment opportunity for private stakeholders in small-scale renewable energy.

“The Government of Uzbekistan plans to establish nearly 3,000 SHPPs, increasing installed capacity to 160 MW by 2026 and providing electricity to an additional 280,000 people,” said Tatiana Proskuryakova, World Bank Director for Central Asia. “The new World Bank-funded project, to be implemented by the Ministry of Energy between 2025 and 2030, will support this goal by providing local developers with access to finance for launching new SHPPs, delivered through local banks. The project will also help mobilize around $38 million in commercial financing to expand hydropower infrastructure nationwide.”

By 2030, the initiative will facilitate investments in SHPPs with a total installed capacity of up to 150 MW, producing over 520 gigawatt-hours of clean energy annually. It is also expected to cut greenhouse gas emissions by up to 430,000 tons of CO₂.

So far, around 270 potential sites for SHPP construction have been identified along existing irrigation canals, with 93 percent of these sites having capacities between 100 kW and 1,000 kW.

Electricity produced by these SHPPs will be purchased by JSC Regional Electric Power Networks, ensuring a reliable renewable energy source that diversifies the energy mix and enhances power supply to households and businesses in Uzbekistan’s underserved regions areas.

The initiative is also poised to spur job creation, boost production in related industries and small and medium enterprises (SMEs), and drive economic growth in local communities, contributing to broader regional development.