Tashkent, Uzbekistan, December 22, 2020 – The World Bank Group, Abu Dhabi Future Energy Company PJSC (Masdar), Asian Development Bank (ADB) and the Government of Uzbekistan signed today loan and guarantee agreements to finance the first 100-megawatt solar photovoltaic power plant in the country, in support of its efforts to produce clean energy, strengthen the security of supply and combat climate change.
The International Finance Corporation (IFC) and ADB are providing up to $60 million in the financing of the project which will be the first large-scale, privately developed and operated renewable energy facility in Uzbekistan. The European Bank for Reconstruction and Development (EBRD) is providing an equity bridge loan to Masdar to fund the equity needs of the project. Meanwhile, the World Bank is providing a $5.1 million payment guarantee for the Government of Uzbekistan to backstop the payment obligations under the project along with its upstream support to create an enabling environment for renewable energy deployment in Uzbekistan.
The plant's 300,000 photovoltaic panels occupying a 268-hectare plot of land 35 kilometers east of the city of Navoi are expected to start feeding power directly to the national electric network in 2021. It will produce 270 gigawatt hours per year of electricity from solar energy resources, enough to power more than 31,000 households, and prevent the release of 156,000 metric tons of greenhouse gases annually.
Thanks to the project, Uzbekistan, which generates 85 percent of its electricity in thermal power plants, will be able to reduce its dependency on natural gas and coal. The project will also help ramp up the use of renewable energy and contribute to electricity production that is projected to increase from 65,000 Gigawatt hours (GWh) in 2019 to 103,000 GWh by 2030 to meet rapidly growing demand across the country.
"The project will have an enormous effect, serving as a best practice example in Uzbekistan, opening new markets for private investment and helping accomplish the country's goal of increasing the use of renewable energy," said Wiebke Schloemer, IFC Director for Europe and Central Asia. "It will also help reduce the burden on public finances, which could be deployed into other critical sectors of Uzbekistan's economy to support its recovery from the COVID-19 pandemic."
The financing package to implement the project includes up to $20 million in senior loans from IFC's own account, up to $20 million from the Canada-IFC Blended Climate Finance Program, plus up to $20 million from the ADB. IFC will also provide of up to $1 million in interest rate swaps. And the World Bank will issue a $5.1 million payment guarantee. It will be used to ensure that the National Electric Grid of Uzbekistan (NES) is capable of performing its obligations arising out of a power purchase agreement signed with Masdar and cover the risk of nonpayment for supplied electricity.
"I am pleased that the World Bank, together with IFC, is supporting Uzbekistan in greening its electricity generation through the first competitively-tendered public-private partnership in the country," noted Lilia Burunciuc, World Bank Regional Director for Central Asia. "Our technical assistance, financing and guarantees will help the Government to grow the share of renewable energy generation from currently less than 0.2 percent to 25 percent by 2030 and attract private investments into the renewable energy sector. They will also facilitate the Government efforts in the energy sector reform, the integration of renewable energies into the grid, and the global climate change mitigation."
The plant will be constructed and operated by the "Nur Navoi Solar" Foreign Enterprise, a limited liability company (the project company) owned by Masdar, a renewable energy company of the United Arab Emirates. In October 2019, Masdar won Uzbekistan's first competitively-tendered solar power public-private partnership, which was structured with IFC's advisory support under the WBG Scaling Solar Program, a one-stop shop that helps governments rapidly bring online privately funded solar projects at competitive tariffs. Uzbekistan was the first state outside of Africa to join the Program.
Masdar committed to supplying power for 25 years at just 2.679 US cents per kilowatt hour – the lowest tariff for solar energy in Central Asia to date. The project company will sell electricity to the NES at this fixed price until 2046.
About the World Bank Group
The World Bank Group plays a key role in the global effort to end extreme poverty and boost shared prosperity. It consists of five institutions: the World Bank, including the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Working together in more than 100 countries, these institutions provide financing, advice, and other solutions that enable countries to address the most urgent challenges of development. For more information, please visit www.worldbank.org, www.miga.org, and ifc.org.
About Masdar
Abu Dhabi's renewable energy company Masdar is advancing the commercialization and deployment of renewable energy, sustainable urban development and clean technologies to address global sustainability challenges. Wholly owned by Mubadala Investment Company, the strategic investment company of the Government of Abu Dhabi, our mandate is to help maintain the UAE's leadership in the global energy sector, while supporting the diversification of both its economy and energy sources for the benefit of future generations. Today, Masdar is active in more than 30 countries, including the UAE, Jordan, Saudi Arabia, Mauritania, Egypt, Morocco, the UK, the US, Australia, Spain, Serbia, India, Indonesia, Uzbekistan, and many more.
About Canada-IFC Blended Climate Finance Program
The Canada-IFC Blended Climate Finance Program aims to mobilize private capital for global climate action and reflects Canada's commitment under the 2015 Paris Agreement to support developing countries in their transition to sustainable and resilient low-carbon economies. For more information on Canada's investment in global climate change action, please visit https://www.canada.ca/en/services/environment/weather/climatechange.html
About Scaling Solar
Scaling Solar is a World Bank Group program that makes it easier for governments to quickly procure and develop large solar projects with private financing. It includes a package of expert advice, fully templated documents, pre-approved financing, insurance products, and guarantees. Scaling Solar is supported by USAID's Power Africa, the Ministry of Foreign Affairs of the Netherlands, the Ministry of Foreign Affairs of Denmark, and the Infrastructure Development Collaboration Partnership Fund (DevCo). For more information, please visit www.scalingsolar.org.
