World Bank Approves $150M to Boost Small Hydropower in Uzbekistan

In a significant step toward a greener and more resilient energy future, the World Bank has approved $150 million in concessional credit to support Uzbekistan’s expansion of its small hydropower sector. The funding will finance a new nationwide project designed to strengthen electricity supply, expand renewable energy production, and foster private sector participation in the country’s evolving energy mix.

The initiative, to be implemented by the Ministry of Energy between 2025 and 2030, targets the development of small hydropower plants (SHPPs)—facilities ranging from 100 kilowatts (kW) to 5 megawatts (MW) that can operate efficiently on Uzbekistan’s extensive irrigation canal system.

Meeting Growing Electricity Demand with Clean, Local Solutions

Uzbekistan faces rapidly growing energy needs. By 2030, electricity demand is expected to double, surpassing 120 billion kilowatt-hours (kWh) annually. Despite ongoing efforts to scale up electricity production, 10% of current demand remains unmet, especially in rural and underserved regions. Frequent power outages have disrupted livelihoods, economic activities, and public services.

The deployment of SHPPs is seen as a pragmatic and cost-effective solution. SHPPs are low-maintenance, adaptable to Uzbekistan’s existing irrigation infrastructure, and ideal for decentralized electricity generation—especially in areas far from the national grid. These plants can enhance supply reliability, strengthen climate resilience, and reduce dependence on fossil fuels.

Project Goals and Scope

The World Bank-funded project aligns with Uzbekistan’s broader energy reform agenda and green transition ambitions. The primary goals include:

• Establishing up to 3,000 SHPPs by 2026

• Adding 160 MW in installed capacity, benefiting over 280,000 people

• Generating 520 gigawatt-hours (GWh) of renewable energy annually by 2030

• Reducing greenhouse gas emissions by 430,000 tons of CO₂ over the project duration

• Mobilizing an additional $38 million in commercial financing

• Providing reliable power to underserved and remote communities

Tatiana Proskuryakova, World Bank Director for Central Asia, stated, “The new World Bank-funded project will help Uzbekistan realize its SHPP vision by supporting private developers with finance and technical assistance, stimulating the local green energy market, and unlocking new opportunities for inclusive development.”

Mobilizing Private Sector and Local Banks for Green Growth

A distinguishing feature of the program is its strong private sector orientation. The concessional loan will be paired with commercial financing to encourage local small hydropower developers (SHDs) to enter the market. Funding will be channeled through partner banks in Uzbekistan, enabling them to offer affordable financing and guarantees to SHDs.

This model is expected to de-risk private investments and accelerate the deployment of dozens of new SHPPs across the country. In particular, the project has preliminarily identified 270 suitable SHPP sites, with 93% of them ranging from 100 kW to 1,000 kW in capacity, ideal for community-scale deployment.

Electricity generated from these SHPPs will be purchased by JSC Regional Electric Power Networks, a state-owned utility. This mechanism ensures a stable offtake environment for private producers and contributes to energy diversification, decarbonization, and resilience in the national grid.

Catalyzing Regional Development and Job Creation

Beyond addressing electricity shortages, the project is expected to stimulate employment, particularly in the construction, engineering, and maintenance sectors. The growth of SHPPs will also benefit small and medium enterprises (SMEs) involved in manufacturing, services, and agricultural processing by providing more reliable and sustainable energy access.

Additionally, the project will support regional development by attracting investment, promoting local industry, and improving quality of life for rural populations.

Aligning with Global and National Climate Goals

The World Bank’s investment supports Uzbekistan’s climate objectives under the Paris Agreement and the Country Partnership Framework (CPF) 2022–2026. It aligns with the nation's commitment to:

• Increase the share of renewables in the energy mix

• Reduce carbon intensity

• Promote sustainable infrastructure development

The project is part of the World Bank’s broader agenda to support low-carbon, inclusive energy transitions in developing economies through targeted policy support, concessional finance, and innovation.

A Model for Scalable, Inclusive Renewable Energy

Uzbekistan’s small hydropower initiative offers a replicable model for scaling distributed renewable energy in countries with existing water infrastructure and underserved regions. With appropriate financing and public-private collaboration, SHPPs can play a key role in closing the energy access gap while supporting climate mitigation, economic growth, and community empowerment.

The World Bank’s $150 million commitment sets the foundation for a greener, more equitable energy future in Uzbekistan—one that taps into the untapped power of water, harnessed at small scale for maximum local impact.