Masdar finalises funding for utility-scale wind farm in Uzbekistan

The 500MW Zarafshan project will support the country’s goal of meeting 25 per cent of electricity needs from renewables by 2030

The Zarafshan wind farm is Masdar’s second utility-scale project in Uzbekistan, after the 100-megawatt Nur Navoi Solar Project. Stephen Lock/The National

Abu Dhabi's clean energy company Masdar has achieved financial close on the 500-megawatt Zarafshan wind project, Uzbekistan’s first utility-scale wind farm, the company said.

The announcement was made in the Uzbek capital Tashkent on Friday. The project is expected to begin commercial operation by the end of 2024 and will provide enough electricity to power 500,000 homes, while displacing 1.1 million tonnes of carbon dioxide per year.

Anchor lenders for the Zarafshan project include the European Bank for Reconstruction and Development, International Finance Corporation, Asian Development Bank and Japan International Co-operation Agency.

Alongside the anchor lenders, the Dutch Entrepreneurial Development Bank is acting as B lender, while Etihad Credit Insurance, Natixis and First Abu Dhabi Bank, are providing credit-insured lending for the project.

“Uzbekistan is aiming to derive 25 per cent of its energy from renewable sources by 2026, and we are grateful to Masdar and financial institutions who are contributing to this goal through solar, wind, and other renewable energy projects,” said Shukhrat Vafaev, Deputy Minister of Investment and Foreign Trade.

Uzbekistan has become a hotspot for renewable energy investment from key Middle East players. The country aims to deploy 5 gigawatts of solar and 3 gigawatts of wind power capacity by 2030.

The Zarafshan project’s financial closing comes only a few weeks after Mohammed Al Gergawi, Minister of Cabinet Affairs, led a UAE delegation to Tashkent to sign an extension to the partnership with Uzbekistan, including other areas of strategic partnership such as finance, education, economic development, government leadership, food security and agriculture, and ports and customs.

“Uzbekistan is a key strategic investment destination for Masdar, and we look forward to continuing to develop and grow our strong portfolio of projects in the nation,” said Mohamed Al Ramahi, chief executive of Masdar.

Masdar entered into bilateral agreements with the government of Uzbekistan in 2020 to develop, build and operate the Zarafshan wind farm, the largest renewables project in Central Asia.

The project is expected to attract foreign direct investment of more than $600 million, and is part of Uzbekistan’s effort to meet 25 per cent of its electricity needs from renewable sources by the end of the decade.

The Zarafshan wind farm is Masdar’s second utility-scale project in Uzbekistan, after the 100MW Nur Navoi Solar Project — Uzbekistan’s first successfully financed independent power producer (IPP) solar project — started operations last year.

Masdar signed the power purchase agreement and investment agreement for the Zarafshan wind farm with the Ministry of Investments and Foreign Trade of the Republic of Uzbekistan and JSC National Electric Grid of Uzbekistan in June 2020.

Masdar also signed agreements last year to develop additional photovoltaic power projects in Uzbekistan with a combined capacity of 890MW. The projects will be located in the Samarkand, Jizzakh and Sherabad regions of Uzbekistan.

Masdar is one of the fastest-growing renewable energy companies in the world, with the expectation of reaching well over 50GW total capacity by 2030 — and more than 100GW in the following years.

In December last year, the UAE announced that Abu Dhabi energy entities Taqa, Abu Dhabi National Oil Company and Mubadala were to join forces as shareholders in Masdar, creating a global clean energy powerhouse that will be a major force in renewables and green hydrogen.